Saturday, June 01, 2019

From Markets as Governance to Governance Through Markets--Considering President Trump's "Statement Regarding Emergency Measures to Address the Border Crisis" and the Mexican Response, All With Chinese Characteristics

By now it is well known that President Donal Trump has announced an intention to impose a series of increasing tariffs on Mexican goods if Mexico does not demonstrate to his satisfaction immediate progress in efforts to stem the flow of migrants through Mexico. Less well known among American audiences but equally important has been the response of Mexican President Andrés Manuel López Obrador, who has both objected to the policy and its punitive intent and also sought to find common ground for advancing both nation's interests. This appeared in Mexican social media and then widely reported. For news coverage see, here, here, here, and here. At the same time, the Chinese state announced the roll out of a new blacklist policy against economic actors and individuals deemed unfriendly or unhelpful to China and its business interests. This was undertaken, in part, in response to the actions of the United States which had recently announced a blacklist of Huawei, and China ceased purchasing American soybeans (and threatened the supply of rare earths) as part of its ongoing dispute with China about the terms of their bilateral trade.

Both President Trump's Statement explaining the imposition of tariffs, and President Andrés Manuel López Obrador's response letter (Spanish original with my English translation) follows, along with brief reflections. Those reflections suggest the way that profound changes are already occurring in the normative structures of economic globalization.  Principally it suggests the way in which global economic stakeholders are increasingly retreating from private market driven governance to state to state mechanisms.  But these are not a reactionary move toward pre-1945 models.  It is too late for that. Instead there is a Chinese model that suggests the contours of the new intertwining of economics and politics in the role of states within and through production chains.  These new models of  state action arise within environments of free movement of goods and capital in which markets and production across borders define the extent of effective state projections of power.  These will define  the new forms of synergies between private sector driven governance (in which the state itself may be an actor) at the micro-level delegated to markets and compliance responsibilities of entities, while at the same time strengthening the role of the state (the the largest governmentalized non-state enterprises) in driving macro-economic decision making through their economic instrumentalities (whether public or private in organization).

The announcement by President Trump of tariffs to be imposed on Mexico if it fails to address a migration issue with effects on the United States, and President Andrés Manuel López Obrador's response deploring the use of market power to resolve bilateral relations, embracing the role of human rights and sending his high level ministers to seek a solution presents a quite visible expression of a substantial change in the way that states engage within the realities of economic globalization.  Each statement provides a classic example of the way in which framing shapes the realities of discourse, and the ability to perceive problems and the plausibility of variations toward their solution.  While President Trump sees invasion and allied states as conduits and facilitators causing a threat to national sovereignty by other than direct military means, Mexico sees human rights problem over which they have little control and few resources even as they are constrained by their own view of the limitations on action necessitated by their application of what they understand as the requisites of international human rights. While President Trump sees Mexican policy as reflecting a form of regulatory governance in which the state can wrap itself in high morals while leaving open the door to robust markets in the transport of humans across borders, a  means of facilitating economic, President Andrés Manuel López Obrador sees a threat to Mexico's ability to combat the corruption that makes such suppressed markets possible. Where President Trump sees an overarching duty to protect national sovereign interests, Present López Obrador sees an expression of national chauvinism now centuries old.

Ironically both while President Trump and President López Obrador see the intimate linking between economic policy and societal issues that spill across borders.  Yet the former understands that as a tool for managing public decision making, and the later sees in that connection a means of addressing societal issues through the governmentalization of private sector activity. President Trump would aggregate economic and regional policy int he Caribbean, of which the economic actions threatened against Mexico are merely a part of a larger regional strategy, a pivot toward the Caribbean marked by the aggressive use of economic tools to address the political actions of states (The Pivot Toward the Caribbean: Announcement of Permission to Sue Anyone Using American Property Confiscated by Cuba and the Larger Trump Administration Strategy Coordinating Policy Against Cuba, Nicaragua, and Venezuela).  President López Obrador would see a bilateral arrangement with spillover effects and the decoupling of trade from societal policy except to the extent that macro-economics could be used as incentives in national self-help programs.  Economic policy is a tool and not a weapon.  

