US-Mexico Reach Sugar Trade Deal...There's Just One Problem

US Commerce Secretary Wilbur Ross announced Tuesday that he had reached “an agreement in principle” with his Mexican counterpart, Economy Minister Ildefonso Guajardo, on a new trade deal governing the trade of raw and refined sugar between the US and Mexico.

There’s only one problem: The US sugar industry has said it’s unable to support the agreement in its current form, according to Reuters.

Ross said that Mexico met nearly every request by the US sugar industry to fix problems with a 2014 sugar trade agreement.

"Unfortunately, despite all of these gains, the U.S. sugar industry has said it is unable to support the agreement in its present form," Ross said without elaborating on their objections.

Ross added that the agreement will now go through a final “drafting” stage during which he hopes the US sugar industry would come on board. He added that “it should be days, not weeks” before the final agreement is reached, Reuters reported.

The American Sugar Alliance said in a statement that the exiting agreement could allow Mexican producers to exploit a “loophole” allowing them to continue to dump subsidized sugar into the U.S. market.

“This loophole takes away the existing power of the U.S. government to determine the type and polarity of any additional sugar that needs to be imported and cedes that power to the Mexican government,” the Alliance said in a statement.

“We will work with Secretary Ross in the coming days to see if that loophole can be effectively closed so that the basic provisions of the agreement are not undermined and USDA can effectively manage the sugar program”

The "deal," in its current form, leaves Mexico’s overall access to the US market essentially unchanged: The biggest difference is that refined sugar must fall to 30% of overall imports from Mexico, down from a previous limit of 53%. Thanks to protections granted to the US sugar industry by Nafta, sugar prices in the US are higher than anywhere else in the world.

The US sugar industry late last year pressured the Commerce Department to withdraw from an agreement with Mexico that set a fixed system of prices and quotas on imported Mexican sugar. Mexico struck back in March by canceling export permits for sugar being shipped to the US, putting the squeeze on US refiners who were struggling with high prices and tight supplies.

Iowa Sen. Chuck Grassley said that the deal between Mexico and the US “bodes well” for Nafta talks. We imagine that"d be true...if the two sides can reach an honest-to-god agreement, not...whatever this is.

Who Will Really Pay? Mexico Plans Retaliation Over Trump's Border Wall But Ted Cruz Has A Cunning Plan

As President Trump appears to fold on his funding request for a border wall, though tweet-xclaiming "it will get built and help stop drugs, human trafficking etc.," a top Mexican official on Tuesday said that Mexico may consider charging a fee for Americans entering the country in what could be seen as a retaliation to President Trump"s posturing.

Trump has asked congress to include a down payment on the wall in the spending bill but because of scrutiny from both sides, the President announced Monday that he’d be willing to wait until September to revisit the issue of funding; however, his stance on Mexico’s role in paying for the wall hasn’t changed. And as Fox News reports, Foreign Secretary Luis Videgaray, in a meeting with Mexico"s top legislators, called Trump"s plan an "unfriendly, hostile" act, and called on his colleagues to consider the entry fee.

"We could explore - not necessarily a visa, that could impede a lot of people from coming to Mexico - but we could perhaps (have) a fee associated with entry,” Videgaray said. “This is something that I"m sure will be part of our discussion, and I believe we can find points of agreement."

Videgaray went on to say that Mexico would not pay a cent towards the wall. He said if talks between the U.S. and Mexico fail to satisfy both countries, the Mexican government would consider reducing security cooperation. 

"If the negotiation on other themes — immigration, the border, trade — isn"t satisfactory to Mexico"s interests, we will have to review our existing cooperation," Videgaray said. "This would be especially in the security areas ... and that involves the national immigration agency, the federal police and of course, the armed forces."

So, trade deficits, tax plans, and budget decisions aside, who will really pay for the wall? American tourists via a transfer tax on entry to Mexico? Well Ted Cruz has an even more cunning plan. As RT reports, President Donald Trump’s much vaunted Mexican border wall could be built using the fortune of a notorious drug kingpin, according to Republican Senator Ted Cruz, who has proposed the ‘El Chapo Act’.

