Spain, although affected, is not as badly affected as other European partners.

The UK's exit from the European Union finally materialised on the last day of 2020. The compromise on fisheries was the last point of the arduous negotiations and the differences were only overcome some conference before the unpostponable deadline. The fisheries agreement reached provides that for five and a half years EU vessels will continue to have access to fish in British waters. Although affected, Spain is not as badly affected as other European partners.

Fishing fleet in the Galician town of Ribeira [Luis Miguel Bugallo].

article / Ane Gil

The Brexit-culminating withdrawalagreement ran aground in its final stretch on the issue of fisheries, despite the fact that the UK's fishing activity in its waters contributes only 0.12% of British GDP.

That discussion, which nearly derailed the negotiations, centred on the delimitation of the Exclusive Economic Zone (EEZ), the area beyond territorial waters - at a maximum distance from the coast of 200 nautical miles (about 370 kilometres) - in which a coastal country has sovereign rights to explore and exploit, conserve and manage natural resources, whether living or non-living. The UK EEZ is home to fish-rich fishing grounds, which account, with a average of 1.285 million tonnes of fish per year, according to a 2019 study by the European Parliament's Fisheries Committee, for 15% of the EU's total fish catch. Of these catches, only 43% was taken by British fishermen, while the remaining 57% was taken by other EU countries. The European countries that had access to fishing in British waters were Spain, Germany, Belgium, Denmark, France, the Netherlands, Ireland and Sweden.

Therefore, the entrance in force of Brexit would mark the UK's withdrawal from the Common Fisheries Policy, which defines the access of European vessels to the Exclusive Economic Zone.

Initial perspectives

During its membership of the EU, the UK was part of the Common Fisheries Policy, whereby all EU member states' fishing fleets have equal access to European waters. In the EU, fishing rights are negotiated annually by the ministers of each member state and national quotas (the amount of fish of each species that each country's fleet can catch) are set using data historical data such as reference letter.

The Spanish fishing fleet followed the negotiations closely, as it had a lot to lose from a bad agreement. On the one hand, a Brexit without agreement could mean a reduction in income of 27 million euros related to fishing in British waters; it would also entail a drastic reduction in hake, megrim and mackerel catches for Spanish fishing boats specialising in these species. On the other hand, the employment would also be affected if the agreement established a drastic reduction in catches. Eighty Spanish vessels have licence to fish in British waters, which means almost 10,000 jobs for work related to this activity.

The negotiations

Until Brexit, British waters and their exploitation were negotiated jointly with the rest of the European Union's maritime areas. Brussels tried to maintain this relationship even if the UK left the EU, so the position of European negotiators focused on preserving the system of fishing quotas that had been in place, for a period of fifteen years deadline . However, British Prime Minister Boris Johnson always ruled out any trade agreement that would grant European vessels access to British waters in exchange for better conditions for British financial services in the single market as offered by Brussels. London wanted to implement a regime similar to the Norwegian one, which negotiates year by year the catches of EU fleets in its waters, with the difference that in the Norwegian case the pact refers to average dozen species, compared to almost a hundred in British waters.

We should bear in mind that the service sector accounts for 80% of the UK's GDP, while fishing activities account for only 0.12%. It is therefore quite clear that London's positions on the fisheries section were more political than economic. Although fishing activities have little impact on the British Economics , the fishing sector does have political importance for the Eurosceptic cause, as regaining control of the waters was one of the promises made in the Brexit referendum. Thus, this issue became a symbol of national sovereignty.

The starting point for the negotiations was the UK government's demand to repatriate up to 80% of the catches in its waters of control, while the EU offered refund to the UK between 15% and 18%. Johnson wanted to keep management from exploiting its waters and to negotiate with the EU as partner preferential. He expressed his initial intention to establish, from January 2021, more frequent negotiations on how to fish in his EEZ. This resulted in a finalagreement which implies that European vessels will continue to be able to fish in British waters for five and a half years, in exchange for refund 25% of the quotas EU vessels fish there, estimated to be worth around 161 million euros. In return, fish products will continue to enter the European market at zero tariff. After this transitional phase, the EU and the UK will have to renegotiate year after year. If the agreement is violated, there are mechanisms in place to ensure compensation, such as tariffs.

Consequences for Spain and its European neighbours

The agreement provoked discontent in the UK fishing industry, which accused Johnson of caving in on this agreement. The National Federation of Fishermen's Organisations expressed disappointment that only marginal changes had been made to quotas and that EU fleets would continue to have access to UK waters up to the six-mile limit. The prime minister responded that the UK could now catch "prodigious amounts of extra fish".

For the time being, the UK has already encountered some problems. The new customs agreement has been causing delays and lorries have to be checked at the borders. With a sudden overproduction, there will not be enough veterinarians to make the necessary export health certificates. Therefore, the new bureaucratic requirements has led to several cases of seafood rotting on the docks before it can be exported to the EU. It is estimated that the fishing industry is losing 1 million pounds per day due to these new requirements, which has caused many fishermen to reduce their daily catches.

But EU fishermen will also be affected, as until now they have been catching fish in British waters with a total annual value of 650 million euros, according to the European Parliament, especially at position from Danish, Dutch and French vessels. In addition, Belgium is one of the countries most affected, as 43% of its catches are taken in British waters; it will now have to reduce its catches by 25% over the next 5 years. Moreover, Belgian fishermen used to land their fish in British ports and then truck it to Belgium. However, this will no longer be possible. Alongside Belgium, other countries that will suffer most from the loss of fishing rights due to Brexit are Ireland, Denmark and the Netherlands.

As for Spain, the fishing sector has acknowledged its unease about the annual negotiation that will take place after the initial five-year period, as well as the consequences for the future distribution of the rest of the fishing quotas, for the Common Fisheries Policy itself, for the exchange of quotas between countries and for the sustainable management of marine stocks. However, in the short term deadline the Spanish fleet does not seem to be so affected in comparison with other European countries.

In fact, the Minister of Agriculture, Fisheries and Food, Luis Planas, gave a positive assessment of this agreement, considering it a "good agreement, which provides stability and legal certainty". Planas argued that the 25% reduction in the average value of catches by the eight European countries fishing in British waters has limited effects on Spanish fishing activity and, by way of example, he stated that hake catches will only be reduced by 1%. In other words, the current quota of 29.5% would fall to 28.5% in 2026. In addition, other species of greater interest to Spain (such as mackerel, horse mackerel and blue whiting) have not been included in the agreement and there are no reductions in deep-water species in high demand (such as black scabbardfish or grenadiers). In conclusion, Planas said that Spain has only conceded on 17 of the 32 fishery resources allocated to the country. However, it is up to Brussels to go into the details and decide on fishing quotas during the transition period that opened on 1 January, in which the eight countries fishing in British waters will have lower quotas.

In conclusion, Britain now has the ability to dictate its own rules at subject on fishing. By 2026, the UK can decide to completely withdraw access for EU vessels to British waters. But the EU could then respond by suspending access to its waters or imposing tariffs on UK fish exports.

