THE BIG TROUBLE IN AMLO´S MEXICO / THE WALL STREET JOURNAL EDITORIAL

The Big Trouble in AMLO’s Mexico

His one-party power play would violate the USMCA. Where’s Joe Biden?

By The Editorial Board

Mexican President Andrés Manuel López Obrador Photo: Carlos Santiago/Zuma Press

Most Americans don’t think of Mexico much beyond migration, but big trouble is brewing south of the U.S. border that will inevitably flow north. 

The next President will have to make up for the Biden Administration’s inattention as the Morena Party of President Andrés Manuel López Obrador seeks to re-create a one-party state.

AMLO, as the president is known, hands power to his Morena successor Claudia Sheinbaum on Oct. 1. 

A new Congress, in which Morena enjoys large majorities, convenes Sept. 1. AMLO wants to use the 30-day window to pass constitutional amendments that will centralize power in the executive, grant state-owned energy companies priority over private investors, and erect new barriers to foreign trade and investment. 

All of these would violate the 2020 United States-Mexico-Canada Agreement (USMCA) that replaced Nafta.

AMLO proposes to remake the judicial branch by dismissing Mexico’s 7,293 jurists, including the 11 Supreme Court justices and all judges at the federal, circuit and state level. 

Nominees to fill the seats on a new high court will be chosen by the executive and the Morena-controlled Congress. 

All seats will be filled by popular election, making the judiciary a tool of special-interest politics. 

This will end judicial independence, which Mexico is obligated to provide under the USMCA.

In the USMCA negotiation, Trump U.S. Trade Representative Robert Lighthizer removed the right of investors to take claims of state discrimination or takings to USMCA arbitration panels. 

Bad decision, as we warned at the time. 

U.S. investors now must seek redress in Mexican courts. 

Investors in oil and gas, electricity generation, public works, and telecommunications may appeal to USMCA arbitration, but other investors would be at the mercy of the Morena judiciary. 

Mr. Lighthizer wanted to discourage U.S. investors from investing in Mexico. 

Does AMLO realize he’s doing the same?

Americans have some $144 billion direct investment in Mexico, and AMLO’s constitutional rewrite puts those dollars at risk and violates the USMCA by eliminating regulatory independence. 

Reversing market reforms is also a no-no under USMCA.

AMLO’s amendments would allow Mexico to discriminate, as it once did, in favor of the state-owned oil company Pemex and the federal electricity commission. 

Bans on open-pit mining, genetically modified corn and fracking for oil and gas also close markets that were agreed to be open.

Mexicans and Americans are sounding the alarm. 

An Aug. 21 New York City Bar Associationreport warns that the judicial reform “threatens to undermine the institutional conditions that protect human rights, provide impartial access to justice, and preserve the rule of law.”

An Aug. 19 letter to Secretary of State Antony Blinken from nine U.S. industry groups said the “changes risk harming the longstanding trade and investment relationship between the United States and Mexico as well as U.S. companies’ rights.” 

The letter adds: “Mexico’s attractiveness as a place to invest and do business” is at risk as well as “North America’s potential to maintain its competitive position in an increasingly complex global economy.”

Until last week U.S. ambassador to Mexico Ken Salazar had endorsed Morena’s judicial power grab. 

In recent days he has awakened to criticize it, and a furious AMLO said Tuesday he has put U.S. and Canadian relations “on pause,” whatever that means.

The Biden Administration has tried to duck a fight with AMLO, who controls migration flows at the border. 

But a Mexico that returns to economic autarky will produce more huddled masses yearning to work in the U.S.

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Mexico has made great democratic and economic progress in the 40 years since the country began reform under President Miguel de la Madrid. 

AMLO wants to take his country back to the pre-de la Madrid days of one-party rule and a state-dominated economy.

It would help if Mr. Blinken and President Biden gave some support to Mr. Salazar. 

But if they won’t, then Kamala Harris and Donald Trump should put AMLO and Ms. Sheinbaum on notice that their one-party power play will jeopardize Mexican access to the U.S. market. 

The stakes are high for all of North America.