Welcome back to Foreign Policy’s Latin America Brief.
The highlights this week: Mexico makes progress on nearshoring, Guyanese Indigenous groups work to defend a rare bird against poachers, and Argentina’s former president is investigated for gender-based violence.
Sign up to receive Latin America Brief in your inbox every Friday.
Sign up to receive Latin America Brief in your inbox every Friday.
U.S. President Joe Biden and his predecessor Donald Trump don’t see eye-to-eye on much. But both promoted policies that enabled nearshoring—drawing business production from Asia to North America—in part due to concern about overreliance on China. Supply-chain disruptions during the COVID-19 pandemic gave businesses catering to the U.S. market further reason to make the move.
A new report suggests that nearshoring has taken hold in Mexico. Foreign direct investment in the country’s manufacturing sector increased by 29 percent last year, according to data from the United Nations Economic Commission for Latin America and the Caribbean.
Among the biggest-ticket investments in Mexico last year were an Italian-Argentine firm’s plans for a sustainable steel plant and a U.S. firm’s purchase of a Mexican industrial and logistics company, the report detailed. Meanwhile, the Mexican Association of Industrial Parks estimates that demand for industrial space will grow by up to 180 percent in 2024. Mexico overtook China as the top exporter to the United States this year.
Whether and how nearshoring in Mexico can continue apace will depend on the imminent transitions of power in both Mexico City and Washington. On Oct. 1, Mexican President Andrés Manuel López Obrador will hand the reins to his protégé Claudia Sheinbaum. Many analysts have argued that López Obrador failed to cultivate a business environment where nearshoring could reach its full potential.
Foreign investors have complained both about the Mexican market’s unpredictability and the country’s broader infrastructure. “Water and power availability are the biggest limitations that I hear [about] from businesses that are considering Mexico,” said Rachel Ziemba, an adjunct senior fellow at the Center for New American Security and the founder of research firm Ziemba Insights.
Sheinbaum has chosen an economy minister seen as business-friendly and pledged that nearshoring will be an important part of her economic strategy. She aims to foster 10 industrial corridors across the country. At least one such zone in Baja California would include semiconductor production, in line with recommendations from a U.S. Agency for International Development and U.S.-Mexico Foundation for Science roadmap about how Mexico could expand in the sector.
Encouraging businesses to cluster in zones where they complement each other is a tactic that development experts recommend to turn foreign direct investment into long-term economic growth. Mexico has failed at that equation before: It experienced a boom in manufacturing investment after the North American Free Trade Agreement (NAFTA) took effect in 1994, but the country’s economy has since grown at below-average rates for the developing world.
Following Mexico’s presidential transition, the U.S. presidential election in November could bring more explosive change. Although Vice President Kamala Harris, the presumptive Democratic nominee, has not signaled that her trade policies would depart dramatically from Biden’s, Trump has said he would slap a 10 percent tariff on all foreign goods and threatened a tariff as high as 200 percent for cars made by Chinese firms in Mexico.
People in Trump’s trade policy circle “tend to be supportive of tariffs, and despite Mexico having the structure of the [U.S.-Mexico-Canada Free Trade Agreement, or USMCA], there’s no sign it would be immune,” Ziemba said.
Trump triggered NAFTA’s 2018 renegotiation into USMCA, saying he wanted a better deal for U.S. workers. Although Trump often criticized Mexico during the process, Mexico’s negotiators were savvy: The new deal includes several provisions that are positive for Mexico, such as increased labor protections and regional content requirements.
“Nearshoring as we know it would not have happened without NAFTA or the USMCA,” journalist Alex González Ormerod wrote in the Mexico Political Economist.
Altogether, the uncertainty around the U.S. election has many firms—including Tesla—waiting to move forward on building plants in Mexico. Regardless of who wins the White House this fall, any U.S. dissatisfaction with the trade relationship could bubble up in 2026, when USMCA is due for a review.
Friday, Aug. 16, to Saturday, Aug. 17: Tropical Storm Ernesto is forecasted to pass near or over Bermuda.
Venezuela’s impasse. A team of U.N. experts who were on the ground during Venezuela’s July 28 election published a preliminary report this week, saying the vote was “logistically well organized” but that the election authorities’ failure to publish detailed results “fell short of the basic transparency and integrity measures that are essential to holding credible elections.”
