Tag Archives: trade

Huatulco

A Land in Between: The Istmo de Tehuantepec

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By Randy Jackson

If you were to drive east from Huatulco for about two hours, you’d arrive at a narrow neck of land where the Pacific and Atlantic oceans nearly meet. You’ll know you’re there when you see a landscape covered by hundreds of windmills and feel and hear the force of wind as it hurtles against your vehicle. These are the Tehuano Winds, born from the clash of cool northern air spilling down from the Gulf of Mexico and the rising heat of the Pacific. Channeled through the Chivela Pass in the Sierra Madre, they come roaring toward the coast, sometimes with the force of a hurricane.

This region, known as the Istmo de Tehuantepec, is one of the eight distinct regions of Oaxaca, and it’s known for far more than wind. It’s a crossroads in every sense: a cultural crossroads between the heartlands of ancient Mesoamerican civilizations, an ecological crossroads bridging diverse geographical zones, and now, with the Interoceanic Corridor project, a potential crossroads for global trade.

Ecological Crossroads

The Istmo de Tehuantepec is an ecological crossroads. While the southern portions near the Pacific are dry and windswept, the northern reaches include part of Mexico’s largest tropical rainforest, the Selva Zoque, home to much of the nation’s biodiversity. This varied topography also gives rise to pine-oak forests and more than 300 species of native orchids.

The Istmo holds an extraordinary range of ecosystems within this relatively narrow band of land. There are cloud forests in the Sierra Madre, coastal lagoons along the Gulf of Mexico, and everything in between. Its geographic position bridges the flora and fauna of North and Central America, creating a vital migratory and evolutionary corridor where species from different regions meet, interact, and adapt.

Cultural Crossroads

For millennia, the Istmo de Tehuantepec has served as a crossroads between the heartlands of the Mesoamerican civilizations. The first of these civilizations was the Olmec, widely recognized for their iconic colossal stone heads. Their civilization was centred just to the north of the Istmo in the lowlands of the Gulf of Mexico. Later, as the Olmec declined, the Zapotec civilization emerged in the Valley of Oaxaca.

Archaeological finds suggest trade between these two civilizations, with goods like obsidian and jade traversing the Istmo between these two powers. Trade also existed in later times between the Maya civilization, located south and east of the Istmo, and the formidable city-state of Teotihuacán in the valley of Mexico.

Today, the Zapotec are the principal indigenous group of the Istmo, and their identity here is distinct. The Zapotec language in the Istmo differs significantly from the version in the Valley of Oaxaca. There are also cultural differences, such as the matrilineal social structures in the Istmo compared to the more patriarchal structures of the Zapotec of the Valley of Oaxaca. Other indigenous groups in the region of Istmo de Tehuantepec are the Mixe, roughly centred around the area of Matías Romero, and the Huave (they call themselves the Ikoots), located around San Mateo del Mar on the Pacific coast.

Global Crossroads – Mexico’s Interoceanic Corridor

Among the defining projects of former president Andrés Manuel López Obrador (AMLO), the Interoceanic Rail Corridor may turn out to be the most transformative. Beyond the potential benefits to Mexico overall, the state of Oaxaca, particularly the Istmo de Tehuantepec, could develop into an economic engine. Spanning 303 kilometres (188 miles), this rail link connects the Pacific port of Salina Cruz in Oaxaca with the Gulf port of Coatzacoalcos in Veracruz. Its aim is ambitious: to serve as a land-based alternative, or complement, to the Panama Canal, allowing cargo to be offloaded at one coast, transported swiftly across the Istmo, and reloaded on the other side.

The corridor project aims to stimulate industrial growth in southern Mexico through major infrastructure upgrades, chief among them the modernization of the Salina Cruz and Coatzacoalcos seaports. To draw private investment, the federal government plans to establish ten industrial parks along the route, offering tax incentives to companies willing to build and operate there.

The project is well underway. The expanded seaports are already under construction, and the rail line now has limited passenger service between the two coasts. One of the most high-profile developments tied to the corridor came in December 2024, when President Claudia Sheinbaum announced a $10 billion USD green hydrogen facility to be built by Helax, a subsidiary of Copenhagen Infrastructure Partners. Scheduled for completion in 2028, the project signals a push toward sustainable industry in the region.

If fully realized, the Interoceanic Corridor could mark a historic shift in Mexico’s economic geography, channeling investment and opportunity toward the poorer southern states of Oaxaca and Chiapas. The road ahead, however, isn’t without obstacles: land disputes, environmental concerns, and questions about who truly benefits, especially among local Indigenous communities.

For centuries, the Istmo de Tehuantepec has stood at the intersection of movement and change – a crossroads where two oceans, multiple climate zones, and cultures converge. The Istmo continues in its role as a landscape of transition and is now, possibly, a passageway for global trade.