[Daniel Méndez Morán, 136. China's plan in Latin America (2018), 410 pages].

review / Jimena Puga

By means of a first-person on-the-ground research and the testimony staff of Chinese and Latin Americans, who give the story the character of a documented report, Daniel Méndez summarises in detail the mark that the growing Asian superpower is leaving in the region. This gives the reader an insight into the relations between the two cultures from an economic and, above all, political point of view. The figure of degree scroll -136- is the issue that, according to the author, Beijing assigns to its plan for Latin America, in its planning of different sectoral and geographical expansion programmes around the world.

The book begins by briefly reflecting on China's rapid growth since the death of Mao Zedong and thanks to Deng Xiaoping's growth and opening-up policies between 1980 and 2000. This resurgence has not only been reflected in China's Economics but also in society. The new generations of Chinese professionals are better educated training and more fluent in foreign languages than their elders, and therefore better prepared for International Office. However, Liu Rutao, Economic and Commercial Counsellor at the Chinese Embassy in Chile explains to the author that "the history of China's going abroad is only fifteen years old, so neither the government nor the companies have a very mature thinking on how to act abroad, so we all need to study".

However, the country's short experience in the international arena is not an obstacle since, as the book shows, China has a very effective shortcut to accelerate this learning process: money. In fact, the goal of many of the most important Chinese investments in Latin America is not only access to natural resources, but also to human capital and, above all, to knowledge. Thanks to their huge financial resources, Chinese companies are acquiring companies with experience and contacts in the Americas, hiring the best professionals in each country and buying brands and technologies. "This phase is very difficult. Chinese companies are going to pay to learn. But everything is learned by paying," diplomat Chen Duqing, China's ambassador to Brazil between 2006 and 2009, explained to Méndez.

After this overview, the book moves on to China's relationship with different Latin American partners. In the case of Mexico, there is a struggle against the famous made in China. The empire at the centre went to Mexico 40 years ago to study the maquiladora programme; when they returned, Méndez explains, they said: "Mexico is doing that for the United States, we are going to do it for the world". And so, a few years later, China designed and improved the strategy. There is little doubt that made in China has won the day over Mexican maquiladoras, and it is all these decades of skill and frustration that explain the complex political relations between the two countries. This is what the people interviewed by the author testify to. To Jorge Guajardo, this model reminds him of the colonial order imposed by Spain and continued by the United Kingdom: "I sometimes said to the Chinese: 'Gentlemen, you cannot see America: Gentlemen, you cannot see Latin America as anything other than a place where you go for natural resources and in return you send manufactured goods. We were already a colony. And we didn't like it, it didn't work. And we chose to stop being one. You don't want to repeat that model".

The result of these new tensions is that neither country has achieved what it was looking for. Mexico has barely increased its exports to China and the Asian giant has barely increased its investments in the Latin American country. In 2017 there were only 30 Chinese companies installed in Mexico, a very small number compared to the 200 in Peru. Other diplomats on the continent recognise that in any international meeting where both countries are present, the Latin American country is always the most reluctant to accept Beijing's proposals. For China, Mexican 'resistance' is perhaps its biggest diplomatic stumbling block in the region: the best example that its rise has not benefited all countries in the South.

Méndez says that, unlike Mexico, Peru's mining strategy has found an ideal partner on the other side of the Pacific. In need of minerals to feed its industry and build new cities, China's huge demand has pulled strongly on the Peruvian Economics . Between 2004 and 2017, trade between the two countries increased tenfold and the Asian giant became Peru's first commercial partner . China is no longer only important for its demand for copper, lead and zinc, but also for its investment flows and its capacity to implement mining projects. These financial conditions, which are very difficult to obtain from private banks, are often the comparative advantage that allows Chinese state-owned companies to beat their Western competitors.

What does this mean for Latin America, and should Latin American countries be concerned about this political and economic strategy that invests massively in their natural resources through state-owned companies? As the book points out, many diplomats think it is necessary to be vigilant. Unlike private companies, whose primary goal aim is to make profits and submit dividends to their shareholders, Chinese companies are ultimately written request controlled by politicians who may have another diary. In this sense, the expansion of so many state-owned companies in natural resources can also become a weapon of pressure and influence.

If a Latin American leader, for example, decides to meet with the Dalai Lama or opposes a diplomatic initiative led by Beijing, the Asian giant could use its state-owned companies in retaliation, warns Méndez. In the same way that if the Peruvian government wanted to cancel some project chimo for labour or environmental infractions, Beijing could threaten to deny approval of phytosanitary protocols or delay other investments. Moreover, China is increasingly aware that its image, its capacity for persuasion and its cultural attractiveness (soft power) are vital to expand its political and economic project .

On the other hand, further south in the region, Uruguay has become the perfect laboratory for China. Uruguayan factories are prepared for short production runs of a few thousand cars, the country has a specialised workforce and the good infrastructure means that in a very short time it is possible to set up plants in Brazil or Argentina. It should be borne in mind that Chinese companies are still little known in Latin America and do not have many financial resources, and in Uruguay they can test the market.

As for Brazil, Méndez speaks especially of the diplomacy of satellites. Satellites are not only useful for bringing television to homes and for using GPS on mobile phones, but also for their military capabilities and the political prestige they imply. Brazil has collaborated with other countries such as Argentina and the United States, but political and economic tensions almost always limit space cooperation. Paradoxically, in the case of China, distance seems to be a blessing as there are no geopolitical problems between the two: sometimes it is more difficult to work with your neighbours than with people who are far away. For Beijing, space missions serve to enhance all dimensions of its power: it increases its military capabilities and contributes to its space industry and competitiveness in an economic sector with a bright future. And finally, it also serves as a public relations campaign in the world. However, the technological and economic differences are becoming so apparent that even China is outgrowing the South American giant.

From a geostrategic point of view, Méndez does not want to miss the construction of a Chinese space station on a 200-hectare plot of land in the Argentinean province of Neuquén, which has an initial investment of 50 million dollars and is part of China's moon exploration programme. Moreover, Argentina is the only country in which the presence of the Industrial and Commercial Bank of China is so popular in society. B . This Chinese bank has managed to offer the same services as any other banking institution in Argentina.

Finally, Chile is one of the countries with which Beijing has the best relations, but why does China not invest in Chile? The answer is simple. Investment processes in Chile are clear, transparent and equal for all countries. There are no exceptions and investors have to follow complex legal regulations to the letter. The business culture is different, and the Chinese don't like the idea of needing lawyers and 20,000 permits for everything. They like to pay bribes, and in Chile corruption provokes a lot of indignation.

Throughout this country-by-country analysis, the author has made one thing clear: China has a plan. Or at least, it has been able to bet for decades on the training of officials with the goal of designing a strategy in Latin America. This capacity for planning and these long-term objectives deadline have helped the Asian giant to advance its position in recent years and leave a deep mark on many countries in the American continent. And what does the plan consist of? It is clear that China's goal issue one is economic. It has managed to successfully "sneak" into the three major trade blocs that include Latin American countries: NAFTA, the Pacific Alliance and Mercosur.

