January 2022, Volume 28, Number 1
President Biden met PM Trudeau of Canada and President AMLO of Mexico in November 2021, resuming the annual Three Amigos meeting after a five-year break. Canada complained that limiting the proposed $12,500 full tax credit in the BBB for buying electric vehicles to those that are made with US batteries and US union labor violated the USMCA. Mexico resisted US complaints about AMLO’s policies that favor state-owned energy and electricity firms.
Migration may be the most contentious Mexico-US issue. Both countries are dealing with Central American migrants. Mexico can facilitate or block the flow of Central Americans who arrive in the south and want to transit Mexico to the US border. By cooperating to manage migration, Mexico likely limits criticism of AMLO’s anti-democratic policies that include attacking critical journalists, professors and NGOs.
Canada. The government plans to admit 400,000 immigrants a year over the next three years, which would increase the country’s population by over one percent a year via immigration.
Atlantic Canada includes four poorer provinces and 2.5 million people that often send young people to richer provinces further west for opportunity. So-called “come from awayers” have moved to Newfoundland during the covid pandemic for low living costs, and are generally welcomed as stabilizing the population even as their arrival pushes up housing prices.
In the first decision by a dispute resolution panel under the USMCA, Canada’s use of a tariff-rate quota system to limit US dairy imports was deemed unlawful. Canada has about 11,000 dairy farms, many in rural Quebec, and uses a supply management system to ensure that higher cost Canadian milk is sold before imports.
Mexico. The government reported that an average 4,000 migrants entered Mexico from Guatemala every day in 2021. Most were from El Salvador, Guatemala, Haiti and Honduras, and most wanted to transit Mexico to apply for asylum in the US. The National Immigration Institute (INM) has tried to keep migrants who are headed to the US in the city of Tapachula, Chiapas.
A tractor-trailer truck carrying 150 migrants in Chiapas overturned in December 2021, killing at least 55 migrants. Authorities said that smuggling networks charge 60,000 pesos ($2,900) to transport migrants from the Guatemala-Mexico border to the Mexico-US border, often using stolen trucks that are painted with well-known company logos in order to avoid detection as they pass through Mexico.
Refugee agency COMAR received 50,000 asylum applications from Haitians in 2021, more than the total number of asylum applications that Mexico received from all countries in 2020. Some 6,000 Haitians applied for asylum in Mexico in 2020.
Wages. Mexico’s CONASAM agency announced that the minimum wage would increase to 173 pesos ($8) a day in 2022, and 260 pesos ($12) a day in border areas. Mexico’s minimum wage rose 16 percent in 2019, 20 percent in 2020, 15 percent in 2021, and 22 percent in 2022.
CONASAM said that the 22 percent increase was the most since 1987, and will restore the purchasing power of the six million workers who earn the minimum wage to what it was in 1985. Most workers earn more than the minimum wage, typically $2 to $3 an hour in manufacturing and export agriculture. Mexico had 20.6 million formal sector jobs registered with the social security system IMSS at the end of 2021, up almost 850,000 from the end of 2021.
Economists debated the impacts of Mexican minimum wage increases. AMLO supporters say that minimum wage increases increase consumption among low earners, boosting employment without increasing inflation. However, other studies find that the minimum wage increases accelerated inflation, especially in the border areas where the wage increase was largest. This inflationary effect was offset in part by a reduction in the value-added tax.
Poverty. Mexico’s 15 poorest municipalities are places where over 99 percent of residents are poor; most are in the southern states of Oaxaca (eight) and Chiapas (six). Coneval’s poverty threshold is 3,898 pesos (US $187) a month in urban areas in 2021 and 2,762 pesos (US $133) in rural areas.
Coneval defines poverty as having an income below the urban or rural income level and at least one of six social deficiencies such as poor access to adequate nutrition, housing and healthcare. Extreme poverty is an income below 1,850 pesos a month in urban areas and 1,457 pesos in rural areas and at least three social deficiencies.
Coneval reported that the richest municipalities were in northern Mexico states such as Nuevo Leon. The suburbs of Monterrey have a level of human development comparable to that of Europe.
The US blocked fresh tomato imports from Agropecuarios Tom (San Luis Potosí) and Horticola Tom (Michoacán) in October 2021 after identifying at least five of the 11 ILO indicators of forced labor among workers at these farms, including deception, withholding of wages, debt bondage, and abusive working and living conditions. The farms, which employ 600 workers, were investigated by Mexican labor authorities in October 2020, resulting in back wages paid to some workers. The Mexican government promised to revisit the farms after the CBP blocked imports from them.
Haiti. Conditions in Haiti deteriorated in fall 2021 as competing gangs took control of various elements of critical infrastructure such as fuel delivery. Kidnapping became rampant, including the abduction of 16 American missionaries for whom a ransom of $1 million each was demanded. Police are unable to control the gangs, who often have more and better weapons than the police because of their connections to corrupt government officials.
Crime and the deteriorating economy prompted more Haitians to attempt to leave by sea for the Bahamas and other nearby islands, paying $250 for spots on fishing boats. Those intercepted at sea and returned to Haiti say they will try again. Haiti shares a land border with the Dominican Republic, which guards the border and conducts raids to detect and deport unauthorized Haitians.
Hurricane Maria exposed the vulnerability of the electrical grid in September 2017, exposing neglect and corruption at the Puerto Rico Electric Power Authority (PREPA) that generated and distributed power. The transmission and distribution system was privatized to LUMA, but bankrupt PREPA continues to generate power from plants that are frequently off line.
Mastronardi Produce, a leader in controlled environment ag (CEA), in December 2021 agreed to help Agropark Panama to produced tomatoes and other vegetables indoors for export.