Canada and Mexico Face Uncertainty of NAFTA Renegotiation

By Daniela Stevens*

Two men stand at podiums with Mexican and Canadian flags behind them

Canadian Prime Minister Justin Trudeau gives a presentation with Mexican President Enrique Peña Nieto during an official visit to Mexico in October 2017. / Presidencia de la República Mexicana / Flickr / Creative Commons

Facing the growing possibility that the Trump Administration is walking away from the North America Free Trade Agreement (NAFTA), Mexico and Canada are beginning to look for trading partners beyond the United States.  The interdependencies binding the three are strong.  Both Mexico and Canada have deep commercial ties with the United States, which imports about 80 percent of Mexico’s exports and about 70 percent of Canada’s.  Both have significant leverage vis-à-vis the United States as well.  U.S. auto and agriculture industries have a major stake in free trade with Mexico, which also provides important cooperation on security issues and controlling Central American migration.  Liberalization measures within the energy sector by the current Mexican administration make Mexico a strategic partner in terms of energy security.  Canada buys about 19 percent of U.S. exports.

But these ties are fraying as conversations drag on.  Trump Administration proposals are hurting the talks; especially contentious are changes in the “rules of origin” (since the United States proposed increasing the U.S. content of autos to 85 percent from the current 62.5 percent) as well as the inclusion of a “sunset clause” that would make NAFTA expire unless it is renegotiated every five years.  NAFTA’s Article 2205 lets either of the three member countries announce its withdrawal from the accord with six months’ notice.  Canadian and Mexican trade officials have not given such notice yet, but they show signs of heading in that direction.  Both have held high-level meetings with counterparts from South America and Europe, according to official and non-government sources.

  • Mexican President Peña Nieto’s administration has expressed a preference for leaving the negotiations over accepting “a free trade agreement that ceases to promote free trade.” President Trump has said that his administration would be willing to negotiate a free trade agreement with Canada alone if the NAFTA talks fail.  However, Canadian Prime Minister Trudeau’s government has stated a preference for keeping the trilateral alive rather than resorting to bilateral agreement, since the terms of the U.S.-Canada deal were more outdated than the NAFTA’s.  The two presidents have been reluctant to take these actions because they apparently believe, as do many experts, that dismantling NAFTA would inevitably create uncertainty and inefficiencies for the three economies.  For example, the auto sector relies on three-way product flows that move several times across borders to be assembled into finished products.  Canadian and Mexican auto parts makers have a direct stake in each other’s dealings with the United States.  Even small duties would add up.
  • Nonetheless, some increased trade and a bilateral free trade agreement between just Mexico and Canada is possible. The two countries originally joined NAFTA to protect their access to the U.S. market, not to obtain access to each other’s.  Canadian public opinion and media reflect continued disinterest in Mexico, which is viewed as unstable due to drug-related criminality and corruption.  However, as the completion of a satisfactory NAFTA renegotiation is unlikely, Canadians are exploring deepening the bilateral link.  Mexican interest in Canada is also growing, according to some specialists.  Beyond North America, moreover, Canadians and Mexicans are exploring trade and investment diversification.  Canada is looking for increased cooperation with Latin America, in particular within the Pacific Alliance, a free trade partnership that includes Mexico, Chile, Peru and Colombia, and of which Canada is already Associate Member.  Mexico started a renegotiation last January of its free trade agreement with the European Union, which parties hope to finalize in the next few days.  It has begun warming up neglected ties with the Southern Cone and has already pledged to deepen ties with China.

Trade experts convened recently within the framework of American University’s Robert A. Pastor North America Research Initiative (NARI) were unanimous that that a trilateral agreement that protects the interests of all three partners would be the optimal outcome, but few observers of the NAFTA talks are confident that the Trump Administration will soften its position.  Canada’s commitment to a trilateral renegotiation should exert more pressure on the U.S. to compromise while strengthening both Canada and Mexico’s negotiating positions.  In the event of U.S. withdrawal from NAFTA, however, the two can expand their trade and investment relationship by lowering barriers further through modernization and e-commerce.  In addition, trade can potentially expand between the two since they have similar approaches to achieving various commitments of the Paris Accord involving energy projects and greenhouse gas emissions reductions.  Pastor Scholars concluded that both countries will have to carry out public campaigns to explain to their constituencies the benefits of continued cooperation, either trilateral or bilateral, if the United States significantly alters or abandons NAFTA.  Mexico and Canada have options outside North America in the quest for trade and investment diversification – even though their preferred scenario is a stronger NAFTA.  China, South America, and the European Union arise as the most readily available partners.

