Leftist Andres Manuel Lopez Obrador promised to review oil contracts should he be elected Mexico’s next president, while also promising to install a free-trade zone along the US/Mexico border. The 63-year-old presidential candidate of the Movement for National Renewal (Morena) party is currently leading in the polls. Opponents have denounced him as a dangerous populist who seeks to lead Mexico in the socialist direction taken by Venezuela’s government under leaders Hugo Chavez and Nicolas Maduro.
In 2013 and 2014, Mexico liberalized its energy sector and offered reforms to provide investors the opportunity to participate in petroleum exploration and extraction. The Mexican government has auctioned to investors sites on land, as well as in shallow and deep water, in an effort to boost production. “We will intervene because we don’t want to end up not producing petroleum,” Lopez Obrador said in a speech at the Wilson Center in Washington. “The fall in production must be stopped – if not, we will end up buying crude oil, and we can’t have that. We are going to intervene quickly and we are going to review the contracts.”
Lopez would not specify how he would intervene in petroleum production, but said that he does not trust those who had signed the contracts for Mexico. Saying he would make sure that the contracts favor Mexico, Lopez said “We are not going to act in an arbitrary way, we are going to be respectful of the law, but we will review the contracts.” He told listeners, “Everything related to Pemex must be public business - their profits are for the Mexican people and we must look after them. It is not an ideological matter, it is not a political matter.”
Currently, crude oil production in Mexico is around 2 million barrels per day, having come down from a height of 3.4 million in 2004. Authorities say that production should increase gradually over several years because of the reforms. However, Lopez Obrador said that the reforms have not lived up to their promise. He said that he plans to stimulate refining by modernizing six government-operated company Pemex’s refineries in Mexico. Saying that he wants to see two more refineries built in Mexico so that the country will not continue importing more than half of the gasoline it consumes, Lopez Obrador said, “We sell crude oil and we buy gasoline, and it’s necessary to pay a surcharge of 30 percent just for the freight, money that could be saved if the gasoline was made in Mexico.” Lopez Obrador said.
Last month, Lopez Obrador called on President Donald Trump and asked him to not impose tariffs nor enter a trade war with Mexico or any other country. Speaking in Los Angeles to promote his 16th book “¡Oye Trump!” [Hey, Trump!], Lopez Obrador said that Mexico and the US are united by “geopolitics.” He added, “We are neighbors, sharing a lengthy border and while we have had disagreements, and Mexico has been wronged, there are also historic links of friendship and culture.”
Moving on to economic matters, Lopez Obrador dismissed US complaints over the $60 billion trade deficit, saying that much of what is exported to the US contains significant amounts of American capital, technology, and parts.
Having long denounced Trump’s statements about Mexico, Lopez Obrador said that is possible that the American president may modify his “aggressive policy” toward Mexico. He said that hatred directed at Latino migrants to the US must be addressed. “The focus should be on stopping, arresting the hate promoted by the propaganda against migrants. Let the absurdity of racial supremacy by addressed by arguments. Let not prosper in the states nor great cities of the United States, nor in the hearts of the noble people and workers of this nation, the phobia against our countrymen nor foreigners in general,” he said.
Lopez Obrador told listeners in Los Angeles that as president he would direct Mexico’s foreign ministry to defend Mexicans’ right to earn a living through honest work in any part of the world. He said that the 50 Mexican consulates in the US will work to defend Mexicans’ rights. Promising that foreign ministry personnel will serve as true advocates for their countrymen, Lopez Obrador said that consuls will be chosen carefully.
While Lopez Obrador promised that he would work with the US to promote bilateral trade and economic development, he said, “We will defend immigrants, but at the same time we will advance an economic policy to generate jobs and guarantee work for Mexicans in their places of origin and where their families, customs, and culture are.” On the issue of trade, Lopez Obrador promised that he would create a free-trade zone all along the US-Mexico border to create jobs while increasing production and technological innovation.
Going to specifics about the free-trade zone, Lopez Obrador said that it will serve to keep workers on our soil. Along the 2000 mile border and in a zone that will be at least 12 miles wide, there will be a tax incentive program where the Value Added Tax (VAT) will be reduced to 8 percent while income taxes will drop to 20 percent.”
Currently, the VAT tax in the rest of Mexico it is 16 percent.
Lopez Obrador promised that the prices for fuel and electricity will drop, adding that he will provide incentives to increase wages and salaries in the free-trade zone. “Soon, very soon, migrants will be able to choose whether to stay on this side of the border with protection from the Mexican government, or return to their country where they are guaranteed the right to work, a just wage, prosperity, and security.”