But Economics per se is not the only thing that drives China. To achieve its economic goals, Beijing also needs to build political relations and allies that can defend its diplomatic positions. Its defence of non-interference in internal affairs and a multipolar world demands in return the silence of Latin American countries on human rights violations in their country and respect, for example, for the one-China policy. The Asian giant wants to expand all its strengths and is not willing to give up any of them.

In conclusion, whether or not China has a strategy for Latin America, Latin America does not have a strategy for China. And China is not an NGO; if recent history shows anything, it is that each country seeks to defend its own selfish national interests at the International Office level. China has its diary and is pursuing it. Perhaps the time has come for Latin America to have its own.

India's trade with the region has increased twenty-fold since 2000, but is only 15% of the trade flow with China.

China's rapid trade, credit and investment spillover into Latin America in the first decade of this century suggested that India, if it intended to follow in the footsteps of its continental rival, could perhaps stage a similar landing in the second decade. This has not happened. India has certainly increased its economic relationship with the region, but it is a far cry from that developed by China. Even Latin American countries' trade flows are greater with Japan and South Korea, although it is foreseeable that in a few years they will be surpassed by those with India given its potential. In an international context of confrontation between the US and China, India emerges as a non-confrontational option, specialising in IT services that are so necessary in a world that has discovered the difficulty of mobility for Covid-19.

article / Gabriela Pajuelo

India has historically paid little attention to Latin America and the Caribbean; the same had been true of China, apart from episodes of migration from both countries. development But China's emergence as a major power and its landing in the region prompted the Inter-American Development Bank (IDB) to ask in a 2009 report whether, after the Chinese push, India was going to be "the next big thing" for Latin America. Even if India's figures were to lag behind China's, could India become an actor core topic in the region?

Latin American countries' relationship with New Delhi has certainly grown. Even Brazil has developed a special link with India thanks to the BRICS club, as evidenced by Brazilian president Jair Bolsonaro's visit in January 2020 to his counterpart Narendra Modi. In the last two decades, India's trade with the region has increased twenty-fold, from $2 billion in 2000 to almost $40 billion in 2018, as a new IDB report found last year.

This volume, however, falls far short of the trade flow with China, of which it constitutes only 15 per cent, because if Indian interests in Latin America have increased, Chinese interests have continued to do so to a greater extent. Investment from both countries in the region is even more disproportionate: between 2008 and 2018, India's investment was $704 million, compared to China's $160 billion.

Even India's trade growth is less regionally intertwined than global figures might suggest. Of the total $38.7 billion of transactions in 2018, $22.7 billion were Latin American exports and $16 billion were imports of Indian products. Indian purchases have already surpassed imports from Latin America by Japan ($21 billion) and South Korea ($17 billion), but this is largely due to the purchase of oil from Venezuela. Adding the two directions of flow, the region's trade with Japan and Korea is still larger (around $50 billion in both cases), but the potential for growth in the trade relationship with India is clearly greater.

There is interest not only from American countries, but also from India. "Latin America has a young and skilled workforce, work , and is rich in natural and agricultural resource reserves," said David Rasquinha, director general manager of the Export-Import Bank of India.

Last decade

The two IDB reports cited above are a good reflection of the leap in relations between the two markets in the last decade. In the 2009 report, under degree scroll 'India: Opportunities and Challenges for Latin America', the Inter-American institution presented the opportunities offered by contacts with India. Although it was committed to increasing them, the IDB was uncertain about the evolution of a power that for a long time had opted for autarky, as Mexico and Brazil had done in the past; however, it seemed clear that the Indian government had finally taken a more conciliatory attitude towards the opening up of its Economics.

Ten years later, the report graduate "The Bridge between Latin America and India: Policies for Deepening Economic Cooperation" delved into the opportunities for cooperation between the two actors and noted the importance of strengthening ties to favour the growing internationalization of the Latin American region, through the diversification of trade partners and access to global production chains. In the context of the Asian Century, the flow of exchange trade and direct investment had increased exponentially from previous levels, result largely due to the demand for Latin American raw materials, something that is often criticised as not fostering the region's industry.

The new relationship with India presents an opportunity to correct some of the trends in interaction with China, which has focused on investment by state-owned companies and loans from Chinese state-owned banks. In the relationship with India, there is greater participation of Asian private initiative and a commitment to new economic sectors, as well as the hiring of indigenous staff , including at the management and management levels.

agreement According to General Manager of the IDB's Integration and Trade Sector, Fabrizio Opertti, "the development of an effective institutional framework and business networks" is crucial. The IDB suggests possible governmental measures such as increasing the coverage of trade and investment agreements, the development of proactive and targeted trade promotion activities, boosting investments in infrastructure, promoting reforms in the logistics sector, among others.

Post-Covid context

The questioning of global production chains and, ultimately written request, of globalisation itself because of the Covid-19 pandemic, is not conducive to international trade. Moreover, the economic crisis of 2020 may have a long-lasting effect on Latin America. But it is precisely in this global framework that the relationship with India could be particularly interesting for the region.

Within Asia, in a context of polarisation over the geopolitical interests of China and the United States, India emerges as a partner core topic , one might even say neutral; something that New Delhi could use strategically in its approach to different areas of the world and in particular to Latin America.

Although "India does not have pockets as deep as the Chinese", as Deepak Bhojwani, founder of the consultancy firm Latindia[1], says in relation to the enormous public funding that Beijing manages, India could be the origin of interesting technological projects, given the variety of IT and telecommunications companies and experts it has. Thus, Latin America could be the target of the "technology foreign policy" of a country that, according to agreement with its Ministry of Electronics and IT, has the ambition of growing its digital Economics to "one trillion dollars by 2025". New Delhi will focus its efforts on influencing this economic sector through NEST (New, Emerging and Strategic Technologies), promoting a unified Indian message on emerging technologies, such as governance of data and artificial intelligence, among others. The pandemic has highlighted Latin America's need for more and better connectivity.

There are two prospects for the expansion of India's influence on the continent. One is the obvious path of strengthening its existing alliance with Brazil, within the BRICS, whose pro tempore presidency India holds this year. That should lead to more diversified ties with Brazil, the region's largest market, especially in science and technology cooperation, in the fields of IT, pharmaceuticals and agribusiness. "Both governments committed to expand bilateral trade to 15 billion dollars by 2022. Despite the difficulties brought by the pandemic, we are pursuing this ambitious goal", says André Aranha Corrêa do Lago, Brazil's current ambassador to India.

On the other hand, a greater effort could be made in bilateral diplomacy, insisting on pre-existing ties with Mexico, Peru and Chile. The latter country and India are negotiating a preferential trade agreement and the Bilateral Investment Protection Treaty signature . A rapprochement with Central America, which still lacks Indian diplomatic missions, may also be of interest. These are necessary steps if, closely following in China's footsteps, India wants to be the "next big thing" for Latin America.

The increase in South Korean trade with Latin American countries has allowed the Republic of Korea to reach Japan's exchange figures with the region.

Throughout 2018, South Korea's trade with Latin America exceeded USD 50 billion, putting itself at the same level of trade maintained by Japan and even for a few months becoming the second Asian partner in the region after China, which had flows worth USD 300 billion (half of the US trade with its continental neighbours). South Korea and Japan are ahead of India's trade with Latin America (USD 40 billion).