In both cases, then, the most peculiar aspect of this "dialogue" has been its central focus on the use of economic policy, and principally the control of trade, as a mechanism for managing state to state relations. This begins to suggest the converse of the markets driven development of regulation and state policy that is pre 2016 economic globalization in favor of the adoption of a notion of economic activity as yet another arrow in the arsenal of state to state dialogue.  The ironic part, of course, is that this si precisely what many progressives wanted--the re-introduction of vigorous government in the management of economic activity--it is just that this is not quite the sort of activity they might have had in mind. 

More interesting still is the way that the United States here, as in other matters, is imitating the nationalization of the private sector as a tool for the projection of state power that has been increasingly well defined by China's "core" leadership in the development of its own brand of economic internationalism.  It is quite curious that even as Mr. Trump was announcing the use of tariffs as a means of projecting U.S. power in the context of a dispute with Mexico over migration policy (as a threat to its economic and social well being), the Chinese leadership was announcing "a list of so-called unreliable entities of foreign companies and people that “seriously damage” the interests of domestic firms." (China is establishing an ‘unreliable entities’ list that will include companies and people).
“Foreign enterprises, organizations and individuals that do not comply with market rules, violate the spirit of contract, block or cut supplies to Chinese firms with non-commercial purposes, and seriously damage the legitimate rights and interests of Chinese enterprises, will be added to the list of unreliable entities,” Gao Feng, a spokesperson at the Ministry of Commerce, said Friday. (China is establishing an ‘unreliable entities’ list that will include companies and people).
These tactics are meant in some large measure to be deployed against U.S. businesses as China and the United States battle for control of the structures and drivers of global trade in the form of their dispute about bilateral economic relations.  And it came days after the U.S. (always a pioneer in these matters)  blacklisted Chinese telecom giant Huawei, halting its ability to purchase American chips. Even more interesting still will be the way that these blacklists will be managed through the data driven analytics of China's Social Credit System, now to be applied to foreigners as well in their conduct beyond but with an effect on China. All of this is echoed and applied in a novel way by the United States in managing its state to state relations with Mexico over migration.At the same time, these refine the project of building a comprehensive social credit system, now in ways that apply to businesses with which China engages. Central to this is the principle of trustworthiness or reliability at the heart of the construction of social credit analytics.  And related to that is a State Council Opinion that builds a regulatory social credit architecture on the analytics of trustworthiness (《关于加快推进失信被执行人信用监督、警示和惩戒机制建设的意见).

The two statements, then, merely confirms the discursive forms (the patterns of speech that each uses to convey messages to internal and external audiences using symbolic and coded forms of expression) in which these two states, through their Presidential incarnations, will continue to talk past each other while using a common vocabulary.  In that context it will be to actions rather than discourse that the realities of accommodation will have to be measured.  The Chinese overlay suggests that the forms of such dialogue have also changed.  López Obrador's target, then, is not necessarily America First, as he suggests.  Rather it is the renewal of state based internationalism (ironically a tool that López Obrador deploys when it suits him) driven by transnational markets and global production chains.At the same time, it presents an echo of what in retrospect will be the emerging patterns of "new era"  globalization.  To that end it is worth looking to China, whose core leadership is driving aggressively a change in approach from one in which markets lead states, to one in which states use markets to national ends within the constraints (and possibilities offered by) global production.  The Chinese have made that explicit on a one to one basis--using the state to serve as a gatekeeper into Chinese global production chains based on the willingness of public and private entities to serve Chinese interests.  To this mico-economic approach of state the United States has added a macro element, now being fined tuned in its formulation of a new policy in the shadow of Chinese efforts to modify the rules of transnational economic engagement. The United States will use tariffs not so much to protect American economic activity (which is transnational in scope and protective of its own global production chains), but as a means of serving those interests in specific context.  In the case of Mexico it is to counter Mexico's well known use of migration as a pressure point to leverage its power in negotiations against the U.S (something the Turks learned well in the use of Syrian refugees as a lever in their negotiations with the EU). With respect to the rest of the Caribbean Tariffs and micro interventions are used to reshape the power and state behavior dynamics of the Caribbean region as the U.S. tilts in a way more protective of its perceived interests in that region.  