December 21, 2017

*Daniela Stevens is a Ph.D. Candidate in the American University School of Public Affairs and a Pastor Scholar.  Her research focuses on national and subnational policies that put a price on carbon emissions.

Cuba: Trump Actions Strengthening Hardliners

By Fulton Armstrong and William M. LeoGrande

Two buildings in a composite photo

On the left, the U.S. Embassy in Havana; on the right, the Cuban Embassy in D.C. / U.S. Government Accountability Office / Flickr / Creative Commons

As the end of Raúl Castro’s presidency approaches, Trump Administration actions halting, if not reversing, the process of normalizing relations with Cuba have tilted debate in Havana in favor of hardliners trying to keep the brakes on economic reform and on constructive relations with Washington.

  • In retaliation for alleged “sonic attacks” against U.S. diplomats in Havana, Secretary of State Rex Tillerson’s ordered departure of staff from the U.S. Embassy in Havana, the closure of the U.S. consulate, and the expulsion of Cuban consular and commercial staff in Washington –has put a chill on bilateral relations that ratifies Havana hardliners’ contention that Washington cannot be trusted. By halting the issuance of visas to Cubans in Havana, the Trump Administration will almost certainly violate the 1994 migration accord committing the United States to issue at least 20,000 immigrant visas to Cubans annually.  That would rupture the longstanding bipartisan consensus in Washington that bilateral cooperation on migration serves an important U.S. interest in safe and orderly migration.
  • The State Department’s unwillingness to share meaningful information on the U.S. diplomats’ mysterious symptoms – underscored by the Embassy’s refusal to use a hotline established for Cuba to investigate alleged attacks real-time – has frustrated pro-normalization Cubans, who face conservatives’ claims that Washington is cynically exploiting the incident to embarrass Cuba and return to a policy of hostility and regime change.
  • Other Trump measures reinforce Cuban conservatives’ efforts to limit the growth of the country’s nascent private sector, particularly entrepreneurs who profit from U.S. visitors and need easy travel to import inputs from the United States. A travel warning issued in conjunction with the withdrawal of U.S. diplomats is causing a sharp drop in U.S. travelers, and new regulations abolishing individual people-to-people educational travel are channeling people into large hotels, away from private bed and breakfast rentals.  A prohibition on doing business with companies and hotels allegedly linked to the Cuban military is not pushing new clients to cuentapropistas’ businesses but instead is discouraging travel and commerce in general.  Cuban reformers are further dispirited by the perception that Washington is shifting back to the erroneous view that it can promote regime collapse by tightening the economic screws on the government, thereby reinforcing a siege mentality among senior leaders and discouraging needed economic reforms as too risky in the current environment.
  • Trump’s actions have so closely dovetailed with the agenda of Cuban hardliners that some people speculate it was opponents of reform inside the Cuban government who perpetrated the mysterious “sonic attacks” to provoke a confrontation with Washington. But there is no evidence whatsoever in support of that theory, and for anyone to sabotage Raúl Castro’s opening to Washington – one of the signal achievements of his presidency – would be to commit political (if not literal) suicide.

Implementation of Raúl Castro’s road map for economic change, embodied in the 311 lineamientos approved in 2011 and the Conceptualización of Cuba’s socialist model approved by the Communist Party congress last year, had already slowed before Trump’s sanctions due to Cuban concerns about growing income inequality during a period of poor economic performance, uncertainty about energy imports, and perhaps the 86-year-old president’s own level of energy and state of mind after the passing of his two brothers (Ramón and Fidel both died in 2016).  Widely discussed political reforms, such as the Electoral Law and the Law on Associations, that were expected months ago have yet to be unveiled.  The Trump Administration’s efforts to expedite regime change by curtailing financial flows to the government and by promoting private sector growth at the expense of state enterprises make it easy for Cuban hardliners to rally support for slowing reforms.  Ever since he launched the reform process in 2011, Castro has insisted it would move ahead, “Without haste, but without pause.”  Lately, in part because of the Trump Administration’s actions, there’s a lot more “pause” than “haste.”