Cruz, a one time political rival to Trump, has backed the president’s desire to build a 1,000 mile-long (1600km) barrier between the US and Mexico.

Cruz has now gone a step further by proposing the so-called ‘El Chapo Act’, or the Collection of Hidden Assets to Provide Order, which would use any of the $14 billion being sought by the US government in a case against Mexican drug boss Joaquín Guzmán, to construct the barrier.

The US indictment alleges the 59-year-old, who was previously given a 20-year sentence in his homeland for murder and drug offences, led the violent Sinaloa Cartel and amassed “$14 billion from narcotics sales throughout the United States and Canada.”

“Fourteen billion dollars will go a long way toward building a wall that will keep Americans safe and hinder the illegal flow of drugs, weapons, and individuals across our southern border,” Cruz said in a statement.

“Ensuring the safety and security of Texans is one of my top priorities. We must also be mindful of the impact on the federal budget. By leveraging any criminally forfeited assets of El Chapo and his ilk, we can offset the wall’s cost and make meaningful progress toward achieving President Trump’s stated border security objectives.”

Now that is a border wall funding plan we suspect many could get behind.

Mexican Archdiocese Blasts "Immoral" Companies Building Border Wall As "Traitors To Homeland"

Last week we noted that Mexico"s Economy Minister, Ildefonso Guajardo, was somewhat less than completely supportive of Trump"s impenetrable, yet "aesthetically pleasing", 30-foot border wall and issued a stark warning to Mexican companies that it would not be in their best "interests" to participate in the project even though there would be no explicit legal restrictions or sanctions to stop them if they tried.  Per Reuters:

"We"re not going to have laws to restrict (companies), but I believe considering your reputation it would undoubtedly be in your interest to not participate in the construction of the wall," said Mexican Economy Minister Ildefonso Guajardo.

"There won"t be a law with sanctions, but Mexicans and Mexican consumers will know how to value those companies that are loyal to our national identity and those that are not," Guajardo added.

His comments echo those of Mexico"s foreign minister Luis Videgaray, who said on Friday that Mexican companies that see a business opportunity in the wall should "check their conscience" first.

Now, in a stunningly candid editorial, Mexico"s biggest Archdiocese has ramped up pressure against Mexican companies like Cemex who have expressed interest in providing supplies for the construction of the wall saying that such support would be "immoral" and shareholders of such companies "should be considered traitors to the homeland."  Per Yahoo News:

In a provocative editorial, the country"s biggest Archdiocese sought to increase pressure on the government to take a tougher line on companies aiming to profit from the wall, which has strained relations between Trump and the Mexican government.

"Any company intending to invest in the wall of the fanatic Trump would be immoral, but above all, its shareholders and owners should be considered traitors to the homeland," said the editorial in Desde la fe, the Archdiocese"s weekly publication.

Meanwhile, according to a spokesman for the Archdiocese, which centers on Mexico City and is presided over by the country"s foremost Roman Catholic cleric, Cardinal Norberto Rivera, the editorial was not just the ramblings of one disaffected priest but rather represented the views of the diocese.  Therefore, we can only presume by their own words that the Catholic Church is of the belief that enforcing borders, in any fashion, is tantamount to an act of "terror."

The Desde la fe editorial, which was published online, said the barrier would only feed prejudice and discrimination.

"In practice, signing up for a project that is a serious affront to dignity is shooting yourself in the foot," it wrote.

"Any deportation, when there is no proven crime and administrative failure justified according to law, is a sign of terror, and the wall is a monument of intimidation and silence, xenophobic hatred to silence the voices of poorly paid and ill-treated workers, unprotected families and Of abused persons."

Of course, we would be remiss if we didn"t point out the inherent irony of Catholic opposition to border walls given the monstrosity of the structure surrounding the Vatican. 

Below is a loose translation of the full editorial courtesy of Google translate:

As the months go by, Donald Trump"s immigration policies face reality. Demagoguery was easy in the campaign, but actions, in practice, become difficult in the face of the remarkable opposition of civil society, churches and activists, who are faced with an erratic government whose promises are not easy to consolidate.