That makes two independent expert groups that were invited to observe Venezuela’s vote and have subsequently slammed election authorities. The Carter Center, which sent a team of 17 experts and observers to Venezuela, said the vote “did not meet international standards of electoral integrity and cannot be considered democratic.”
Meanwhile, efforts by the Brazilian, Colombian, and Mexican governments to mediate some kind of solution in Venezuela appeared to hit roadblocks this week. López Obrador said he would stand down for now and Brazil and Colombia floated an idea for a new vote that was rebuffed by key Venezuelan opposition leader María Corina Machado.
Mexico is “having now very close relations with Cuba, so I wouldn’t be surprised if there are conversations between Mexico and the Cuban government,” Ana Covarrubias, an international relations scholar at the Colégio de Mexico, said at a virtual forum on Tuesday. Cuba is one of the most important backers of Venezuelan President Nicolás Maduro.
After lying low after an initial burst of demonstrations was met with government repression, Venezuela’s opposition says it is planning another major protest for Saturday.
Brazilian power broker. Former Brazilian Finance Minister Antonio Delfim Netto died on Monday at age 92. He had a decadeslong career at the center of Brazilian politics, including during the country’s military dictatorship from 1964 to 1985. Delfim Netto was a signatory of a 1968 decree that gave the regime exceptional powers against the opposition, increasing the intensity of detentions and torture.
Unlike the Cold War dictatorship in neighboring Chile, much of Brazil’s military regime featured heavy state intervention in the economy. Delfim Netto presided over a period in the early 1970s, in which Brazil’s economy grew by an average of some 10 percent annually, that became known as the country’s “economic miracle.”
Although the global inflationary shock of 1979 eventually helped the dictatorship out the door, Delfim Netto lived on in Brazil’s National Congress, holding office for decades and informally advising presidents, including during current President Luiz Inácio Lula da Silva’s first two terms between 2003 and 2010.
Delfim Netto’s legacy continued to be overshadowed by the dictatorship. “I would sign [the 1968 decree] again,” he said in a 2021 interview. “That was really a revolutionary process.”
Bird conservation. The red siskin, which looks like a canary with red and black plumage, was once found across tropical South America. But the bird’s numbers declined in recent decades as hunters sought its feathers for hats and other fashion accessories. In Guyana, Indigenous communities in the South Rupununi region have established a successful conservation zone where red siskins are now abundant.
Indigenous defenders monitor the forest for bird smugglers, who seek the high prices that red siskins can fetch on the black market. These wildlife defenders have also served as a first line of alert against forest fires, Mongabay reported.
At the closing ceremony of the Paris Olympics on Sunday, a group comprising one athlete from each region of the world blew out the Olympic flame. Which country represented the Americas?
Argentina
Brazil
Cuba
Dominican Republic
Cuban wrestler Mijaín López is a five-time Olympic gold medalist. He was joined on stage by athletes representing the four other Olympic rings’ regions—Europe, Africa, Asia, and Oceania—as well as an athlete from the Refugee Olympic Team.
Argentina has been rocked by allegations that former President Alberto Fernández physically abused his ex-partner, Former Argentine First Lady Fabiola Yáñez, during his time in office. Yáñez’s claims became public after leaked images of her with a bruised face were published in the media in recent days.
On Wednesday, an Argentine prosecutor formally charged Fernández. Since the denunciations became public last week, Fernández has repeatedly denied hitting Yáñez. But Argentines across the political spectrum, including Fernández’s vice president, Cristina Fernández de Kirchner, have spoken out in the former first lady’s defense.
The photos of Yáñez “not only show the beatings she took, but also reveal the most sordid and dark aspects of the human condition,” Kirchner wrote on X. “Misogyny, machismo, and hypocrisy, pillars of physical and verbal violence against women, have no political affiliation and crisscross all levels of society.”
Fernández, a Peronist, billed himself as a feminist president, creating a Ministry of Women, Genders, and Diversity and proposing and signing a law that legalized abortion in the country. Current Libertarian President Javier Milei was among the many people who suggested Fernández was a hypocrite. “A champion of feminism beating his wife,” Milei posted on X.
This isn’t the only scandal facing Fernández, who left office last December: Investigators reportedly found the photos of Yáñez while they were searching the phone of one of Fernández’s staffers to probe a separate corruption case.
The post Will New Leaders Shake Up Mexico’s Nearshoring Boom? appeared first on Foreign Policy.
