Mexico Found Another Door

Sí, pero también hay que entender la geografía.

Yes, but you also have to understand the geography.

México está al lado de Estados Unidos.

Mexico is next to the United States.

Es muy difícil ignorar a tu vecino más grande cuando es también tu mercado más cercano.

It's very hard to ignore your biggest neighbor when it's also your closest market.

Fair.

And from the European side, what are they actually getting here?

Europe is not exactly short on trade partners.

Para Europa, México es interesante por varias razones.

For Europe, Mexico is interesting for several reasons.

Primero, México es una economía grande, la segunda en América Latina.

First, Mexico is a large economy, the second largest in Latin America.

Segundo, México tiene acceso al mercado de Estados Unidos y Canadá.

Second, Mexico has access to the US and Canadian market.

And that second point is significant.

If a European company invests in Mexico and makes something there, it potentially gets preferential access to the US market through USMCA.

Mexico becomes a kind of back door.

Exactamente.

Exactly.

Y eso también fue un problema en el pasado.

And that was also a problem in the past.

Cuando Trump habló del TMEC, dijo que no quería que empresas de China o de Europa usaran México como una ruta para entrar en el mercado americano.

When Trump talked about the USMCA, he said he didn't want companies from China or Europe to use Mexico as a route into the American market.

He called it a back door, actually.

That specific language.

Which means there's a political tension baked right into the structure of this deal that will need managing.

Sí, y eso es un problema real para México.

Yes, and that's a real problem for Mexico.

México necesita mantener buenas relaciones con Washington al mismo tiempo.

Mexico needs to maintain good relations with Washington at the same time.

No puede hacer enojar a Trump.

It can't anger Trump.

That's the tightrope.

And Claudia Sheinbaum has actually been more careful with Washington than people expected.

She's managed the relationship with a kind of disciplined pragmatism.

This deal is probably as much a signal to Mexico's own business class as it is a message to Washington.

Sí.

Yes.

Y también es una señal para los inversores europeos.

And it's also a signal to European investors.

Dice: México es un lugar estable y seguro para invertir.

It says: Mexico is a stable and safe place to invest.

Tenemos reglas claras, no solo con Estados Unidos.

We have clear rules, not only with the United States.

I want to go back to the agricultural piece because I don't think we can skip over it.

What kinds of products are we talking about, and who stands to gain or lose the most?

México exporta muchas cosas a Europa, como aguacate, tomate, frutas tropicales y tequila.

Mexico exports many things to Europe, like avocado, tomato, tropical fruits, and tequila.

Con menos aranceles, estos productos llegan más baratos al mercado europeo.

With lower tariffs, these products reach the European market more cheaply.

Tequila I can support unconditionally.

But the tomato question is genuinely fraught.

Spanish tomato farmers have been fighting cheaper imports for years.

I remember covering protests outside the Ministry of Agriculture in Madrid back in 2012.

Sí, los agricultores españoles van a protestar.

Yes, Spanish farmers are going to protest.

Ya protestaron contra Marruecos por los tomates.

They already protested against Morocco over tomatoes.

Ahora van a protestar contra México.

Now they'll protest against Mexico.

Es un problema político muy complicado para España.

It's a very complicated political problem for Spain.

And Spain isn't alone.

France has made blocking agricultural imports practically a national sport.

So the deal may be signed, but the real test is ratification, implementation, the legal challenges.

Es verdad.

That's true.

El acuerdo con el Mercosur, por ejemplo, todavía no es completamente oficial.

The agreement with Mercosur, for example, is still not fully official.

Hay muchos pasos antes de que un acuerdo sea una realidad.

There are many steps before an agreement becomes reality.

Hay que ratificarlo en el Parlamento Europeo.

It has to be ratified in the European Parliament.

Ratification.

That word has ended more deals than any negotiator.

The EU's own Parliament is not always enthusiastic about trade agreements, especially after the TTIP collapse with the US a decade ago.

El TTIP fue un desastre.

The TTIP was a disaster.

Muchos europeos tenían miedo de los estándares americanos, especialmente en la comida.

Many Europeans were afraid of American standards, especially in food.

Pensaban en el pollo lavado con cloro y tenían miedo.

They thought about chlorine-washed chicken and were frightened.

The chlorinated chicken.

That killed a transatlantic trade deal.

Which, when you step back, is remarkable.