Trump allocated a budget of two billion dollars for the construction of the wall, which should have solid infrastructure features and soft aesthetics to hide, under paint and lights, hatred, mutilation and division.

What is regrettable is that, on this side of the border, Mexicans are ready to collaborate with a fanatical project that annihilates the good relationship in the concert of two nations that share a common border.

In recent days, some companies with Mexican capital raised their hands to participate in the tenders, and offer technical and expertise to deal with specific aspects in the construction of the wall of ignominy, providing cement, materials, luminaires and painting; Under the good argument of being companies that generate jobs, these companies seek to make a profit, regardless of the consequences, and consolidate their presence in the industry they exploit. It is not two or three, but more than 500 companies that seek to obtain good economic slices. For them, the end justifies the means.

However, what is most surprising is the lukewarmness of the Mexican government"s economic authorities, which have not shown any firmness against these entrepreneurs.

Some have pointed out that the United States has the inalienable right to build the wall and do whatever it wishes to do, even if it violates the dignity of the people. It is those same myopes who fail to see that the wall is a frank threat that violates social relations and peace.

Recall that, in the name of ideology, entire nations and continents were divided, plunging thousands into uncertainty. The only prevailing voice was that of arms, bullets, repression and legal murder for anyone who dared to cross a border in search of freedom.

The investment of Mexican companies in the wall will end up nurturing all those forms of discrimination that throughout history have subjected millions of human beings. Virtually, joining a project that is a serious affront to dignity, is to be shot in the foot.

Any deportation, when there is no proven crime and administrative failure justified according to law, is a sign of terror, and the wall is a monument of intimidation and silence, xenophobic hatred to silence the voices of poorly paid and ill-treated workers, unprotected families and Of abused persons; It is a retreat from the noblest longings of mankind, by which much blood has been shed; Is a prelude to the destruction of the values ??of democracy and social rights.

The wall represents the predominance of a country that is considered good with the manifest destiny to overwhelm a nationality that has considered perverted and corrupt: the Mexican.

Pope Francis appeals to forge peace between nations. In February 2017, during a weekly catechesis, he said: "In the social and civil context, I appeal not to create walls, but to build bridges. Do not respond to evil with evil. They defeat evil with good, to offense with forgiveness."

Any company intent on investing in the wall of the Trump fanatic would be immoral, but above all, its shareholders and owners should be considered as traitors to the motherland.

Ron Paul Suggests A Better Solution Than Trump's Border Wall

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Just one week in office, President Trump is already following through on his pledge to address illegal immigration. His January 25th executive order called for the construction of a wall along the entire length of the US-Mexico border. While he is right to focus on the issue, there are several reasons why his proposed solution will unfortunately not lead us anywhere closer to solving the problem.

First, the wall will not work. Texas already started building a border fence about ten years ago. It divided people from their own property across the border, it deprived people of their land through the use of eminent domain, and in the end the problem of drug and human smuggling was not solved.

Second, the wall will be expensive. The wall is estimated to cost between 12 and 15 billion dollars. You can bet it will be more than that. President Trump has claimed that if the Mexican government doesn’t pay for it, he will impose a 20 percent duty on products imported from Mexico. Who will pay this tax? Ultimately, the American consumer, as the additional costs will be passed on. This will of course hurt the poorest Americans the most.

Third, building a wall ignores the real causes of illegal border crossings into the United States. Though President Trump is right to prioritize the problem of border security, he misses the point on how it can be done effectively and at an actual financial benefit to the country rather than a huge economic drain.

The solution to really addressing the problem of illegal immigration, drug smuggling, and the threat of cross-border terrorism is clear:

remove the welfare magnet that attracts so many to cross the border illegally, stop the 25 year US war in the Middle East, and end the drug war that incentivizes smugglers to cross the border.

The various taxpayer-funded programs that benefit illegal immigrants in the United States, such as direct financial transfers, medical benefits, food assistance, and education, cost an estimated $100 billion dollars per year. That is a significant burden on citizens and legal residents. The promise of free money, free food, free education, and free medical care if you cross the border illegally is a powerful incentive for people to do so. It especially makes no sense for the United States government to provide these services to those who are not in the US legally.