Statement from the President Regarding Emergency Measures to Address the Border Crisis
Donald J. Trump
Issued on: May 30, 2019

 As everyone knows, the United States of America has been invaded by hundreds of thousands of people coming through Mexico and entering our country illegally. This sustained influx of illegal aliens has profound consequences on every aspect of our national life—overwhelming our schools, overcrowding our hospitals, draining our welfare system, and causing untold amounts of crime. Gang members, smugglers, human traffickers, and illegal drugs and narcotics of all kinds are pouring across the Southern Border and directly into our communities. Thousands of innocent lives are taken every year as a result of this lawless chaos. It must end NOW!

Mexico’s passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States. Mexico has very strong immigration laws and could easily halt the illegal flow of migrants, including by returning them to their home countries. Additionally, Mexico could quickly and easily stop illegal aliens from coming through its southern border with Guatemala.

For decades, the United States has suffered the severe and dangerous consequences of illegal immigration. Sadly, Mexico has allowed this situation to go on for many years, growing only worse with the passage of time. From a safety, national security, military, economic, and humanitarian standpoint, we cannot allow this grave disaster to continue. The current state of affairs is profoundly unfair to the American taxpayer, who bears the extraordinary financial cost imposed by large-scale illegal migration. Even worse is the terrible and preventable loss of human life. Some of the most deadly and vicious gangs on the planet operate just across our border and terrorize innocent communities.

Mexico must step up and help solve this problem. We welcome people who come to the United States legally, but we cannot allow our laws to be broken and our borders to be violated. For years, Mexico has not treated us fairly—but we are now asserting our rights as a sovereign Nation.

To address the emergency at the Southern Border, I am invoking the authorities granted to me by the International Emergency Economic Powers Act. Accordingly, starting on June 10, 2019, the United States will impose a 5 percent Tariff on all goods imported from Mexico. If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed. If the crisis persists, however, the Tariffs will be raised to 10 percent on July 1, 2019. Similarly, if Mexico still has not taken action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States, Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019. Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory. Workers who come to our country through the legal admissions process, including those working on farms, ranches, and in other businesses, will be allowed easy passage.

If Mexico fails to act, Tariffs will remain at the high level, and companies located in Mexico may start moving back to the United States to make their products and goods. Companies that relocate to the United States will not pay the Tariffs or be affected in any way.

Over the years, Mexico has made massive amounts of money in its dealings with the United States, and this includes the tremendous number of jobs leaving our country.

Should Mexico choose not to cooperate on reducing unlawful migration, the sustained imposition of Tariffs will produce a massive return of jobs back to American cities and towns. Remember, our great country has been the “piggy bank” from which everybody wants only to TAKE. The difference is that now we are firmly and forcefully standing up for America’s interests.

We have confidence that Mexico can and will act swiftly to help the United States stop this long-term, dangerous, and deeply unfair problem. The United States has been very good to Mexico for many years. We are now asking that Mexico immediately do its fair share to stop the use of its territory as a conduit for illegal immigration into our country.

The cartels and coyotes are having a greater and greater impact on the Mexican side of our Southern Border. This is a dire threat that must be decisively eliminated. Billions of dollars are made, and countless lives are ruined, by these ruthless and merciless criminal organizations. Mexico must bring law and order to its side of the border.

Democrats in Congress are fully aware of this horrible situation and yet refuse to help in any way, shape, or form. This is a total dereliction of duty. The migrant crisis is a calamity that must now be solved—and can easily be solved—in Congress. Our broken asylum laws, court system, catch-and-release, visa lottery, chain migration, and many other loopholes can all be promptly corrected. When that happens, the measures being announced today can be more readily reduced or removed.