Billions of dollars of potential trade, undone by a poultry processing technique.

Though I understand why it became a symbol of something bigger.

Exacto.

Exactly.

No era solo el pollo.

It wasn't just the chicken.

Era una pregunta más profunda: ¿queremos los estándares americanos en Europa?

It was a deeper question: do we want American standards in Europe?

Con México, esa pregunta es diferente, porque México ya tiene sus propios estándares y sus propias tradiciones.

With Mexico, that question is different, because Mexico already has its own standards and its own traditions.

And Mexico's food culture is something Europeans generally respect rather than fear.

There's no chlorinated taco problem.

Which might actually make ratification easier than people assume.

Puede ser.

Maybe.

Pero también hay preguntas sobre los derechos laborales en México.

But there are also questions about labor rights in Mexico.

Algunos europeos dicen: si los trabajadores en México ganan menos dinero, es competencia desleal.

Some Europeans say: if workers in Mexico earn less money, it's unfair competition.

That's a real debate and it's been central to every major trade deal for thirty years.

The counter-argument is that trade agreements, if they include labor provisions, can actually raise standards over time.

Though the evidence on that is genuinely mixed.

Sí.

Yes.

El TMEC incluyó nuevas reglas sobre los derechos laborales en México.

The USMCA included new rules about labor rights in Mexico.

Y hay evidencia de que los salarios en algunos sectores aumentaron un poco.

And there's evidence that wages in some sectors increased a little.

Pero 'un poco' no es suficiente para todos.

But 'a little' is not enough for everyone.

And there's one more dimension here that hasn't come up yet.

China.

Because part of what's reshaping global trade right now is that everyone is trying to figure out where they stand relative to China.

And Mexico has become a major nearshoring destination precisely because companies want supply chains that aren't dependent on Beijing.

Sí, eso es muy importante.

Yes, that's very important.

Muchas empresas europeas también buscan alternativas a China.

Many European companies are also looking for alternatives to China.

Si pueden producir en México y exportar a Europa con buenos términos, eso es muy atractivo para ellas.

If they can produce in Mexico and export to Europe on good terms, that's very attractive for them.

So this deal, at its most ambitious reading, is a node in a larger rewiring of global supply chains away from China.

Which is a much bigger story than the tariff schedules suggest.

Exactamente.

Exactly.

Y creo que eso es lo más importante de este acuerdo.

And I think that's the most important thing about this agreement.

No es solo sobre el aguacate o el tequila.

It's not just about avocados or tequila.

Es sobre quién controla las rutas del comercio mundial en el futuro.

It's about who controls the routes of world trade in the future.

Well put.

And that is the kind of sentence that should be on the front page but usually isn't, because it doesn't fit in a headline.

Alright, before we wrap, something caught my ear earlier and I want to come back to it.

You said 'cadenas de producción' and then later 'cadenas de suministro.' Are those the same thing, or am I missing a distinction?

Buena pregunta.

Good question.

Son similares, pero no exactamente iguales.

They're similar, but not exactly the same.

'Cadena de producción' habla de cómo se hace un producto, los pasos para fabricarlo.

'Production chain' talks about how a product is made, the steps to manufacture it.

'Cadena de suministro' es más amplia: incluye también cómo llegan los materiales y cómo se distribuye el producto final.

'Supply chain' is broader: it also includes how materials arrive and how the final product is distributed.

So production chain is from raw material to finished product, and supply chain wraps around that, including getting stuff in and getting it out to market.

In English we mostly just say supply chain for all of it, which might actually be imprecise.

Sí, en español tenemos las dos palabras y las usamos de manera diferente.

Yes, in Spanish we have both words and use them differently.

Pero en los periódicos económicos, muchas veces los periodistas usan las dos como si fueran lo mismo.

But in economic newspapers, journalists often use the two as if they were the same.

Incluso yo lo hice antes.

I even did it just now.

So even the experts get fuzzy on it.

That's oddly reassuring.

Mexico and the EU, a deal that took a quarter of a century to update, signed this week.

And it is worth more attention than it got.

Gracias, Octavio.

De nada.

You're welcome.

Y la próxima vez que bebas tequila, Fletcher, piensa en el libre comercio.

And the next time you drink tequila, Fletcher, think about free trade.

Aunque sé que probablemente le vas a poner hielo.

Although I know you'll probably put ice in it.