Likewise, the 40 year war on drugs has produced no benefit to the American people at a great cost. It is estimated that since President Nixon declared a war on drugs, the US has spent more than a trillion dollars to fight what is a losing battle. That is because just as with the welfare magnet, there is an enormous incentive to smuggle drugs into the United States.

We already know the effect that ending the war on drugs has on illegal smuggling: as more and more US states decriminalize marijuana for medical and recreational uses, marijuana smuggling from Mexico to the US has dropped by 50 percent from 2010.

Finally, the threat of terrorists crossing into the United States from Mexico must be taken seriously, however once again we must soberly consider why they may seek to do us harm. We have been dropping bombs on the Middle East since at least 1990. Last year President Obama dropped more than 26,000 bombs. Thousands of civilians have been killed in US drone attacks. The grand US plan to “remake” the Middle East has produced only misery, bloodshed, and terrorism. Ending this senseless intervention will go a long way toward removing the incentive to attack the United States.

I believe it is important for the United States to have secure borders, but unfortunately President Trump’s plan to build a wall will end up costing a fortune while ignoring the real problem of why people cross the borders illegally. They will keep coming as long as those incentives remain.

Pena Nieto Tells Trump Mexico "Will Not Pay For Any Wall", Demands Respect

Mexican President Enrique Peña Nieto reiterated Wednesday in a pre-taped address that his country "will not pay for any wall," but expressed willingness to work with the Trump administration.

Peña Nieto also said he had ordered government agencies to step up protection for immigrants, demanding respect as an autonomous nation, while admitting Mexico is negotiating new trade rules with US.

"I have ordered the Foreign Ministry re-enforce measures of protection for our nationals (inside the US).  The 50 Mexican consulates in the United States will become authentic places of defense for the rights of the migrants.  Our communities are not alone.  The Mexican government will offer them the legal counsel which will guarantee them the protection they need.  I call on the legislators and civil society organisations to join their efforts so as to back them and support them (migrants). Wherever there is a Mexican migrant at risk that needs our support there we must be.  That is where there country should be."

"I am saddened and am against the decision by the United States to continue with the construction of a wall that for years, far from joining us has divided us.  Mexico does not believe in walls.   I have said time and time again: Mexico will not pay for any wall."

"These Executive orders also occur at a moment in which our country is initiating talks to negotiate new rules of cooperation, commerce, investment, security, immigration in the North American region.  This negotiation is very important for strength, certainty, and future of of our economy and our society.  As President of the Republic, I assume, squarely, the responsibility of defending and guarding the interests of Mexico and Mexicans.  It is my duty to deal with the problems and confront the challenges.  Based on the final report of the Mexican officials that at this moment are in Washington and the prior consultation of the Senate chamber and the National Conference of Governors (Mexican), I will make a decision about the next steps to be taken. "

"Mexico offers and demands respect. "

Finally, the Mexican president didn"t say whether he will carry out planned visit to Washington on Jan. 31.

While the costs of "building the wall" are largely unknown, estimates have been made by both political parties...

You will find more statistics at Statista

In a Monday speech, Peña Nieto said his government is prepared to negotiate with the US if Mexico"s national sovereignty is respected. He laid out economic integration and respect for the rights of migrants and the money they send home as his nation"s key negotiating points.

Trump has suggested some of the $25 billion in annual remittances that migrants return home would be retained to pay for the border wall.

Mexico Warns It Is Ready To Quit NAFTA If Trump Crosses "Red Lines"

Under relentless pressure from President Donald Trump, Mexico is said to be ready to discuss changes to trade rules about a product"s country of origin to try to avoid a disruptive fight with the United States over commerce.

As the two countries begin a difficult new relationship, Mexico sees possible common ground with Trump on the "rules of origin" of the North American Free Trade Agreement (NAFTA) that binds the two countries and Canada, Reuters reported. However, as AFP adds, even before the talks started, Mexico has drawn red lines ahead of the negotiations with Trump"s administration, warning it could quit the talks and a major trade pact if the discussions hit a wall, no pun intended.