The election of First Vice President Miguel Díaz-Canel to succeed Raúl as president seems to be a foregone conclusion of the ongoing multi-tiered election process that culminates in February, but no one outside the two men’s inner circle seems to know how or when next steps on reforms will be sequenced.  Raúl’s focus has been on creating processes and institutions for governing after he steps down, rather than achieving particular results between now and the formalities confirming Díaz-Canel.  One thing that is near-certain, however, is that the successor’s legitimacy will be determined by performance, not his surname or soaring oratory.  Tackling the really big reforms that loom ahead, such as currency and exchange rate unification, will require political will from a relatively unified leadership.  Cuba has long been adept at dealing with U.S. sanctions and pressure, so Trump’s policies are more an irritant than a threat, but the effect they have in Havana is to slow the implementation of changes that would improve the standard of living of ordinary citizens and to reduce the willingness of Cuba’s leaders to engage with Washington in ways that would serve the interests of both countries.

 December 18, 2017

Colombia: Effective Transitional Justice?

By Ana Isabel Rodríguez Iglesias*

A large open square surrounded by buildings in Colombia

A view of the Colombian Congress building. / Fernando Garcia / Flicr / Creative Commons

Just hours before its “fast-track” authority for such legislation expired, the Colombian Congress in late November approved legislation establishing the Special Jurisdiction for Peace (JEP) with a weaker mandate than envisioned in the peace accord.  It covers only armed combatants – and excludes the civilians who financed the paramilitaries and other irregular forces – and falls short of enshrining the authority of the JEP magistrates.  This outcome was the result of obstructionism not only by the opposition parties led by the Centro Democrático of former President Álvaro Uribe and its Conservative Party allies; current President Juan Manuel Santos’ political partners in Cambio Radical, including leader Germán Vargas Lleras, broke with the government several months ago and made criticism of the peace agreement a centerpiece of the presidential campaign.  After much wrangling, the watered-down proposal for JEP passed on November 29.

  • The Constitutional Court still has to rule on the constitutionality of the new law, but most provisions apparently face no opposition. The Court unanimously approved the law giving Congress the authority to form the JEP and ruled on some sensitive measures.  It confirmed, for example, that members of the FARC could participate in politics without first being judged by the JEP as long as they promise to submit to the tribunal.  The Court also said that the JEP will determine on a case-by-case basis if FARC politicians’ responsibilities are compatible with fulfilment of their sentences.  It left many details, however, to the Tribunal.
  • The most controversial point in the Court’s decision that provided the framework for the Congressional vote is that civilians and state agents outside the armed forces will not be under the JEP’s jurisdiction unless they opt to be (such as when they expect more leniency than from the ordinary judicial system). That includes businessmen and politicians who financed paramilitarism – a provision that the opposition and Cambio Radical fought hard for.  (During legal proceedings involving demobilized paramilitaries under the Justice and Peace Law, former combatants mentioned their civilian sponsors more than 11,000 times.)  Victims and human rights organizations have called the decision an attack on their interests and stated it will bring only more impunity in the post-conflict era.

The Congress also took steps that, on balance, weakened the JEP’s authorities.  It excluded from JEP processes any FARC members accused of sexual crimes against minors.  The ordinary judicial system will have greater difficulty investigating and corroborating facts and, combined with delays and problems with impunity, could very well fail to satisfy the rights of either victims or perpetrators.  Another change made by Congress was to disqualify JEP magistrates who had worked as lawyers on cases involving human rights and armed conflict during the last five years.  Critics claim this article is illegal because it changes the rules of the game months after the magistrates were selected based on specific requirements such as knowledge and professional experience in human rights law.  Even though the Constitutional Court most likely will declare the provision unconstitutional, the fact that Cambio Radical proposed these disqualifications raises the prospect of more tensions in coming months and the continued stigmatization of human rights defenders at time that many face security threats in the country.

