The USMCA trade agreement, now in its fifth year of existence and up for renegotiation next year, is looking increasingly frail.
This is a story we have been following fairly closely over the past couple of years, and as things currently stand it doesn’t look like it’s going to have a happy ending — unless, of course, you’re a Big Ag exec. Mexico has purportedly lost the dispute settlement panel brought by the US and Canada over its ban on imports of genetically modified corn for direct human consumption. That’s according to unnamed sources briefed on the ruling in a preliminary official report that has already been released to interested parties.
Those parties appear to include Mexico’s Economy Minister Marcel Ebrard. Speaking at a conference on the future of North America on Wednesday, Ebrard acknowledged that it could lose the corn dispute against its USMCA partners: “Now they have already given us the preliminary results of the [case], the process is not yet finished,… but maybe they will beat us.”
In other words, not only will the US government have sued Mexico for not buying their high-risk GMO products, citing basic precautionary reasons related to health and the environment, it also appears to have won the case.
Stiff Penalties
After a year of presentations and deliberations, the three arbitrators chosen to oversee the case are expected to issue a ruling by the end of this month. If that ruling goes against Mexico, as the sources cited by publications like El Economista claim, the government will have to reverse its 2023 decree banning GM corn for human consumption — or face stiff penalties, including possibly sanctions.
Mexico’s government may opt for the latter, says Timothy A Wise, author of Eating Tomorrow and senior adviser at the Institute of Agriculture and Trade Policy:
“If Mexico loses, it could accept the penalty but keep the policy. AMLO [President Andrés Manuel López Obrador] has also indicated that he would seek hearings in other international venues. What I think is safe to say is that Mexico has no intention of allowing GM corn into its tortillas.”
Whether that is true or not, time will soon tell. Early indications suggest that AMLO’s presidential successor, Claudia Sheinbaum, is not for budging. Two months before winning the presidential election in June, Sheinbaum signed an accord with Mexico’s peasant organisations to uphold the ban on transgenic maize in food and replace glyphosate with safer alternatives.
On the day of her inauguration, she learnt that US congressmen had just sent a letter to the US Trade Representative exhorting her to pressure Sheinbaum to back down on the GM corn ban. Uncowed, Sheinbaum used her inaugural speech to reiterate Mexico’s rejection of genetically modified corn. Yesterday, as rumours swirled that Mexico had lost the dispute, Sheinbaum announced that her government would in the coming days present a plan to enshrine the protection of the country’s non-genetically modified white corn in the constitution.
We have to differentiate between white corn and yellow corn. Mexico is self-sufficient in white corn and we have an obligation to ensure that the white corn cultivated in Mexico is not genetically-modified. This will be in the constitution as this is the best defence we have for biodiversity as well as for our health.
The potential health risks posed by GM corn — painstakingly documented by the hundreds of peer-reviewed studies cited in Mexico’s defence, including indications of serious kidney and liver ailments in adolescents after even low-level exposures to glyphosate — are magnified in Mexico, where the national diet revolves around minimally processed white corn, in particular tortillas. Cornmeal provides more than 60% of the average Mexican’s daily calories and protein, which is around 10 times the US average, putting Mexicans at 10 times the risk.
“The Emperor Has No Science”
In a recent article for TruthDig, Wise explains why a ruling against Mexico would make very little sense. A brief three-point summary:
- Mexico’s restrictions have not reduced U.S. corn exports in any meaningful way. On the contrary, Mexican imports of US corn have actually surged to record levels during the year-and-a-half since the presidential decree, largely as a result of the country’s drought last year. And even as Mexico gradually phases out its consumption of GM corn for other purposes, mainly as animal feed, US farmers will always have the option of producing non-GM white corn and securing their Mexican markets for the long haul.
- In its complaint, the US government alleged that Mexico’s approach to biotechnology is not based on science, and challenged the Mexican government to prove otherwise. Which it did in emphatic fashion, “providing mountains of evidence from peer-reviewed literature that showed ample cause for concern about the risks of consuming GM corn and the residues of the herbicide glyphosate — most commonly known as Roundup — that often come with it.”
- For its part, Mexico has challenged the US to show that its GM corn is safe to eat in the quantities and forms that Mexicans consume it, and has seemingly received no response. “As a Reuters headline put it in March: ‘Mexico waiting on US proof that GM corn is safe for its people.’ No such proof was forthcoming as the U.S. government flailed in its attempts to counter the hundreds of studies Mexico identified that showed risk. A U.S. filing claiming to rebut the evidence did no such thing.”