Of course, it all begins with the wall.

During his campaign, Trump vowed to make Mexico pay for a massive border wall and threatened to finance it by tapping into the $25 billion in remittances that Mexican migrants sent back home last year. Mexico does not see things that way. "There are very clear red lines that must be drawn from the start," Economy Minister Ildefonso Guajardo told the Televisa network as he prepares to meet with US officials in Washington on Wednesday and Thursday.

Asked whether the Mexican delegation would walk away from the negotiating table if the wall and remittances are an issue, Guajardo said: "Absolutely."  Guajardo and Foreign Minister Luis Videgaray will hold the face-to-face talks with the new US administration ahead of a meeting between Trump and President Enrique Pena Nieto on January 31.

In addition to the wall, Trump wants to renegotiate NAFTA with Mexico and Canada, warning last week that he would abandon the pact unless the United States gets "a fair deal." The Mexican government has responded that it is willing to "modernize" the pact, which came into force in 1994 and represents $531 billion in annual bilateral trade between Mexico and the United States.

Some 80 percent of Mexico"s exports go to the United States, a clear indicator of the country"s dependence on the US market for its economic well-being.

But Guajardo warned on Tuesday that Mexico was also willing to use the nuclear option, and exit the 23-year-old agreement. "If we"re going for something that is less than what we have now, it doesn"t make sense to stay in," Guajardo said.

That said, since Trump"s stated intention is ultimately dismantling Nafta, Mexico"s gambit does not sound like a very reasonable initial negotiating position.

Cited by AFP, Pena Nieto vowed on Monday that there would be "neither confrontation nor submission" in the negotiations, which will include trade, immigration and other issues. Pena Nieto also looked further north for help on Sunday as he spoke with Canadian Prime Minister Justin Trudeau by telephone to discuss ways to boost North American economic integration.

Luis de la Calle, a Mexican economist and one of the original NAFTA negotiators, said it is impossible to enter negotiations without being willing to walk away if necessary.

Trump "puts pressure in an almost extortionist manner... to get as many concessions as possible," de la Calle told AFP. "But countries must be much smarter."

It was not clear just how countries can be smarter if, at least in the case of Mexico, the US has enough trade leverage it could cripple 80% of Meixcan exports overnight.

Videgeray said that while the United States has "great interest" in talking about trade, Mexico wants to "talk about every issue."

On a separate topic, Pena Nieto has called on the Trump administration to do more to stop the illegal flow of weapons from the United States into Mexico, which Mexican officials blame for fueling a brutal drug war. To this Trump has responded that Mexico has to do more to stop the illegal flow of drugs from Mexico to the United States.

Meanwhile, even as it faces tough talks with the United States, the Mexican government is setting its eyes on new trade pacts with other countries. After Trump withdrew the United States from the Trans-Pacific Partnership on Monday, Pena Nieto said his government would immediately seek to negotiate bilateral agreements with other TPP members to "diversify" his country"s trade relations.

Guajardo noted that Mexico has good relations with China and said Beijing was a "big concern" for the Trump administration. It is unclear whether China has an interest in expanding its Pacific trade partnership to include the US neighbor, and how the US would react to such an eventuality.

But Valeria Moy, director of the Mexico Como Vamos think tank, said Latin America"s second biggest economy cannot lose sight of the importance of the United States while it looks for deals elsewhere.

"If you have the world"s biggest market next door to you, that"s the market you need to take care of, period," Moy said. "What we can diversity is who we buy from." And since that is not the US, one can see why Trump is confident he has all the leverage ahead of this particular round of trade talks which will be closely followed by the rest of the world, as it sets the stage for similar bi- and multi-lateral talks with other nations around the globe all vying for the wallet of America"s overindebted consumer.

Finally, making matters worse for Mexico is that suddenly its "other" Nafta partner, Canada, appears to have left it hanging. In a separate Reuters report, Canada said it would focus on preserving its U.S. trade ties during talks to renegotiate NAFTA and may not be able to help Mexico avoid being targeted by the Trump administration, Canadian government sources say.