ARTICLE / Jimena Villacorta

Latin America is a region highly attractive to foreign markets because of its immense natural resources which include minerals, oil, natural gas, and renewable energy not to mention its agricultural and forest resources. It is well known that for a long time China has had its eye in the region, yet South Korea has also been for a while interested in establishing economic relations with Latin American countries despite the spread of new protectionism. Besides, Asia's fourth largest economy has been driving the expansion of its free trade network to alleviate its heavy dependence on China and the United States, which together account for approximately 40% of its exports.

The Republic of Korea has already strong ties with Mexico, but Hong Nam-ki, the South Korean Economy and Finance Minister, has announced that his country seeks to increase bilateral trade between the regions as it is highly beneficial for both. "I am confident that South Korea's economic cooperation with Latin America will continue to persist, though external conditions are getting worse due to the spread of new protectionism", he said. While Korea's main trade with the region consists of agricultural products and manufacturing goods, other services such as ecommerce, health care or artificial intelligence would be favourable for Latin American economies. South Korean investment has significantly grown during the past decades, from USD 620 million in 2003, to USD 8.14 billion in 2018. Also, their trade volume grew from USD 13.4 billion to 51.5 billion between the same years.

Apart from having strong ties with Mexico, South Korea signed a Free Trade Agreement with the Central American countries and negotiates another FTA with the Mercosur block. South Korea would like to join efforts with other Latin American countries in order to breathe life into the Trans-Pacific Partnership, bringing the US again into the negotiations after a change of administration in Washington.

Mexico

Mexico and South Korea's exports and imports have increased in recent years. Also, between 1999 and 2015, the Asian country's investments in Mexico reached USD 3 billion. The growth is the result of tied partnerships between both nations. Both have signed an Agreement for the Promotion and Reciprocal Protection of Investments, an Agreement to Avoid Income Tax Evasion and Double Taxation and other sectoral accords on economic cooperation. Both economies are competitive, yet complementary. They are both members of the G20, the OECD and other organisations. Moreover, both countries have high levels of industrialization and strong foreign trade, key of their economic activity. In terms of direct investment from South Korea in Mexico, between 1999 and June 2019, Mexico received USD 6.5 billion from Korea. There are more than 2,000 companies in Mexico with South Korean investment in their capital stock, among which Samsung, LG, KORES, KEPCO, KOGAS, Posco, Hyundai and KIA stand out. South Korea is the 12th source of investment for Mexico worldwide and the second in Asia, after Japan. Also, two Mexican multinationals operate in South Korea, group Promax and KidZania. Mexico's main exports to South Korea are petrol-based products, minerals, seafood and alcohol, while South Korea's main exports to Mexico are electronic equipment like cellphones and car parts.

Mercosur

Mercosur is South America's largest trading economic bloc, integrated by Argentina, Brazil, Paraguay and Uruguay. With a GDP exceeding USD 2 trillion, it is one of the major suppliers of raw materials and agricultural and livestock products. South Korea and Mercosur launched trade negotiations on May 2018, in Seoul. Actually, the Southern Common Market and the Republic of Korea have been willing to establish a free trade agreement (FTA) since 2005. These negotiations have taken a long time due to Mercosur's protectionism, so the Asian country has agreed on a phased manner agreement to reach a long-term economic cooperation with the bloc. The first round of negotiations finally took place in Montevideo, the Uruguayan capital, in September 2018. Early this year, they met again in Seoul to review the status of the negotiations for signing the Mercosur-Korea trade agreement. This agreement covers on the exchange of products and services and investments, providing South Korean firms faster access to the Latin American market. The Asian tiger main exports to South America are industrial goods like auto parts, mobile devices and chips, while its imports consist of mineral resources, agricultural products, and raw materials like iron ore.

Among Mercosur countries, South Korea has already strong ties with Brazil. Trade between both reached USD 1.70 billion in 2019. Also, South Korean direct investments totaled USD 3.69 billion that same year. With the conclusion of the trade agreement with the South American block, Korean products exported to Brazil would benefit from tariff eliminations, as would Korean position trucks, and other products going to Argentina. It would also be the first Asian country to have established a trade agreement with Mercosur.

Central America

South Korea is the first Asian-Pacific country to have signed a FTA with Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama). According to Kim Yong-beom, South Korean Deputy Minister of Economy and Finance, bilateral cooperation will benefit both regions as state regulatory powers won't create unnecessary barriers to commercial exchange between both. "The FTA will help South Korean companies have a competitive edge in the Central American region and we can establish a bridgehead to go over to the North and South American countries through their FTA networks", said Kim Hak-do, Deputy Trade Minister, when the agreement was reached in November 2016. Also, both economic structures will be complimented by each other by encouraging the exchange between firms from both regions. They signed the FTA on February 21st, 2018, after eighth rounds of negotiations from June 2015 to November 2016 that took place in Seoul, San Salvador, Tegucigalpa and Managua. Costa Rica also signed a memorandum of understanding with South Korea to boost trade cooperation and investment. This partnership will create new opportunities for both regions. South Korean consumers will have access to high-quality Central American products like grown coffee, agricultural products, fruits like bananas, and watermelons, at better prices and free of tariffs and duties. Additionally, Central American countries will have access to goods like vehicle parts, medicines and high-tech with the same advantages. Besides unnecessary barriers to trade, the FTA will promote fair marketing, ease the exchange of goods and services, to encourage the exchange businesses to invest in Central America and vice versa. Moreover, having recently joined the Central American Bank for Economic Integration (CABEI) as an extra-regional member, has reinforced the development of partner-economic projects around the region.

Opportunity

The Republic of Korea faces challenges related to the scarcity of natural resources, there are others, such as slower growth in recent decades, heavy dependence on exports, competitors like China, an aging population, large productivity disparities between the manufacturing and service sectors, and a widening income gap. Inasmuch, trade between Latin America and the Caribbean and the Republic of Korea, though still modest, has been growing stronger in recent years. Also, The Republic of Korea has become an important source of foreign direct investment for the region. The presence of Korean companies in a broad range of industries in the region offers innumerable opportunities to transfer knowledge and technology and to create links with local suppliers. FTAs definitely improve the conditions of access to the Korean market for the region's exports, especially in the most protected sectors, such as agriculture and agro-industry. The main challenge for the region in terms of its trade with North Korea remains export diversification. The region must simultaneously advance on several other fronts that are negatively affecting its global competitiveness. It is imperative to close the gaps in infrastructure, education and labor training.

Pandemic reinforces value of production centres in the same sub-regions

Free trade zones in Central America and the Caribbean have been an important engine for the region's economies. Favoured by the increasing globalisation of recent decades, they could now be boosted by a phenomenon in the opposite direction: "glocalisation", the desirability of having production centres in the same sub-region, close to major markets, in order to avoid the problems in distant supply chains seen during this Covid-19 crisis that has affected transport and communications so much. The two leading Latin American free trade zone countries, the Dominican Republic and Costa Rica, offer affordable and sufficiently skilled labour at the doorstep of the United States.

