CEO Executive Summary

The sixth round of the NAFTA negotiations made real progress, but the final outcome of this process remains far from certain. The round closed one chapter, generated productive discussion on two of the U.S. “poison pill” demands, and saw a much more positive overall tone to the talks, notwithstanding some tough talk from Amb. Lighthizer directed, this time, to the Canadians. Concerns that the U.S. will withdraw also receded somewhat. Still, none of the main differences between the U.S. and its NAFTA partners were resolved, suggesting that the talks will extend well beyond March, possibly into late 2018 or early 2019. Beyond NAFTA, U.S.-Mexico relations continued to feel the weight of President Trump’s persistent use of Mexico as a political piñata, including a new poll that shows a majority of Mexicans hold a negative opinion of the United States.

The Mexican economy recovered from its earthquake-induced weakness at the end of 2017, while inflation receded, and the peso strengthened during the first weeks of 2018. But the real economic news last month was the great success of the January 31 auction of production rights for a series of deep water petroleum fields. The auction generated 1.5 times more revenue for the government than all previous rounds combined.

On the political front, primary campaigning for the Mexican Presidential election is drawing to a close, and Andrés Manuel López Obrador continues to lead in the polls although his lead over Ricardo Anaya of the PAN/PRD alliance has been reduced significantly. Meanwhile, support for José Antonio Meade of the ruling PRI party plummeted to a distant third while the likely independent candidates continue to poll in the single digits.

Full Newsletter: Monarch News – February 2018