By RICARDO CASILLO
U.S. President Donald J. Trump is in Davos, Switzerland, for a couple of days to participate in the 48th World Economic Forum (WEF) powwow of billionaires and presidents who this year meet under the motto “Creating a shared future in a fractured world.” What’s Earth-fracking Trump doing there? I wonder.
The Gringo Lone Ranger is meeting with a group of people who are extremely enthusiastic because the Trans-Pacific Partnership (TPP), formed by 11-nations, has come up with a new vision of the treaty, augmenting its moniker to Comprehensive and Progressive Trans-Pacific Partnership (CPTPP.)
Of course, President Trump is the man who won the U.S. presidency running on an anti-TPP and anti-NAFTA platform, with the promise of building a new version of Fortress America, a concept that has been for decades buried under the heap of globalization.
Trump, it must be said, has been true to his word, keeping his promise of delivering on his campaign promises to bring now-globalized U.S. industries back to the USA. And how!
His corporate tax cut of 14 percent, from 35 down to 21, definitely is an alluring attraction to many multinational companies looking to up their profit margins.
This was a call that had a direct impact on Mexico, first as a partner in the trilateral North American Free Trade Agreement, which is currently being renegotiated in Canada and in which Trump – not the U.S. Trade representative – is enforcing a stiff position of not budging an inch from his country’s initial proposals and apparently holding his ground against the weakening positions of the Canadian and Mexican economic ministers.
The Trump tax cut was certainly aimed at Mexico first and the rest of the world later. The Donald’s hatred against this nation – surely secretly included in his “shithouse” countries list – is incomprehensible to the WEF. Trump claims NAFTA is the ”worst” agreement ever negotiated because it produced a $63 billion deficit on trade between Mexico and the United States. Ironically, the United States has a $360 billion trade deficit with China. On this, The Donald stays mum.
And then, just this week, President Trump signed an executive order slapping Mexican-produced washing machines and solar panels with a blatantly illegal (under-NAFTA) 20 percent countervailing duty. Mexico exported 8.8 million washing machines between January and November 2017, out of which 7.9 million went to the United States.
The idea behind the 14 percent tax cut and the 20 percent countervailing duty is to force the washing machine manufacturers – LG, Samsung, Daewoo, Electrolux, Koblenz and Fagor – to move out of Mexico and establish their facilities in the United States so that Uncle Sam can be the exporter of these appliances.
Surely, the 20 percent countervailing duty – unnecessary because none of these companies is subsidized by the Mexican government – is heading directly to a NAFTA unfair trading practices panel, but as they say in boxing, what counts is that the punch has landed the jaw, even if it’s not a KO.
On the other hand, here in Mexico, there’s great concern about the stagnation of the President Enrique Peña Nieto administration’s to counterpunch Trump’s walloping.
Thus far, nearly a month after the U.S. tax cut went into effect, the Mexican government has not announced any moves to compensate, even though Peña Nieto should be trembling in fear because, in this period, Mexico dropped from eighth place to 13th place in the ranking of direct foreign investment recipient, according to the annual survey presented this week at the WEF in Davos.
Definitely, Peña Nieto continues to ride a burro in an age when decision-making must be made at turbo-rocket speeds. Many companies may not yet be fleeing Mexico in a hurry, but they are repatriating their cash flow to the United States and receiving the immediate benefits of trickle back taxation practices while the Mexican government is thinking about squeezing more money from taxpayers.
On Friday, Jan. 26, Trump is expected to deliver a speech to the general assembly of the WEF, a speech in which he will attempt to convince globalizers that a Fortress America is the best thing for the rest of the world.
Meanwhile, Trump is practicing fracking economics – get the oil even if you destroy the earth – and most definitely, the first to feel the tremors caused by Trump’s fracking tactics is Mexico.
Tremble, burrito, tremble! But get a move on it!