The United States is a great country that can no longer be exploited due to its foolish and irresponsible immigration laws. For the sake of our people, and for the sake of our future, these horrendous laws must be changed now.

At the same time, Mexico cannot allow hundreds of thousands of people to pour over its land and into our country—violating the sovereign territory of the United States. If Mexico does not take decisive measures, it will come at a significant price.

We therefore look forward to, and appreciate, the swift and effective actions that we hope Mexico will immediately install.

As President of the United States, my highest duty is the defense of the country and its citizens. A nation without borders is not a nation at all. I will not stand by and allow our sovereignty to be eroded, our laws to be trampled, or our borders to be disrespected anymore.

Response Letter  From President Andrés Manuel López Obrador to President Donald J. Trump
30 May 2019 

President Donald Trump:  

I have been informed of your latest position with respect to Mexico.  Before beginning, I want to emphasize that I do not desire confrontation. The peoples and nations that we represent  deserve that, before any conflict in our relations, however grave they may be, we should have recourse to dialogue and we should act with  prudence and responsibility.

Mexico's foremost present, Benito Juarez, maintained excellent relations with the Republican hero Abraham Lincoln. Later, during the time of Mexico's expropriation of the petroleum sector, the Democratic Party President Franklin D. Roosevelt understood the profound reasons that motivated our patriotic president Lázaro Cárdenas in acting in ways that furthered Mexican sovereignty. Certainly, President Roosevelt was a titan of liberty.  He was first among others in proclaiming humanity's four fundamental freedoms: freedom of speech, freedom of religion, freedom form fear, and freedom form want.     

It is in this [normative] context that that we have anchored our politics [policy] touching on the issue of migration. Human beings do not abandon their own societies for pleasure but by necessity. It is for them that my government has, since the start of my administration,  proposed opting for cooperation for development and to aid Central American states with productive investment for the purpose of creating jobs and in this way to solve the underlying causes of this painful matter.    

You also know that we have been complying with our responsibility to avoid, to the extent possible and without violating human rights, the passage [of migrants] through our country.  It is worth remembering that in a short while Mexicans will not need to go to the United States and that migration will be optional and not forced.  This will come to pass because we are now fighting corruption, Mexico's principal problem as never before! And in this way our country will become a powerful with societal dimension.  Our people will be able to work and achieve happiness where they were born, and where their relatives, their customs, and their cultures are located.

President Trump: social problems are not resolved with tariff or coercive measures. How does one convert overnight the country of fraternity to the world's migrants into a ghetto, into a closed space, where migrants are stigmatized, mistreated, persecuted, expelled, and the right to justice is canceled for those who seek with effort and work to live free from misery. The Statue of Liberty ought not to be an empty symbol.  

With all due respect, although you have the sovereign right to express it, the motto America First
is a fallacy because until the end of time, even, over national borders, principles of universal justice and fraternity will prevail.

More specifically, citizen President: I propose to deepen the dialogue, seek alternatives to the immigration problem, and please remember that I do not lack courage, I'm not a coward or timid but I act on principles; I believe in a politics that, among other things, was invented to avoid confrontation and war. I do not believe in the Law of Talon, nor in the 'tooth for a tooth,? nor in the eye for an eye' because, if we resort to those principles, we will all wind up toothless or one eyed.   I believe that the we statesmen and even more we national leaders are obliged to seek peaceful solutions to controversies and to always practice the beautiful ideal of nonviolence. 

Lastly, I propose that you instruct your officials, if it is not inconvenient for them, to meet with representatives of our government, at whose head is the Secretary of External Relations fo Mexico, who tomorrow will travel to Washington to seek to reach a mutually beneficial agreement for both naitons. 

Nothing through force and everything through reason and right!

Your friend

Andrés Manuel López Obrador
President of Mexico

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