For contact or comment: box95jackson@gmail.com.

2020

What Happened with NAFTA?

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By Jan Chaiken and Marcia Chaiken

The North American Free Trade Agreement (NAFTA) went into effect in 1994 and effectively made the US, Mexico, and Canada into a single trading zone without tariffs for many products, or lower tariffs than applied to other trading partners. While the treaty was originally envisioned as a mechanism for creating new employment opportunities and enhancing working conditions and standards, its main impacts were an enormous increase in the amount of goods traded among the three nations and a sudden spurt of Mexican nationals moving to the US for employment (a migration that ended after a few years but left a large residue of Mexican citizens living and working in the US). NAFTA also stimulated the creation of entirely new methods of production between the US and Mexico. US companies export intermediate components to manufacturing companies in Mexico, which assemble the finished product and export it back to the US. As a result, now over 40% of the content of goods imported into the US from Mexico is of US origin. This form of cooperation has helped make US businesses more globally competitive,

Even before he was elected president, Donald Trump declared NAFTA to be the worst trade deal ever made, and after he took office, he initiated renegotiation of the treaty. A revised treaty was signed by the presidents of the US and Mexico and the prime minister of Canada on November 30, 2018, a date chosen specifically because the next president of Mexico, an outspoken opponent of NAFTA, took office the following day. In addition, the Democratic party had already been elected to a majority in the US House of Representatives, but the new members had not yet assumed power to assert their objections to the treaty. This effort by the signers to nail down a new treaty in the face of obvious forthcoming impediments did not succeed, and eventually the trade negotiators returned to the bargaining table. The revised version of the new treaty was ratified by the Senate of Mexico in December 2019 and by the US Congress and President by the end of January 2020. Canada waited for the other parties to act on revisions, and now the ratification process has begun in Canada but may take several months more. The new treaty will take effect 90 days after all three countries have ratified it.
The renegotiated treaty is called USMCA in the United States and T-MEC in Mexico. (The government of Mexico always invents more pronounceable acronyms!.) All told, what are the changes? Despite the bombast and rhetoric that arose from interested parties, the new treaty is remarkably similar to NAFTA. The main effect of enacting a new treaty is to end uncertainty as to whether there will be any treaty at all going into the future – if NAFTA had been simply terminated, the normal operations of many companies would have been thrown into substantial chaos.

Among its changes are a requirement that more components for vehicles be produced in the three countries in order to avoid tariffs, and a provision that 40% of each vehicle must eventually be produced by workers who earn at least $16 US per hour (about 3 times as much as is currently paid to the average Mexican factory worker). Trump has touted this provision as necessarily returning more automobile production to the United States and a subsequent increase in jobs for Americans. But if average wages for Mexican auto workers go up by increasing the salaries of industry administrators, low paid jobs will remain in Mexico and prices for U.S. cars and trucks will noticeably rise.

The treaty also gives US dairy farmers access to a larger proportion of the Canadian dairy market than in the past. In particular, more American cheese, milk and butter can be sold in Canada. Correspondingly US consumers will have access to more Canadian dairy products. Canadian sugar can also be marketed in the U.S.

Perhaps ironically, the most sweeping changes in the new NAFTA were proposed, not by the Trump administration but by Democrats in the US Congress. These included provisions related to new labor laws in Mexico that will allow Mexican workers to form independent unions, prevent forced labor, and have increased control of their contracts. The final USMCA treaty includes benchmarks and inspection protocols that will allow enforcement of the labor provisions. Other late changes to the treaty protect the environment by preventing outsourcing of pollution and related jobs to Mexico, but no specific benchmarks for controlling climate change were included in the renegotiated treaty. The Democrats also won a concession from Trump with a provision change that prevents large drug companies from retaining the rights to a class of extremely expensive pharmaceuticals for ten years and from obstructing the sale of equally effective generic forms of the drugs.

One of Mexico’s main original goals in negotiating a new trade agreement was to update and modernize the list of products so as to include ones that didn’t exist when NAFTA went into effect or that had changed substantially in their nomenclature or mode of manufacture or distribution since 1994. The text of the new treaty covers a variety of digital products and intellectual property rights that were not previously included.

Although the ratification of the new NAFTA provides more certainty in the Mexican, American, and Canadian markets, true to his style of governing by chaos, Trump inserted a sunset provision in the treaty. Any one of the three partner countries can pull out of the treaty six years after all have signed and, after a substantial delay, leave the trading partnership. But, by then, the Trump administration will be over, gone; it is hoped that North America and the rest of the world will be back on track to improving global prosperity rather than serving strictly corporate interests.