The 2023 North American Leaders’ Summit — tit for tat

1. Last week, President López Obrador (AMLO) hosted President Biden and Prime Minister Trudeau in Mexico City for the Xth North American Leaders’ Summit. The Summit is a trilateral meeting between the heads of government of Mexico, the United States and Canada.

2. This year’s edition was designed by the Mexican hosts to build rapport amongst the leaders, and to avoid public confrontations on issues such as energy, climate change, trade disputes, migration and drug trafficking. All of which have put the Mexican government at odds with its northern neighbours. An alliance for the nearshoring of several parts of the semiconductors’ supply chain was the most substantial public agreement.

The colour

3. The day prior to Biden’s arrival, the kingpin Ovidio Guzmán, son of El Chapo and one of the leaders of the Sinaloa Cartel, was captured in Culiacan. Local analysts read this as an olive branch from López Obrador to Biden, after four years of the thinnest bilateral cooperation in security and drug-trafficking in decades. Guzman was a key target of the United States’ justice and is expected to be extradited.

4. As per AMLO’s request, both President Biden and Prime Minister Trudeau landed at the Felipe Ángeles airport (AIFA), a flagship infrastructure project of the administration that has failed to gain traction as a credible alternative to the Benito Juárez airport of Mexico City. The symbolism of having Air Force 1 land in his airport was a crucial win for AMLO at home. AMLO was reported to be ecstatic and extremely grateful with the acquiescence of his guests to land in the AIFA despite minor security concerns.

The substance

5. Immigration. Mexico will increase its role as a safe third country for immigrants who seek to enter the United States through the US-Mexico border. Mexico will take back up to 30 000 immigrants per month from Venezuela, Cuba, Haiti and Nicaragua. In exchange, the United States’ is expected to ramp up its development aid in Central America and the Caribbean.

6. Drug-trafficking. Mexico agreed to focus efforts to reduce the fentanyl smuggled to the United States, the culprit of thousands of deaths and probably the worst addiction crisis in the US. In exchange, the Biden administration received a request to enhance its efforts to cut down the smuggling of American guns into Mexico.

7. Energy and Climate. Biden and Trudeau made important efforts to avoid confronting AMLO. Sources from Washington and Mexico City suggest that AMLO was more open to discuss climate change and hinted that compromises could be achieved on energy issues if the US and Canada would financially back his plans to boost solar power in the north of the country.

8. Geopolitics and trade. In the midst of its rivalry with China, the United States is more interested than ever in strengthening its North American partnership. The US shift away from global supply chains and in favour of nearshoring gives Mexico an outstanding advantage and this administration is more than willing to play along. COVID made evident the weakness of the auto industry which largely depends on chips and semiconductors produced in Asia. Mexico, Canada and the United States have committed to build stronger supply chains for such key industries through nearshoring.

COMMENT

9. The summit was more fluff than substance. However, it is a welcome effort to reinvigorate the high-level dialogue after the Trump years’ hiatus. The very clear messaging in favour of North American friendship is an unprecedented effort to find common ground since AMLO took office. Investors from all three countries should be moderately optimistic about the results, particularly on the nearshoring front where activity in the Mexican north is already quite frantic. Keep in mind that important confrontations on energy and other trade disputes loom in the near future.

Authors:

Gonzalo Escribano & Mauricio Castañeda