AMLO and Trump: NAFTA Best Friends Forever?

"I send you affectionate hugs," writes Mexican President-elect Andres Manuel Lopez Obrador in a letter to U.S. President Trump, "We will put our voters and citizens at the center and displace the establishment."

"Thank you for your kind letter. A strong relationship will lead to a much stronger and more prosperous Mexico which, frankly would make me very happy!" answers Trump back in another letter.

This was followed with Trump saying that Lopez Obrador or AMLO was "a terrific person".

As Canada's Foreign Minister Chrystia Freeland, Finance Minister Bill Morneau and International Trade Minister Jim Carr head to Mexico City, this week, to discuss NAFTA with the both the outgoing and incoming Mexican administrations, AMLO's letter provides some clues to his views on NAFTA.

La Jornada, the centre left Mexican newspaper, lauded the transparency of revealing the letter, but said the missive was questionable.

Luis Hernandez Navarro writes, "The statement is surprising Trump has offended Mexico and Mexicans. He has attacked and persecuted Mexican nationals living in the United States. He has imposed, in the middle of a NAFTA renegotiations, tariffs on Mexican exports. Instead of a paradigm shift in foreign relations, the fact that the next Mexican president is agreeable with the United States is a mistake."

So what does the letter actual reveal about his position on NAFTA?

First of all, it actually doesn't talk about NAFTA's content at all. Despite having Jesus Seade, former WTO deputy general as AMLO's NAFTA point man, there is no mention of Chapter 11, of duties, of energy proportionality. There aren't even attempts to address Trump's demands on auto, on wages, or on the sunset clause.

Here is what it does talk about:

1. The fundamental premise is that to curtail Mexican immigration to the U.S., and Central American migration to Mexico, it is necessary to get rid of the fundamental sources of migration: extreme poverty and violence. He proposes a plan with 75 per cent of its budget devoted to development and 25 per cent devoted to security.
2. He proposes that Mexico make extreme infrastructure investments in energy and transport in the South East of Mexico, recreating Mexico's traditional role as the trading hub between Asia and the North East United States.
3. He proposes free trade zones at the border where sales and corporate taxes match those of U.S. states, in order to pull investment into Mexico. In these zones, the minimum wage would be more than doubled. Competing on lowering taxes in order to spur investment does not seem like a progressive agenda, nor is it going to please Trump as it will compete directly with U.S. firms and U.S jobs.
4. He wants to move heaven and earth to ensure that there is social and economic development in Mexico like no one else has seen.

Of course, Trump and AMLO may agree on a few points: raising wages in the Mexican auto sector, or combatting corruption, U.S. demands the previous regime were less favorable to.

But strangely, AMLO is pushing for quick negotiation claiming that uncertainty around NAFTA is bad for the Mexican economy, a position recently promoted by the IMF. He has basically given carte blanche to the previous administration to negotiate the deal. In essence, he would like a deal before he takes office on December 1^st.

But AMLO's avoidance of NAFTA may not be so naive.

A source told Bloomberg that there is a very clear reason for this: NAFTA Is politically messy, and he wants the outgoing regime to deal with it so he can focus on his domestic agenda.

In response, Council of Canadians Honorary Chair Maude Barlow, and Chair Leo Broderick wrote a letter to AMLO saying that NAFTA curtails their progressive domestic vision and that it increases inequality, hampers public making decision powers, and puts water and energy sovereignty in danger.

They write, "It may be tempting to hope for a swift deal and have NAFTA swept under the rug by the outgoing administration. This, the thinking goes, would allow you to focus on your domestic agenda. However, a progressive agenda and the current NAFTA are incompatible. We urge you to negotiate in a spirit that upholds your progressive agenda, as opposed to a NAFTA serving a tiny minority."