Rhetoric during the peace negotiations and subsequent political skirmishes that the victims were front and center in the formation of the JEP is proving to ring hollow.  The JEP starts its mission weakened both by the Constitutional Court and now by Congress.  The magistrates will face strong political pressures, and the exclusion from proceedings of the sponsors of paramilitary violence, which during the war at times surpassed by far that of FARC combatants, already complicates matters.  Ensuring the rights of the victims, providing justice, and determining the appropriate role for former guerrillas in politics and their reincorporation into society will be no easy task.  It will be up to the Colombian people, through popular vote in elections next March, whether a successor government will improve implementation of the peace agreement and the administration of justice, truth, and reparation to the war’s eight million victims.

December 13, 2017

* Ana Isabel Rodríguez Iglesias is a Ph.D. Candidate in International Politics and Conflict Studies at the University of Coimbra (Portugal) and a CLALS Fellow.

How Will Cuba Update its Drug Policy?

By Isabella Bellezza-Smull*

A graffiti street sign

A “Say no to drugs” sign spotted in Santiago de Cuba. / tgraham / Flickr / Creative Commons

Cuba – unlike neighbors long wracked by the drug trade and its violence – has one of the lowest drug-use and homicide rates in the Western Hemisphere, but national drug experts are debating how to adapt the country’s strategy to new challenges.  The debate is taking place amid positive evaluations by the Cuban government, the U.S. State Department, and others that indicate rates of illicit drug consumption, production, and retail in Cuba have been negligible, while reliable anecdotal information suggests a rise in drug use and transit as the country opens its doors to foreign trade, travel, and allows emergence of a domestic private sector.

  • Cuba credits its success to a comprehensive approach that includes confrontation, collaboration, prevention, and treatment. In conversation with U.S. drug enforcement counterparts, Cubans emphasize tough-on-drugs policies, including sanctions for drug possession, production, and trafficking, and to the effectiveness of the anti-drug police force, interdiction operations, and some 40 bilateral counternarcotics agreements.  To other partners, they stress multi-sector, humanistic prevention and treatment efforts directed by the Comisión Nacional de Drogas (CND).  The CND coordinates national health, education, justice, and community sectors to prevent and delay the initiation of drug use – and to treat it as a public health issue when it does occur.  Even though drug possession is a crime, the diversion of illicit drug users from the criminal justice system to health clinics has been an important element of national strategy.

Despite its successes, Cuba faces a number of challenges with respect to illicit drugs.  If Cuba continues to increase tourism and diversify its foreign trade, the possibility of drugs – and recreational drug cultures – reaching Cuban shores will increase, putting further stress on the country’s “just-say-no” approach.  The emergence of a class of Cuban entrepreneurs with increased disposable income could create a new appetite for drugs, and the possible exacerbation of economic inequality could make the illicit-drug market attractive, whether as producers or retailers.  A well-established context of informal markets and back-channel networks already exists that could be repurposed to distribute drugs.

Cuba’s robust public health, educational, and community-based institutions – the basis of protective factors related to drug abuse – afford the country an opportunity to adopt a more progressive approach to drug control.  The CND remains publicly committed to prohibition and fighting illicit drugs, but there are also signs that alternative strategies are being considered.  Cuba’s leading research center for drug treatment, the Centro para el Desarrollo Académico sobre Drogodependencias (CEDRO), is beginning to explore harm-reduction measures as an alternative to abstinence-based approaches – acknowledging, as its coordinator has said, that “not everyone who comes to consultation is willing to assume abstinence.”  Decriminalization of drug-use and possession appears extremely unlikely, even though studies in other countries show it reduces high-risk behaviors that increase the spread of infectious diseases and death from overdose, the diversion of law enforcement resources from serious criminality, and exploding prison populations.  More likely, Cuba’s debate probably will touch on adopting harm-reduction measures to treat and prevent problematic drug use, and investing in alternatives to incarceration for nonviolent, low-level participants in illicit drug markets involved in production, transport, and sale.

