July 2020, Volume 26, Number 3
The United States-Mexico-Canada Agreement replaced NAFTA on July 1, 2020, with some new provisions still to be implemented. A major goal of USMCA is to change Mexican labor laws so that workers can form independent unions and bargain for higher wages. Mexico enacted labor law reforms in 2019, but internal opposition has slowed their implementation, helping to keep Mexican wages low.
The USMCA allows workers and unions to file complaints of violations of labor laws and can lead to products made in violation of national labor laws being blocked from free trade in North America. US unions say that activists who try to form independent unions in Mexico continue to be harassed and arrested.
Mexico?s president Andr?s Manuel L?pez Obrador (AMLO) made his first foreign trip to Washington DC in July 2020 to commemorate USMCA; Canada?s Prime Minister did not attend. AMLO acceded to Trump?s demands to reduce the flow of Central Americans who transit Mexico to the US in order to preserve free trade.
Canada. Canada endured a recession in summer 2020 as a result of the Covid-19 shutdown and the falling price of oil. The unemployment rate was expected to double or triple from the 5.7 percent rate in 2019.
Some 60,000 temporary foreign workers were employed in Canadian agriculture in 2019, up from 45,000 employed on 3,600 farms in 2015. Some 15,000 guest workers were employed in 680 greenhouse operations, 12,000 on 670 vegetable farms, and 10,500 on 825 fruit farms, that is, over 80 percent of guest workers were employed in FVH agriculture.
Migrant guest workers from Mexico and the Caribbean were deemed essential and allowed to enter Canada despite closed borders, but were required to quarantine for 14 days before going to work. After going to work, over 600 Mexican farm workers contracted Covid-19 by June 2020, prompting the Mexican government to stop more migrants from traveling to Canada for a week until improved safety protocols were in place.
The Mexican government said that 26,400 Mexicans worked in Canada in 2019 and remitted $250 million.
Scotlynn Group in Vittoria abandoned 450 acres of asparagus in June 2020, meaning that an eighth of the 3,750 acres of asparagus in Ontario was abandoned after seven guest workers got Covid-19 and the other 210 were quarantined. Scotlynn admitted that it waited too long to seek local workers to replace the sick guest workers.
Mexico. The economies of Mexico and Latin America shrank as businesses and factories closed to prevent the spread of the coronavirus. Export-dependent economies were also hurt by reduced demand and prices for oil and other commodities, while fewer tourists and remittances reduced the inflow of foreign exchange.
Latin America has eight percent of the world?s people, but had half of the world?s new Covid cases in June 2020. Covid was sometimes introduced into highly unequal Latin American countries by the mobile rich who transferred the disease to their maids and gardeners, who in turn transmitted Covid to their relatives. Obesity and other underlying conditions increase deaths among those who contracted Covid-19.
Mexico?s economy is projected to shrink by 10 percent in 2020, which is likely to increase the number of Mexicans in poverty by 10 million to 12 million.
Mexican President AMLO proposed an additional $25 billion for social programs and infrastructure projects to stimulate the economy, financed in part by reducing the salaries of government officials and spending less on supplies. AMLO has been reluctant to increase Mexico?s debt, but wants to continue spending on the Maya Train in the country?s southeast, the Santa Luc?a airport north of Mexico City, and the $8 billion Dos Bocas oil refinery on the Tabasco coast.
AMLO relies increasingly on the 300,000 strong Mexican army, which is building the $3.2 billion Santa Luc?a airport and supervising the 75,000 strong National Guard; 80 percent of National Guard members are also in the army. Mexico?s army is also expected to build two sections of the 950-mile, $6.3 billion Maya Train that will have 15 stations to attract tourists to Mayan sites. AMLO is considered authoritarian, and reportedly likes the army?s can-do response to orders.
AMLO?s handling of Mexico?s response to Covid-19 was widely criticized, reducing his popularity below 50 percent for the first time since he took office in December 2018. Women?s groups denounced AMLO?s dismissal of a record number of calls to domestic violence hotlines during the lock down; AMLO said that most of the calls were ?fake.?
Business leaders pressed AMLO to endorse a stimulus package, citing widespread layoffs as the economy shrinks by a projected 10 percent. The Mexican stimulus package is equivalent to one percent of GDP, compared with the 10 percent of GDP stimulus packages of Brazil and Chile.