One of the free trade zones of the Dominican Republic [CNZFE] ▲ One of the free trade zones of the Dominican Republic [CNZFE].

article / Paola Rosenberg

The so-called free trade zones, also known in some countries as free zones, are strategic areas within a national territory that have certain tax and customs benefits. In these zones, commercial and industrial activities are carried out under special export and import rules. It is a way of boosting investment and employment, as well as production and exports, thus achieving the economic development of a part of the country or of the country as a whole.

Free trade zones are important in Latin America, and in the case of the smaller economies they are the main production and export hubs. According to agreement with the association of Free Trade Zones of the Americas (AZFA), there are some 3,500 free trade zones in the world, of which 400 are in Latin America, representing 11.4% of the total. Within this region, they are particularly important in the countries of Central America and the rest of the Caribbean basin. They are particularly important in the Dominican Republic and Costa Rica, as well as in Nicaragua, El Salvador, Colombia and Uruguay (also in Puerto Rico).

These countries benefit from having abundant (especially trained in the Costa Rican case) and low-cost labour (especially in the Nicaraguan case), and this close to the United States. For manufacturers wishing to enter the US market, it may be interesting to invest in these free trade zones, taking advantage of tax benefits and labour conditions, while their production will be geographically very close to their destination.

The latter is gaining ground in a post-Covid-19 world. The trend towards sub-regionalisation, in the face of the fractured dynamics of globalisation, has been highlighted for other areas of the American continent, as in the case of the Andean Community, but it also makes a great deal of sense for greater integration between the United States and the Greater Caribbean. Insofar as the US moves towards a certain decoupling from China, the free trade zones of this geographic area may also become more relevant.

Reproduced from report graphic of the association Free Trade Zones of the Americas (AZFA), 2018

Export processing zones

Free zones can be export-oriented (external market), import substitution-oriented (internal market) or both. The former may have a high industrial component, either seeking diversification or relying on maquilas, or emphasising logistics services (in the case of Panama's free zones).

Free zones for exporting products have been particularly successful in the Dominican Republic and Costa Rica. As the AZFA indicates, of the 31,208 million dollars exported from Latin American free zones in 2018, the first place went to the Dominican Republic, with 5,695 million, and the second to Costa Rica, with 4,729 million (the third place went to Puerto Rico, with 3,000 million). Exports from the Dominican Republic's free trade zones accounted for 56% of all exports from that country; in the case of Costa Rica it was 48% (third in the ranking was Nicaragua, with 44%).

The Dominican Republic is the country with the largest issue number of free zones (71 multi-company zones) and its 665 companies generated the largest number of direct jobs (165,724). Costa Rica has 48 free zones (in third position, after Nicaragua), and its 343 companies generated 93,496 direct work jobs (in fifth position).

In terms of the profitability for the country of this economic modality , for every dollar exempted between 2010 and 2015, Costa Rica's free trade zones generated an average of 6.2 dollars and those of the Dominican Republic 5 dollars (El Salvador ranked second with 6 dollars).

As regards Costa Rica specifically, a late 2019report by the Costa Rican foreign trade promotion agency, Procomer, put the contribution of free trade zones at 7.9% of GDP, generating a total of 172,602 jobs work, both direct and indirect, with an annual growth of issue jobs averaging 10% per year between 2014 and 2018. These areas account for 12% of the country's formal private sector employment . An important fact about the contribution to development of the local Economics is that 47% of the purchases made by firms located in free trade zones were from national companies. An important social dimension is that the zones contributed 508 million dollars to the Costa Rican Social Security Fund in 2018.

The Dominican Republic's free trade zone regime is particularly applauded by the World Bank, which describes the country as a pioneer in this subject instrument of productive and commercial promotion, presenting it as "the best known success story in the western hemisphere". agreement According to the statistics of the committee National Free Trade Zones Export Zones (CNZFE), these have contributed 3.3% of GDP in recent years, thereby contributing to the significant growth of the country's Economics in recent years (one of the highest fees in the region, with an average of over 6% until the onset of the current global crisis). The geographical proximity to the United States makes its free trade zones ideal for US companies (almost 40% of investment comes from the US) or for companies from other countries that want to export to the large North American market (34% of exports go to the US).

The trade dependence between the two countries - greater in the case of Brazil, but the Chinese also need certain Brazilian products, such as soybeans - ensures understanding between the two countries.

The relationship between Brazil and China has proved to be particularly pragmatic: neither Jair Bolsonaro has revised his ties with the Asian country as he promised before becoming president (in his first year in office he has not only kept Brazil in the BRICS but even made a highly publicised official trip to Beijing), nor has Xi Jinping punished partner for accusing him of mismanaging the coronavirus pandemic, as has happened with other countries. The convenience of mutual trade relations, revalued by the trade war between China and the US and the current global crisis, has prevailed.

Jair Bolsonaro and Xi Jinping in Beijing in October 2019 [Planalto Palace].

article / Túlio Dias de Assis

visit After years of criticising the "perverse communist government in Beijing", Jair Bolsonaro surprised people at the end of October with a state visit to the Forbidden City, which he himself specially publicised on social networks. On that trip he gave Xi Jinping the shirt of the Club de Regatas do Flamengo (the football team that at the time represented Brazil in the Copa Libertadores, which he would end up winning) and expressed his total conviction that he was in a capitalist country. In November he hosted a BRICS summit in Brasilia.

Bolsonaro's policy towards China had already begun to change shortly after he became president in January 2019, in contrast to his anti-China messages during the election campaign.

In fact, diplomatic relations between the two countries date back to the time of the board Military sample of which Bolsonaro is so proud. In 1974 Brazil recognised the People's Republic of China as the only China, thus allowing, despite being unaware of it at the time, the creation of a huge trade link between the two nations of continental proportions. Since then, as China's openness to China progressed, relations between China and Brazil have increased, so that for almost a decade now China has been Brazil's main trading partner, partner . China's dependence on Brazil is also notable in relation to certain products, such as soya, although for the Chinese, Brazil is the twentieth largest trader partner , since logically they are economies of very different sizes.

When in 1978 Deng Xiaoping decided to open China's Economics to the rest of the world, China's GDP was close to $150 billion, 75% of Brazil's, which was already over $200 billion. Four decades later, in 2018, Brazil's GDP was $1.8 trillion and China's was $13.6 trillion.

Soybeans and pigs

Brazil's greatest commercial and even political rapprochement with China occurred during the presidency of Luiz Inácio 'Lula' da Silva, during which the BRICS was formed, a club that helped create a greater level of economic and diplomatic proximity between member countries. This rapprochement led China to become Brazil's leading trade partner in exports and imports. Brazil's sales to China almost double exports to the US.

Although trade with Brazil represents less than 4% of the total value of goods that China imports annually, the South American country continues to be an important commercial partner for the People's Republic, due to the fact that the main product imported from Brazil is soya, one of the instructions of the per diem expenses habitual of a large part of the Chinese population. More than half of the soya imported by China comes from Brazil and the tendency is for this to increase, mainly due to the trade war with the US - the second main exporter of soya to China -, making Brazil practically the breadbasket of the Middle Kingdom. China is the destination for more than 70% of Brazilian soybean production.