"We love our Mexican friends. But our national interests come first and the friendship comes second," a source said on the sidelines of a cabinet retreat in Calgary, Alberta.

"The two are not mutually exclusive," the source added. The comment was the starkest yet by Canadian officials, who are increasingly convinced Mexico will suffer the most damage from changes to the North American Free Trade Agreement.

The government dismisses the idea that Canada will formally abandon Mexico. Foreign Minister Chrystia Freeland said on Tuesday that Canada supported NAFTA as a trilateral agreement and noted that Trudeau had talked to Mexican President Enrique Pena Nieto over the weekend.

That said, the government sources note Mexico and Canada would appear to have little in common. Trump is unhappy about the large U.S. deficit with Mexico and has promised to punish firms with manufacturing bases there.

"Our negotiating positions are totally different. Mexico is being hung out of an skyscraper window by its feet," said a second government source.

"Mexico is in a terrible, terrible position. We are not," said another Canadian person involved on the trade file.

And just like that, Trump has managed to divide, and shortly conquer, his counterparties in yet another negotiation.

Mexico Panics As Trump's Leverage "Far Greater Than What Mexican Elites Thought"

Earlier this morning we noted that the Mexican Peso was plunging once again - very close to all-time record lows - as fears spread that Ford"s decision yesterday to cancel a $1.6 billion plant may become the norm following president-elect Trump"s tweet that "this is just the beginning."

Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning - much more to follow

— Donald J. Trump (@realDonaldTrump) January 4, 2017

And here is the peso:

And while many senior politicians within the Mexican government dismissed Trump"s campaign speeches as empty rhetoric, per the Associated Press, Ford"s cancellation of it"s $1.6 billion auto plant has served as a "much needed wake-up call" that shows that Trump has far greater leverage "than what Mexican elites thought until recently."

"Trump leaves Mexico without 3,600 jobs," read the headline on El Universal. "Ford"s braking jolts the peso," said Reforma, referring to the Mexican currency"s nearly 1 percent slump following the news.

Two weeks before inauguration, the scuttling of the planned Ford factory and Trump"s pressure on General Motors should be a "much-needed wake-up call," said Mexico analyst Alejandro Hope.

It shows "how much actual leverage Trump has within specific companies, which is far greater than what Mexican elites thought until recently," Hope said. "They claimed that at the end of the day economic interests would prevail over political messaging. That"s clearly not the case."

All of which has caused some level of panic within the Mexican political and media spheres from the elites who are slowly realizing that when Trump says he wants to disrupt the status quo by renegotiating NAFTA and building a border wall, "he means it"....as completely shocking as it may be that a politcian might actually mean what he says. 

In an editorial, El Universal also recalled the deal Trump struck in December with Carrier to keep 800 of 1,300 jobs at an Indiana furnace factory from being sent to Mexico, in return for millions of dollars in tax incentives. It also implicitly criticized the Mexican government"s response to the incoming administration.

"Mexico loses thousands of jobs with no word on a clear strategy for confronting the next U.S. government which has presented itself as protectionist and, especially, anti-Mexican," the paper wrote. "Trump will try to recover as many U.S. companies that have set up in Mexico as possible. He will try to make them return at whatever cost, through threats or using public resources."

"Ford"s decision is indicative of what awaits the economies of both countries," the daily La Jornada said. "For ours a severe decrease in investment from our neighboring country, and for the U.S. a notable increase in their production costs."

Hope said more decisions like Ford"s are likely to come. And while the loss of a single planned plant probably does not fundamentally change the U.S.-Mexico economic relationship, "it certainly shows that the idea that the status quo was entrenched was false."

"This should put us on notice that when he says that he wants to renegotiate NAFTA, he means it," Hope said.

As we pointed out a few days ago, with Trump scoring new victories with every passing day, the question no longer seems to be whether or not Vicente Fox will pay for the "f**king wall," but rather, how he"ll pay for it...cash or credit, Mr. Fox?