Mexico has hundreds of factories in border cities that assemble electronics and produce parts for US firms. As US factories began to reopen in May 2020, they asked the Mexican government to reopen factories that provide them with parts, arguing that their final products were essential. In some Mexican states, state governments tried to shut down factories that did not provide workers with masks and take other steps to prevent the spread of coronavirus.
Mexico has the lowest rate of testing for Covid-19 among OECD countries; less than one test per 1,000 residents compared to an average 23 per 1,000 throughout the OECD. The Mexican government reported relatively few deaths from Covid-19; experts said the Covid-19 death toll was far higher.
The AMLO government reduced health care spending before the pandemic. Many nurses and other health care workers complained of too little protective equipment; up to 20 percent of Mexicans infected with Covid-19 are health care workers.
The Jalisco New Generation Cartel (CJNG), which controls a third of drug shipments to the US, attacked Mexico City?s police chief in June 2020, killing three but not the chief. Mexican drug cartels usually bribe rather than attack federal and state government officials. Over 35,500 people were killed in Mexico in 2019, which authorities blaming competition between the Jalisco Cartel and other drug gangs.
The CJNG emerged as an ally of Joaqu?n ?El Chapo? Guzm?n in 2010, and became independent in 2013, recruiting teen juvenile delinquents and developing a reputation for brutality. The US has $10 million reward for information that leads to the arrest of CJNG leader Nemesio Oseguera Cervantes (El Mencho).
Northern Triangle. The governments of El Salvador, Guatemala, and Honduras locked down their countries to prevent the spread of the coronavirus, slowing the exit of migrants bound for Mexico and the US. Smugglers reported that migrants who wanted to apply for asylum in the US were unwilling to pay $10,000 and risk being turned back without being able to apply.
El Salvador has been governed by two parties that alternated in power since the end of civil wars in the 1990s, a pattern disrupted in 2019 when ex-San Salvador mayor Nayib Bukele became president and promised to reduce violence. By 2020, Bukele was relying more on the military and police to confront gangs and to enforce strict quarantine orders, setting the stage for a return to authoritarian government.
Caribbean. The economies of islands dependent on tourism suffered due to travel restrictions imposed in the wake of Covid-19. As travel resumed in July 2020, some islands restricted the arrival of Americans to those with negative Covid-19 tests. Islands that depend on cruise ship passengers were especially hard hit.
Puerto Rico continues to struggle with the aftermath of hurricanes and earthquakes as well as a debt crisis. The Puerto Rico government had less than $40 billion in debt in 2006, when federal tax advantages for mainland investors expired. Unable to raise taxes and unwilling to cut spending, the Puerto Rico government took on more debt, over $70 billion by 2016. Congress appointed a board to restructure Puerto Rico?s debt, which has led to budget cuts and clashes with Puerto Rico?s elected government.
Brazil. Many South American farmers complained that restrictions on internal travel made it difficult to recruit migrant workers. Brazil?s coffee harvest depends on local and migrant workers, but the migrants in May 2020 were often blocked from moving from their homes in the northeast to the richer southern Brazilian states that produce most of Brazil?s coffee, citrus and sugar.
A third of Brazil?s arabica beans are harvested by hand, and all of the robusta beans are hand harvested, in part because many coffee trees are planted on hills that are not suited to machines. Brazil expects 45 million 60-kg bags of arabica and 15-million bags of robusta beans in 2020.
Brazil had over 1.5 million Covid-19 cases by July 2020, second only to the US, as President Jair Bolsonaro downplayed the threat while some governors and mayors ordered lockdowns. In Brazil, Ecuador and Peru, emergency funds to purchase protective and hospital equipment were sometimes squandered on inferior items at high prices, highlighting the corruption that helped to spread the virus and made it harder to treat the sick.
Guyana. ExxonMobil began pumping light sweet crude oil from fields 125 miles off the coast in summer 2020, potentially making Guyana the richest country in the Americas. A barrel of oil contains 42 gallons and currently sells for $40; a million barrels a day generates $40 million in gross revenue. Guyana is to receive 52 percent of the profits from the offshore oil, less than the usual 65 to 85 percent.