Dependence on China, from the Brazilian consumer's perspective, was accentuated at the end of 2019 due to an exorbitant rise in meat prices. The average between the different Brazilian states hovered between 30% and 40% compared to previous months. Producers were able to substantially increase their profits in the short term deadline, but the popular classes openly protested against the uncontrolled price of a product that is very present on the average Brazilian's regular per diem expenses . The rise in prices was due to a combination of factors, including an outbreak of swine fever that devastated much of China's production. Faced with a shortage of supply in its domestic market, China was forced to diversify its suppliers, and in the midst of a trade war with the US, China had no choice but to turn to Brazil's agricultural potential, one of the few countries capable of meeting China's huge demand for meat. During this period - a brief one, as it gradually returned to the previous status - Brazil managed to obtain a certain coercive power over the Asian giant.

Huawei and credits

Brazil is extremely dependent on China at status subject technology: more than 40 per cent of Brazil's purchases from China are machinery, electronic devices or parts thereof. In the last decade, with the arrival of the smartphone and fibre-optic revolution in Latin America, Brazil decided to make a greater commitment to Chinese technology, thus becoming one of the main international markets for the now controversial Huawei brand, which has come to dominate 35% of the Brazilian mobile phone market. While the US and Europe were wary of Huawei and from the outset placed limits on its markets, Brazil saw Chinese technology as a cheaper way to develop and never let itself be swayed by suspicions of Chinese government interference in subject of privacy. Several deputies of the PSL (Bolsonaro's former party) even visited China in early 2020 to evaluate the possibility of acquiring Chinese facial recognition equipment to help state security forces fight organised crime, proposal which was ultimately rejected by parliament.

With the rise of the controversy over the risks of espionage that the use of the Chinese multinational's technology could pose, some voices have warned of the threat that Huawei's contracting could pose to quite a few government agencies and offices: a couple of embassies and consulates, part of the infrastructure of the Chamber of Deputies, and even the headquarters of the Public Prosecutor's Office and the Federal Justice in some federal states. Although given the lack of accusatory evidence against Huawei, little has been done by the government about it; only the cancellation of some purchases of Huawei devices.

Brazil is the country that has received the second largest amount of public loans from China in Latin America: 28.9 billion dollars (Venezuela is the first with 62.2 billion dollars), distributed in eleven loans between 2007 and 2017, nine of which come from the Bank of China development and another two from the Export-Import Bank of China. Although this is a large amount, it represents a very small percentage of Brazil's public debt, which now exceeds one trillion dollars. Most of the loans granted by Beijing have been earmarked for the construction of infrastructure for resource extraction. In addition, Chinese companies have invested in the construction of two ports in Brazil, one in São Luís (Maranhão State) and the other in Paranaguá (Paraná State).

The rhetoric of the coronavirus

Bolsonaro soon realised his dependence on China and opted for a policy of accommodation towards Beijing, far from his campaign messages. Once again, Brazil opted for pragmatism and moderation, as opposed to ideology and radicalism, in terms of Itamaraty (Ministry of Foreign Affairs) policy. Likewise, in the face of the instability caused by the US-China trade war and Trump's current weak position, Bolsonaro demonstrated pragmatism by not closing himself off to high-potential trade partners because of his ideology, as was seen last November at the BRICS summit in Brasilia.

But at times, rhetoric emerges that is in keeping with the original thinking. In the wake of the coronavirus pandemic, Bolsonaro has in some messages copied Trump's anti-China narrative. A good example is the exchange tweet exchange between Eduardo Bolsonaro, a federal deputy and the president's eldest son, and the Chinese ambassador, Yang Wanming. The former compared the coronavirus to the Chernobyl accident, insinuating total irresponsibility, negligence and concealed information on the part of the Chinese Communist Party. The ambassador responded that the president's son "on his last trip to the US did not contract the coronavirus, but a mental virus", referring to his ideological proximity to Trump.

However, all this status seems to have calmed down after a phone call between the presidents of both countries, in which both reaffirmed their commitments, especially those of a commercial and financial nature. Moreover, once again Bolsonaro seems to be following the Itamaraty's traditional line of neutrality, despite the constant insistence of his instructions in blaming China for the current tragedy. It is clear that economic dependence on China remains much stronger than the ideological principles of Bolsonaro's political base, however Trumpist it may be.

In addition to the return to the Moon and the arrival on Mars, asteroid travel programmes are also being accelerated [NASA].

GLOBAL AFFAIRS JOURNAL / Javier Gómez-Elvira

[8-page document. downloadin PDF]

INTRODUCTION

Since time immemorial, human beings have imagined themselves outside the Earth, exploring other worlds. One of the first stories dates back to the 2nd century A.D. Lucian of Samosata wrote a book in which his characters reached the moon thanks to the impulse of a whirlwind and there they developed their adventures. Since then, one can find numerous science fiction novels or stories set on the Moon, on Mars, on other bodies in our Solar System or even beyond. Somehow they all lost a bit of their fiction in the middle of the last century, with the first steps of an astronaut on our satellite. Unfortunately, however, what seemed to be the beginning of a new era did not go beyond 5 missions over 2 years.

The first stage began when President Kennedy uttered his famous phrase: "We choose to go to the Moon.... We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win, and the others, too". Although perhaps the end was written in the beginning: the only goal was to prove that the US was the technological leader over the USSR, and when this was achieved the project stopped.

Scene about anchoring on an asteroid to develop mining activity, from ExplainingTheFuture.com [Christopher Barnatt].

GLOBAL AFFAIRS JOURNAL / Emili J. Blasco

[8-page document. downloadin PDF]

INTRODUCTION

The new space degree program is based on more solid and lasting foundations - especially economic interest - than the first one, which was based on ideological skill and international prestige. In the new Cold War there are also space developments that obey the strategic struggle of the great powers, as was the case between the 1950s and 1970s, but today the aspects of exploration and defence are joined by commercial interests: companies are taking over from states in many respects.

However debatable it may be to speak of a new space age, given that since the emblematic launch of Sputnik in 1957, there has been no end to scheduled activity in different regions of space, including human presence (although manned trips to the Moon have ended, there have been trips and stays in Earth's orbit leave ), the fact is that we have entered a new phase.

Hollywood, which so well reflects the social reality and generational aspirations of the times, serves as a mirror. After a time without special space-related productions, since 2013 the genre is experiencing a resurgence, with new nuances. Films such as Gravity, Interstellar and Mars illustrate the moment of take-off of a renewed ambition which, after the short horizon of the shuttle programme - acknowledged as a mistake by NASA, as it focused on the Earth's orbit leave -, is linked to the logical sequence of perspectives opened up by man's arrival on the Moon: instructions lunar, manned trips to Mars and the colonisation of space.

At the level of the collective imagination, the new space age starts from the square where the previous one "ended", that day in December 1972 when Gene Cernan, Apollo 17 astronaut, left the moon. Somehow, in all this time there has been "the sadness of thinking that in 1973 we had reached the peak of our evolution as a species" and that afterwards it stopped: "while we were growing up we were promised rocket backpacks, and in exchange we got Instagram", notes the graphic commentary of one of the co-writers of Interstellar.

