Mexico’s International Trade Agenda for 2017

mexico1International events such as “Brexit,” the United States’ potential withdrawal from the Trans Pacific Partnership Agreement (TPP) or the possibility of renegotiating the North American Free Trade Agreement (NAFTA) are all extremely relevant for Mexico’s economy – which has the fourth-largest gross domestic product (GDP) in the Americas and the 15th-largest GDP in the world. The Mexican economy rests heavily on its exports, making 2017 a particularly challenging year for Mexico’s international trade agenda during this last year of the current administration. In 2018, Mexico will hold federal elections to designate a new president and Congress.

The Mexican international trade agenda will be most likely occupied by existing negotiations – such as the modernization of the European Union (EU)-Mexico Global Agreement – as well as with current trade issues such as China’s steel overcapacity and the sugar export restrictions imposed on Mexican exports to the U.S., but there are certain likely events that deserve a close examination:

  • likely formalization of the United Kingdom’s exit from the EU – widely known as “Brexit” – a formal invocation of Article 50 of the Lisbon Treaty that may have an impact in the current free trade agreement (FTA) negotiations with the EU and also may require bilateral negotiations with the UK
  • renegotiation of NAFTA or a possible U.S. withdrawal
  • formal U.S. withdrawal from the TPP and/or possible revival of the initiative in a different format – with or without the U.S.
  • surge of trade protectionist measures, not only through the adoption of additional unilateral measures allowed under international trade agreements, either by Mexico or against Mexican exports, such as antidumping and countervailing duties, but also through more aggressive unilateral actions (customs duties increases, safeguards investigations, tax or export restrictions, etc.), all of which may result in additional dispute settlement proceedings under the World Trade Organization (WTO) or bilateral FTAs – such as NAFTA Chapter XIX­– and investment treaties
  • increase activism by Mexico to diversify its export destinations and foreign direct investment sources, particularly with China, Korea and Japan, to expand and increase trade flows. (Mexico already has an FTA with Japan, has explored the possibility of an FTA with Korea and has not formally expressed yet any interest to negotiate with China)
  • increased pressure by China to obtain recognition from Mexico as a market economy, which could have a serious impact on new antidumping investigations and on the 27 existing antidumping duty orders against Chinese products (out of the current 52 products that are subject to antidumping orders in Mexico); China recently filed for consultations with the EU and the U.S. under the WTO to address this matter

On its own, 2017 will be a busy, uncertain year for Mexico’s trade agenda. The uncertainty over Mexico’s relationship with the U.S. will add additional stress to the system. While the debate will continue to rage in the U.S. as to whether NAFTA was a good trade deal for the U.S., NAFTA brought benefits to Mexico that created a more stable neighbor for the U.S.

Article originally published here

Emerging Nations Have Taken the Lead on Renewable Energy

Historically speaking, wealthier, developed nations, particularly the US and Europe, have led the world on renewable energy, investing the most capital and building the most capacity. Last year, that changed.

In 2015, for the first time, countries outside the Organization for Economic Cooperation and Development (OECD) invested more in renewable energy and added more renewable capacity than the 15 OECD countries combined.

This is only a bit of symbolism — the lines have been converging for a while — but it is important symbolism.

Led by China, emerging nations have emerged

The finding comes from the 2016 Climatescope report from Bloomberg New Energy Finance (BNEF). It’s an annual snapshot of the state of clean energy in non-OECD countries. It goes deep, ranking countries on policies, finance, value chains, and various other metrics.

They’ve got an excellent data visualization to walk you through the results, if you’re interested, and a cool widget that allows you to compare any two countries on any set of metrics.

To me, the headline news is illustrated by two charts. This shows renewable-energy capacity additions from 2011 to 2015:

climatesope capacity additions(BNEF)

As you can see, after some fluctuations, non-OECD countries nosed ahead last year. It might bump around another year or two, but the longer term trend is clear: The center of clean-energy gravity is moving south.

And it’s almost entirely due to China. The country installed 142 gigawatts (!) of new power generation capacity in 2015, of which 33 GW was wind and 18 GW was solar PV. (Compare to India, which installed 27.8 GW of new capacity — 2.6 GW of wind and 1.7 GW of solar PV.)

This shows renewable-energy investment from 2011 to 2015:

climatescope investment(BNEF)

Again, these numbers might bump around for a few years, but renewable-energy investment in non-OECD countries is headed up, whereas investment in developed nations seems to have plateaued.

The surge in non-OECD investment is led by solar:

Investment in utility-scale solar in Climatescope nations spiked 43% from 2014 to $71.8bn in 2015. Total clean energy investment in Climatescope countries rose $24.8bn with solar accounting for nearly all of that. Photovoltaic (PV) costs are essentially on par with wind and, as recent tenders for power contracts have demonstrated, PV can now out-compete fossil-fuelled projects on price.

Solar and wind now dominate renewable-energy investment. “Together, [wind and solar] accounted for 65% of new clean energy investment in 2011,” BNEF writes. “By 2015, that had risen to 94%.”

And investment is spreading beyond China as well (this is from a different BNEF report):

An expanded list of emerging countries committed billions to clean energy last year with record increases, including Mexico ($4.2bn, up 114%), Chile ($3.5bn, up 157%), South Africa ($4.5bn, up 329%) and Morocco ($2bn, up from almost zero in 2014).

The world’s fate will now be decided by the race between coal and renewable energy in the Southern Hemisphere. Coal growth is slowing, but we are still headed for catastrophe.

This (okay, fine, three charts) is from the US EIA’s International Energy Outlook 2016:

EIA: energy sources through 2040(EIA)

If this unfolds, global average temperatures will exceed 2 degrees — possibly even 3 or 4. To stop short of 2 degrees, global coal use will need to be close to zero by 2040, with oil not far behind.

Emerging nations, like their OECD counterparts, are moving in the right direction, but too slowly.

Article originally published here