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By ANTONIO GARZA, former U.S. ambassador to Mexico

It is hard to believe that the holiday season is upon us and we’re already just a few weeks away from 2022.

The past 12 months have brought quite a bit of uncertainty and complexity, but also notable successes.

Yet again, we’re wrapping up this year with uncertainty, amid continuing concerns over China, U.S. inflation, the omicron covid-19 variant and other potential risks.

As we conclude 2021, U.S-China relations remain strained. Earlier this year, U.S. Secretary of State Blinken said that managing the U.S.’ relations with China was the “biggest geopolitical test of the 21st century.”  And in last month’s virtual summit, President Joe Biden and China’s top leader Xi Jinping failed to make progress in thawing longstanding contention over trade, Taiwan, and tech issues.

The U.S. economy, while growing, also faces a number of challenges. Last month, U.S. inflation rose 6.8 percent from the previous year, reaching a nearly 40-year record. Supply chains continue to experience disruptions, resulting from high consumer demand and suppliers’ struggle to get goods onto the shelves and e-commerce delivered to shoppers’ doorsteps.

The covid-19 pandemic left us a lot to mourn in 2021. Over 5.2 million people have lost their lives from the virus to date and many others continue to suffer from the economic impact or social isolation. The recent discovery of the omicron variant led to new travel restrictions and markets also reacted.

Looking forward to 2022, there are several encouraging signs. In the past 12 months, over 8 billion vaccination doses have been administered worldwide. New variants have shown us that equitable vaccine distribution around the globe will be key to successfully tackle covid-19.

On another note, freight congestion and supply shortages may be easing, and supply chains could be back on track by the second half of 2022. Last week, JP Morgan predicted that 2022 will mark the end of the pandemic and see full market recovery. And a silver lining of supply chain challenges is the recent economic boom along Mexico’s northern border, as multinationals move to relocate factories closer to the United States.

Yet, uncertainty will remain heightened in 2022. Emerging markets are likely to struggle as investors flock to more secure havens, while the U.S. and Mexico’s business climate will remain particularly challenging for investors. Despite pressure from U.S. political and business leaders, Mexican President Andrés Manuel López Obrador (AMLO) has yet to change course on thorny issues, such as his reversal of the 2013 energy reform.

Business in Mexico will be further complicated by upcoming political developments. López Obrador called for a referendum — scheduled for spring 2022 – on whether he should remain in office for the rest of the term. He will more than likely win given his approval rating, which hovers around 60 percent.

The world will also be keeping an eye on the six gubernatorial races in June 2022, and López Obrador’s allies, who are already vying for the presidential candidacy for the 2024 elections. And let’s not forget that the United States’ own midterm elections are right around the corner, which will likely make any major activity or movement on the bilateral relationship difficult next year.

On U.S.-Mexican relations, the Biden administration appears to have advanced its objective to reinstitutionalize the relationship on trade, migration and security. During its first 11 months in office, the administration restarted high-level dialogues and the Three Amigos Summit, which had been stalled during the prior U.S. administration. This week, the two governments met to present the work plans for the High-Level Economic Dialogue and the new U.S.-Mexico Bicentennial Framework for Security, Public Health and Safe Communities.

ANTONIO GARZA is a U.S. lawyer who served as his country’s ambassador to Mexico between 2002 and 2009. In recognition of his work, in 2009, the Mexican government bestowed on him the Águila Azteca, the highest award granted to foreigners. Prior to his appointment as ambassador, Garza served as Texas’ secretary of state from January 1995 to November 1997 and was also chairman of the Texas Railroad Commission. He is currently a lawyer specializing in cross-border issues at White & Case, which was recently named the most innovative firm in North America for 2020 by the Financial Times. He is also currently a director at both Kansas City Southern and MoneyGram.

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