Something similar is what George W. Bush had expressed when in 2004 he commissioned NASA to start preparing for man's return to the moon: "In the last thirty years, no human being has set foot on another world or ventured into space beyond 386 miles [621 kilometres in altitude], roughly the distance from Washington, DC, to Boston, Massachusetts".

The year 2004 could be seen as the beginning of the new space age, not only because manned trips to the Moon and Mars are now back in NASA's sights, but also because it was the first milestone in private space exploration with the experimental flight of SpaceShipOne: it was the first private pilot's access to orbital space, something that until then had been considered the exclusive domain of the government.

The American priority then shifted from the Moon to some of the asteroids and then to Mars, with the journey to our satellite once again taking first place on the diary space website. By returning to the Moon, the idea of a "return" to space exploration takes on a special significance.

One of the main instruments for combating poverty loses its relevance between the end of the "golden decade" and the beginning of the "second lost decade".

So-called Conditional Cash Transfers (CCTs) -submission of money to disadvantaged families with a commitment to schooling, medical check-ups or other basic requirements that, along with improving household incomes, sought to promote the options of the younger generation - have over the last two decades helped to significantly increase the class average in Latin America. But once beyond the subsistence level, citizens have recently begun to demand improved services, such as teaching, healthcare or transport - as seen in the protests of recent months in the region - to which CCTs no longer provided an answer. Just as countries were thinking of readapting their policies in response to this change in perspective, the Covid-19 crisis threatened to throw millions of people back into poverty, so cash transfers became necessary again, this time without conditionalities.

Beneficiaries of Brazil's Bolsa Família, one of the pioneering conditional cash transfer programmes [Gov. of Brazil].

article / María Gabriela Fajardo

The first Conditional Cash Transfer (CCT) programmes in Latin America, a pioneer region in the implementation of this instrument, were developed in the mid-1990s in Brazil and Mexico with the intention of "transforming and halting the intergenerational transmission of poverty through the development of human capacities in the most vulnerable families", as stated by a report of ECLAC (United Nations Economic Commission for Latin America and the Caribbean). status The CCTs were designed to provide support to families in poverty or extreme poverty with under-age children. The submission of this monetary aid (also non-monetary) was provided as long as the families complied with basic conditions of health, Education and nutrition for the children.

The implementation of CCTs spread rapidly throughout the region. In 1997, only four countries had any of these programmes: Brazil (Bolsa Escola), Ecuador (Bono Solidario), Honduras (Programa de Asignación Familiar) and Mexico (Progresa). A decade later, almost all Latin American countries had adapted the initiative.

Although in some cases this tool has been controversial, given that some governments have been able to use it as "an instrument of social policy and its targeting is discussed as a strategy to address actions that must operate under restricted budgets", according to the aforementioned report of ECLAC, the truth is that CCTs are considered to have contributed to the socio-economic progress of the region. Alejandro Werner, director for the Western Hemisphere of the International Monetary Fund (IMF), recently pointed this out. "In the last 15 years," he said, giving part of the credit to CCTs, "important progress has been made in the topic area of poverty alleviation and reduction of income maldistribution. In this way, Latin America is probably the region where we see the greatest improvement in income distribution".

agreement Between 2002 and 2014, a time known in Latin America as the "golden decade" (a consequence of the commodities boom ), the poverty rate in the region fell from 45.4% to 27.8%, so that 66 million people overcame that status, according to the Social Panorama of Latin America 2019 published by ECLAC. Additionally, the extreme poverty rate decreased from 12.2% to 7.8%. However, since 2015, the level of poverty and extreme poverty began to increase, patron saint which has continued since then, albeit moderately. For 2019, ECLAC predicted an increase in poverty and extreme poverty to fees of 30.8% and 11.5%, respectively, so that 27 million more people returned to poverty compared to 2014. 

The challenge: from extreme poverty, to the class average

This slight reversal indicates that many who in that "golden decade" gained access to the class average , making this sector of the population a majority for the first time, find themselves in a high Degree of vulnerability. At the same time, these people have seen their expectations of subsequent progress and access to better services from the state unmet after their previous status of survival. The new challenge in many countries was to make public policies revolve around other factors that would allow the consolidation of these people in the class average . This neglect generated discontent that contributed to the large protests in several Latin American countries at the end of 2019.

The increased demands of a better-off population made structural deficiencies more evident. "The region's structural deficiencies have become more evident and their solution is part of the demands of broad social groups, particularly the new generations", according to report Social Panorama. In particular, ECLAC warned about "segmented access to quality public and cultural services".

In Werner's words, "having achieved such a significant reduction in the reduction of poverty also generates an important challenge for policy makers in Latin America, since the design of social policies has to be oriented towards attending to other factors, not to the reduction of extreme poverty. It is not that we have to forget about that, but clearly the challenge now is to focus also on addressing those segments of the population that are no longer in poverty, which are class average ". After underlining the precariousness of this large group of the population that has moved up the social ladder, the IMF's manager for the Western Hemisphere indicated that "clearly the instruments to address this vulnerability are different from the conditional transfer schemes that were implemented in the past", and specifically cited access to quality health and Education .

However, states have faced the need for this paradigm shift without budgetary support. It is evident that the state has little capacity to respond to the new needs of the vulnerable population affected by low levels of education, few opportunities at work and the inefficiency of the pension system.

The countries have found that economic growth, which between 2000 and 2013 hovered jointly around 2%, has been weakening since 2014. Thus, real GDP per capita in the region has declined by 0.6% per year. The causes of this decline in economic growth can be classified into two factors, as Werner explained. Firstly, structural causes have inhibited potential growth due to "low investment, slow productivity growth, a poor business climate Pass , the leave quality of infrastructure and Education". Second, cyclical causes include weak global economic growth and low commodity prices; uncertainty in large regional economies such as Brazil and Mexico, sudden economic stops in stressed economies such as Argentina and Ecuador, and social tensions in the last quarter of 2019.

Coronavirus

The emergence of the Covid-19 pandemic has worsened the economic outlook for Latin America and the Caribbean, for which the April 2020 report forecasts a 5.2% drop in GDP this year. Although the IMF estimates a recovery of 3.4% in 2021, this will not be enough to allay fears of a new "lost decade". In his most recent intervention to comment on these data, Werner warned that between 2015 and 2025 GDP per capita "will be flat".

To cope with this new status, socially aggravated by the health crisis and the suffering of so many people, governments are resorting to direct cash transfers, no longer conditional, to vulnerable households. In a way, it is a return to a stage of need that was even earlier, before the CCTs were extended. It is a return to the urgency of the 1980s, known in Latin America as the lost decade, when countries had to apply shock measures to get out of a severe public debt crisis.

development The president of the Inter-American Development Bank (IDB), Luis Alberto Moreno, believes that it is still too early to speak of a second lost decade, but agrees that the time is ripe for unconditional transfer programmes. "The big question is whether everything we have achieved in the last 15 years in terms of reducing poverty and extreme poverty, with the incorporation of some Latin Americans into the middle classes, is going to be lost or whether, on the contrary, the capacity of the social systems and the governments' drive to increase the debt and the public expense will cushion the effects," Moreno affirms. All the countries "are strengthening the transfer programmes that were developed almost two decades ago, and which have been very successful", although "in this case they will not be conditional, in order to preserve the income of many families".

