By ANTONIO GARZA, former U.S. ambassador to Mexico
We’re just days away from the Opening Ceremony of the 2022 Olympics Games in Beijing. The games open amid an outcry over China’s ongoing human rights abuses, a lukewarm diplomatic boycott of the winter games by the United States and its allies, and with the world’s focus largely on heightened tension over Ukraine.
In Beijing, Russian President Vladimir Putin will meet with his Chinese counterpart Xi Jinping to discuss Moscow’s talks with NATO. This week, the United States and NATO allies remain on alert regarding the Russian buildup of more than 100,000 troops along Ukraine’s borders.
Amid rising political tensions and a lack of clarity about the covid-19 pandemic’s future, the global economy faces a high level of uncertainty. Last week, the International Monetary Fund (IMF) warned in a new assessment that economic downturns in China and the United States will be more severe than anticipated last October, and it reduced its 2022 global growth rate estimate from 4.9 percent to 4.4 percent. The repercussions will drastically impact countries around the world, which will continue to face high rates of inflation, supply chain hiccups, and labor shortages in critical sectors.
The outlook for Mexico’s economy is also looking more somber than previously forecasted. In 2021, Mexico’s GDP contracted in the third and fourth quarters, and Mexico ended the year with an annual inflation rate of 7.3 percent — the highest in 20 years. Starting off 2022, moderate U.S. growth will impact Mexico’s external demand. Last week, the IMF downgraded its 2022 projections of Mexico’s GDP growth by 1.2 percent to 2.8 percent.
Omicron also presents new challenges for Mexico’s economy, fragile health system, and tourism industry. This week, the Centers for Disease Control (CDC) added Mexico to a list of countries U.S. travelers should avoid due to high levels of covid-19 infections.
As we begin a new year, Mexican President Andrés Manuel López Obrador maintains a high approval rating of more than 60 percent. He controls both chambers of Congress, though he lost the supermajority in last year’s midterm elections. With such strong support and a fractured opposition, López Obrador is expected to win the recall election for his presidency on April 10 by a landslide. His allies are also projected to increase the number of states they control in June’s gubernatorial elections, which will be held in Hidalgo, Durango, Tamaulipas, Oaxaca, Quintana Roo and Aguascalientes.
López Obrador’s actions to concentrate power in the executive branch and give preference to state-run industries continue to concern investors and strain U.S.-Mexico affairs. On Jan. 21, U.S. Energy Secretary Jennifer Granholm traveled to Mexico City to meet with López Obrador on his proposed energy reform that would give the government greater control over the country’s energy market. The U.S. delegation expressed concern that the initiative would hinder U.S. investment in Mexico and impede progress on clean energy and climate change. Mexico’s legislators have yet to set a date to vote on the reform, but the vote could take place as soon as March and it is expected to pass.
On trade, the United States remains at odds with Canada and Mexico over compliance under the United States-Mexico-Canada Agreement (USMCA). The U.S. trade minister is currently reviewing Mexico’s energy reform to assess if it violates the USMCA. And recently, Mexico and Canada requested a USCMA panel to resolve a dispute with the United States over rules of origin in the auto manufacturing industry.
Earlier this week, the Joe Biden and López Obrador administrations met to discuss the action plan for the recently launched U.S.-Mexico Bicentennial Framework for Security, Public Health and Safe Communities. However, huge challenges remain to create robust bilateral cooperation on security, which has been severely diminished during López Obrador’s first three years in office. While homicides in Mexico slightly declined slightly in 2021, four Mexican journalists were murdered in the first month of 2022 alone. Security experts assess that the outlook for crime and violence in 2022 remains discouraging.
The Biden administration continues to rapidly expel migrants who cross the U.S. southern border – often repeatedly – under the CDC’s Title 42 public health order. It also continues to request that Mexico implement restrictive measures to stop migrants from reaching the border. In January, Mexico announced new requirements that Venezuelans obtain a visa to travel to Mexico as tourists, following similar restrictions for Ecuadorians and Brazilians last year.
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.