As Wise puts it, “the emperor has no science.” But that won’t prevent it from prevailing. The practice of science is a pale shadow of what it used to be, as KLG’s excellent essays keep reminding us.
If the Mexican government loses this case and is forced to repeal the 2023 decree banning GMO corn, it will have effectively lost the ability to set its own food policies. As notes an excellent backgrounder provided by The Nation, this would represent a brutal loss of national sovereignty and food security that could have reverberations far beyond North America:
Do nations have the right to determine their own food policies? Can they make laws to safeguard domestic agriculture, public health, the environment, and the genetic integrity of the national diet?
If sovereignty means anything, the answer to these questions is yes. Defending food supplies is an ancient cornerstone of the social contract, one enshrined in 21st-century trade pacts, including the US-Mexico-Canada Agreement (USMCA), the successor to NAFTA. In December 2023, Mexican President Andrés Manuel López Obrador invoked this right when he banned genetically modified corn for human consumption and announced a plan to phase out the use of glyphosate, GM corn’s signature herbicide, which the World Health Organization calls “probably carcinogenic to humans.” The measure, said López Obrador, was necessary to guarantee Mexicans’ “rights to health and a healthy environment, native corn, [and] ensure a nutritious, sufficient, and quality diet.”…
[W]hatever [the dispute panel’s] judgement, the US-Mexican dispute has put a needed spotlight on mounting global concern about the consolidation of a global food system dominated by a handful of biotech and chemical firms. Mexico’s challenge has also bolstered its standing as hemispheric leader of an agroecology movement gaining momentum across the global south.
“If the biotech companies defeat maize in its center of origin, it will embolden them to do the same in other centers of origin,” said Tania Monserrat Téllez, an organizer with Sin Maiz, No Hay Pais (Without Corn, There Is No Nation), a coalition of groups in Mexico supporting the ban. “We are challenging an entire model of production that threatens not just Mexico, but the world.”
That model revolves around the mass production of lab-designed GM seeds for crops that will end up laced with toxic herbicides like glyphosate. The accompanying business model involves the ruthless enforcement of rigid intellectual copyright and patent laws. It is a business model that has been vigorously opposed by campesino groups throughout Latin America, which, together with North America, is one of the two most important regions of the world for GM crop cultivation.
In 2013, for example, Colombia’s government passed into law a resolution that sought to force the nation’s farmers to exclusively use certified seeds – patented by the world’s largest agribusiness companies. When Colombian farmers realised that sharing or giving away seeds – a practice that dates back millennia – was now a crime, they mounted a collective resistance struggle that brought large swathes of the country’s rural heartland to a standstill, culminating in direct, bloody clashes with government and paramilitary forces.
Eventually, Colombia’s Supreme Court declared the law unconstitutional, not least of all because indigenous communities had not been consulted before its implementation. As Sheinbaum explained during her press conference, the GMO business model is one based primarily on forced dependence:
“Genetically modified organisms have an additional problem which is that the farmer always depends on the seeds. When he sows hybrid corn that is modified in the laboratory… he buys the seed and depends on the seed to be able to continue growing corn. At the same time, the genetic diversity of Mexico’s corn that resulted from our peoples’ toil and that has remained more or less in tact until 1731674514 will be lost.”
That loss would be a tragedy not only for Mexico but for the world as a whole, as argues a 2018 article in Scientific American:
Commercial corn farmers in Mexico planted around 3.2 million acres during the rainy season; the rest—more than 11.5 million acres—was planted by campesinos, the researchers reported in August in Proceedings of the Royal Society. Using previous estimates, [the research team was] able to calculate that in 2010 alone family farmers in Mexico grew approximately 138 billion genetically different maize plants. The domestication of native maize across a wide range of temperatures, altitudes and slopes has allowed rare mutations to take hold that would otherwise disappear, Bellon notes. “Campesinos are generating an evolutionary service that is essential for them, for the country and, given the global importance of maize, for the world,” he says.
In a rational world, Mexico would be allowed — indeed, encouraged — to safeguard this treasure trove of biodiversity against GMO contamination. But alas, this is not a rational world.