December 7, 2017

* Isabella Bellezza-Smull is Latin America coordinator for Global Exchange.  This article is adapted from a study – Will Cuba Update its Drug Policy for the Twenty First Century? – that she prepared for the Igarapé Institute in Rio de Janeiro.

Honduras: Hernández Stealing the Election Too?

By Eric Hershberg and Fulton Armstrong

Two men sitting in chairs looking at each other.

Honduran President Juan Orlando Hernández and U.S. Vice President Mike Pence. / Embassy of Honduras / Creative Commons

Honduran President Juan Orlando Hernández and the military have declared a “state of emergency” – tantamount to martial law – to ensure that the President wins a second term, but irregularities in the vote-counting and the harsh suppression of the opposition probably will poison political discourse and hinder democratic progress for years to come.  The government declared the emergency, which will run for 10 days, on Friday night after days of growing tensions over mysterious actions by the Supreme Electoral Tribunal (TSE) – heavily stacked in favor of Hernández – that erased opposition candidate Salvador Nasralla’s five-point lead earlier in the week and moved toward formalizing the incumbent’s victory by 1.5 percentage points.  Senior government officials themselves have characterized the action as a “suspension of constitutional guarantees.”  Hondurans are now living under a dusk-to-dawn curfew; radio and TV stations have been warned against publicizing opposition claims of fraud; and street confrontations are growing.  Media confirm several deaths, but opposition leaders say that more than a dozen demonstrators have been killed.  Opposition videos showing military and police violence, including chasing individual protestors and shooting them, have been removed from Facebook and other venues, although still photos of the victims can be found.

  •  The TSE has agreed to hand-count about a thousand ballot boxes with “irregularities” in three of 18 departments, representing about 6 percent of the votes, but the opposition claims that several thousand more boxes have been compromised and need to be reviewed.

International reaction has been mixed and generally muted.  The EU’s observers have held firm on demanding a full vote count and expressing, diplomatically, skepticism about TSE’s handling of it.  Observers for the “Grupo de Lima,” which has been active on the Venezuela issue, issued a “position” paper on election day (November 26) urging calm and patience with the vote count, but it has released no apparent updates since then.  OAS observers have taken a similar low-key position.

  • Although the Trump Administration may conceivably be working behind the scenes, neither the White House nor State Department has done publicly more than urge calm. Vice President Pence, who previously praised Hernández “for his leadership in addressing security and governance challenges,” has remained silent.  The U.S. chargé d’affaires has said Honduras is in “a new, unprecedented phase in the electoral process” but limited herself to calling for calm and a full vote count.

The audacity of this apparent election fraud and crackdown on Hernández’s opponents dwarfs the many other charges of corruption brought against the Hernández government, including some validated by the OAS Mission to Support the Fight against Corruption and Impunity in Honduras (MACCIH).  Although different in form from the coup in 2009, these events also threaten to undermine the nation’s political stability, economic wellbeing, and institutions necessary to building democracy.  The U.S. reaction suggests that Washington will acquiesce in the ongoing abuses and Hernández’s second term despite the obvious irregularities and rights violations.  The United States – convinced as in the past that political leaders who are “our SOBs” can make good partners – has often countenanced dubious elections.  Moreover, both the Obama and Trump Administrations were persuaded that Hernández has been their faithful, effective ally in combating the drug trade, despite evidence of official involvement in it, and the temptation to turn a blind eye to less-than-democratic political outcomes must be strong.

  •  The OAS, the “Lima Group,” and other intraregional groupings do not appear poised to weigh in despite their good intentions. Neither do Mexico, Guatemala, and El Salvador appear likely to condemn a neighbor for engaging in practices that are ongoing or fresh in their own near pasts.  The Inter-American Democratic Charter, a historic document laying out hemispheric values, is of little value in the absence of the political will and ability to enforce it.  Now is a crunch time both for the OAS and for those governments that advocate some teeth to the charter.  At this point, they appear likely to cave – to the detriment of democracy in Latin America.

 December 4, 2017