The changes, although significant in some cases, will not substantially alter trade flows between the three countries.

The new Free Trade Agreement between the United States, Canada and Mexico is now ready for implementation, following ratification by the congresses of the three countries. The revision of the previous treaty, which came into force in 1994, was called for by Donald Trump on his arrival at the White House, citing the trade deficit generated for the US in relation to Canada and especially Mexico. Although some significant corrections have been introduced, following the main American approaches, it does not seem that the revised agreement will substantially modify trade flows between the three countries.

▲ Presidents Peña Nieto, Trump and Trudeau sign the free trade agreement in November 2019 [US Gov.]

article / Marcelina Kropiwnicka

On 1 January 1994, the North American Free Trade Agreement (NAFTA) entered into force. More than twenty years later and under the administration of President Donald Trump, the three partner countries opened a review process of agreement, now called the Free Trade Agreement between the United States, Canada and Mexico (to which each country has given a different acronym: the Mexicans call it T-MEC or TMEC, the Americans USMCA and the Canadians CUSMA).

The text of the TMEC finally ratified by the three countries is broadly consistent with the old NAFTA. However, there are particular distinctions. Thus, it includes stricter rules of origin in the automotive and textile sectors, an updated labour value content requirement in the automotive sector, increased US access to Canadian supply-managed markets, novel provisions related to financial services, and a specification on the establishment of free trade agreements with non-market economies. The joint goal is to encourage production in North America.

New developments negotiated in 2017-2018

The three parties began negotiations in the summer of 2017 and after just over a year they concluded a agreement, signed by the presidents of the three countries in November 2018. The main novelties introduced until then were the following:

1) The agreement revises the regional value content (RVC) percentage for the automotive industry. Under NAFTA, at least 62.5% of an automobile had to be made from North American parts. The TMEC raises the percentage to 75% with the intention of strengthening the countries' manufacturing capacity and increasing the strength of work in the automotive industry.

2) Along the same lines, to support employment in North America, the agreement contains new trade rules of origin to boost higher wages by mandating that 40-45% of auto manufacturing be done by workers earning at least $16 per hour on average by 2023; that's roughly three times the pay a Mexican worker normally receives today.

3) Apart from the automotive industry, the dairy market will be opened to ensure greater access for US dairy products , a demand core topic for Washington. Currently, Canada has a system of domestic quotas that were put in place to protect its farmers from foreign skill ; however, under the new TMEC agreement , changes will allow the US to export up to 3.6% of Canada's dairymarket ,an increase of 2.6% from the original NAFTA provision. Another achievement core topic for Trump was the negotiation of Canada's elimination of what are known as itsmilk classes 6 and 7.

4) Another new aspect is the sunset clause. NAFTA had an automatic sunset clause or a pre-determined end date for the agreement, which meant that any of the three parties could withdraw from the agreement, after a six-month notice of withdrawal notice ; if this did not occur, the agreement remained indefinite. However, the TMEC foresees a duration of 16 years, with the option to meet, negotiate and revise the document after six years, as well as the possibility to renew the agreement after 16 years.

5) The three-country pact also includes a chapter on work that anchors labour obligations at the core of agreement , making enforcement more demanding.

Reforms in Mexico

Precisely to make that last point more credible, US and Canadian negotiators demanded that Mexico make changes to its labour laws to speed up the process of approval and ratification of the TMEC by lawmakers in Washington and Ottawa. US House leaders had doubted Mexico's ability to comply specifically with the labour rights points of agreement. One of President Trump's main objectives in the renegotiation was to reassure US workers that the status of skill would be overcome.

Mexican President Andrés Manuel López Obrador sent a letter to the US congress guaranteeing the implementation of a four-year plan to ensure the achievement of adequate labour rights. López Obrador committed to an outlay of $900 million over the next four years to change the labour justice system and ensure that disputes between workers and employers are resolved in a timely manner. Mexico has also invested in the construction of a Federal Centre for Labour Conciliation and Registration, where labour disputes will be addressed prior to a court hearing.

Obrador showed his commitment to labour reforms by ensuring at least a 2% increase in theminimum wage in Mexico. Most importantly B is that the requirement for direct voting of union leaders will change the way workers' organisations function. With direct elections, decisions on collective agreements will be more transparent. Mexico's plan to improve the working environment will start in 2020.

What's new in 2019 to facilitate ratification

Faced with demands on the US congress , especially from the Democratic majority, to ratify the treaty, negotiators proceeded with two major revisions to NAFTA. One of them aimed primarily at revising a large number of provisions relating to intellectual property, pharmaceuticals and the digital economy:

6) The intellectual property rights chapter seeks to address US concerns to spur innovation, generate economic growth and support jobs work. For the first time, according to the US Trade Representative, the additions include: strict rules against circumvention of technological protection measures for music, movies and digital books; strong protections for pharmaceutical and agricultural innovation; broad protections against theft of trade secrets; and authority for officials to stop suspected counterfeit or pirated goods from official document .

7) A new chapter on digital trade has also been included that contains stricter controls than any other international agreement , strengthening the foundation for the expansion of trade and investment in areas where the US has a competitive advantage.

8) The final draft removes a 10-year guarantee of intellectual property protection for biological medicines, which are some of the most expensive medicines on the market. It also removes granting an additional three years of IP exclusivity for medicines for which a new use is found.

A second group of last minute changes makes reference letter for greater environmental and labour protections:

9) Environment covers 30 pages, outlining obligations to combat trafficking in wildlife, timber and fish; strengthen law enforcement to stop such trafficking; and address critical environmental issues such as air quality and marine litter. New obligations include: protection of various marine species, implementation of appropriate methods for environmental impact assessments, and alignment with obligations under seven multilateral environmental agreements. In particular, Mexico is agreement to improve surveillance to stop illegal fishing, and the three countries agree to stop subsidize fishing for overfished species. To increase environmental accountability, Democrats in the US House of Representatives called for the creation of an inter-agency oversight committee. However, the treaty does not address climate change issues.

10) To ensure that Mexico delivers on its labour promises, House Democrats forced the creation of an interagency committee to monitor the implementation of Mexico's labour reform and compliance with labour obligations. Despite the new and unique 'LVC' requirement, a labour value content rule, it will still be difficult to impose a minimum wage on Mexican automakers. However, US Democrats hope that the condition will force automakers to buy more supplies from Canada or the US, or cause automakers' wages in Mexico to rise.

The finally ratified agreement will replace the one that has been in force for 25 years. Overall, the move from NAFTA to the TMEC should not have a drastic effect on the three countries. It is a progressive agreement that will entail slight changes: certain industries will be affected, such as the automotive and dairy industries, but only to a small extent. In the long run deadline, given the changes introduced, wages should increase in Mexico, which would reduce Mexican migration to the US. Businesses will be affected in the long run deadline, but with back-up plans and new redesigns, the transition process will hopefully be smooth and mutually beneficial.