That said, it’s not all doom and gloom just yet. There are at least two silver linings to this story:
- As Wise muses, Mexico’s public filings in the GM corn case, which are now a matter of public record, “may actually reopen the debate in the US and elsewhere over the safety of GM crops and their associated chemicals.” Also, as AMLO has said, Mexico will take the case to other international fora. For its part, the Sheinbaum government has announced plans to boost local production of corn and beans, Mexico’s two main staples. Perhaps the presence in the Trump administration of Robert Kennedy Junior, a former environmental lawyer who helped secure a landmark prosecution of Monsanto and its glyphosate weedkiller 2018, will help temper US policy in this area (I know, wishful thinking…).
- Bayer, the owner of glyphosate (after buying Monsanto in 2018 in arguably the worst merger in corporate history), is in dire financial straits. As the FT reported earlier this year, “its breakup looks inevitable.” Its shares continue to slide, having already lost roughly 80% of their value since 2018. They are now worth just 20 billion euros, significantly below its net debt (39 billion euros). In its latest earnings statement, the much-diminished German chemicals giant reported a net loss of 4.18 billion euros in the third quarter. Worldwide sales of glyphosate are sinking and one of the worst performing regions for its agricultural market is Latin America. Just what the German economy needed…
OUCH! Following the profit warning, #Bayer‘s market cap fell to €20bn, even further below net debt. pic.twitter.com/rYvHlGiSAT
— Holger Zschaepitz (@Schuldensuehner) November 13, 2024
With Friends Like These…
The US’ corn dispute with Mexico is one of a host of trade disputes that have been brought against the Mexican government by its USMCA partners since the signing of the trade deal in 2018. In 2023, Mexico had received the most investment arbitration claims under investment protection treaties worldwide, according to the Transnational Institute.
It is a trend that shows no sign of abating. In coming months, the Sheinbaum government is planning to pass over a dozen constitutional reforms, on (among other things) mining, energy, housing, agriculture and labour rights, etc, that are also likely to ruffle feathers in the C-suites of US and Canadian companies.
The USMCA trade agreement, now in its fifth year of existence and up for renegotiation next year, is looking increasingly frail. Trump is threatening to impose ratcheting tariffs of up to 100% on Mexican goods if the Sheinbaum government doesn’t close its border with the US. Of course, this could be pure electoral bluster coming from Trump. But if he does follow through on these threats, it would seriously undermine the very trade deal he himself helped broker as well as invite tit-for-tat tariffs from Mexico’s government.
Meanwhile, in Canada the governor of Ontario, Doug Ford, has called for the removal of Mexico altogether from the trade agreement due to its growing trade and diplomatic ties with China (a topic we covered just a couple of months ago).
“Since signing on to the United States-Mexico-Canada Agreement, Mexico has allowed itself to become a backdoor for Chinese cars, auto parts and other products into Canadian and American markets, putting Canadian and American workers’ livelihoods at risk while undermining our communities.”
The Canadian government is also up in arms about the Sheinbaum government’s plans to radically rewrite Mexico’s mining laws. For over three decades, Mexico has been a veritable paradise for global mining conglomerates, many of them based in Canada, serving up some of the laxest regulations in Latin America. That is now changing. The proposed reforms include a near-total ban on open-pit mining and much stricter restrictions on the use of water in areas with low availability.
Ford’s proposal to eject Mexico from USMCA has an ironic twist given that it was Mexico’s AMLO government that allegedly intervened to helped seal Canada’s membership of the USMCA. By late 2018, relations between Trump and Trudeau had soured to the point where Trump was threatening to leave Ottawa out of the trade deal altogether after already signing a preliminary agreement with Mexico. But AMLO apparently said to Trump: “No, we are going to have Canada participate as well.” And President Trump acceded.
Now, Canada’s Deputy Prime Minister, Economy Minister and WEF Trustee Chrystia Freeland is paying Mexico’s government back by echoing US concerns that Mexico’s trade policy is not in line with its US allies on China. Speaking to reporters in Ottawa this week, Freeland claimed to have heard these concerns from people expected to serve alongside US President-elect Donald Trump, as well as current Biden administration officials and other US business leaders.
Another irony in all this is that as tensions have risen between the US and Mexico, business has never been better. Due to changing global trade patterns and nearshoring strategies, Mexico has become the US’ biggest trading partner, as the volume of goods the US buys from its southern neighbour has surged past those of China and Canada. Exports to the US from Mexico have increased 20 percent-plus annually between 2020 and mid-2024 while exports from China have steadily fallen, according to data cited by CNBC.
But while the Mexican economy may have benefited enormously from rising trade with the US over the past five years, the price tag is growing rapidly.
