Mexico’s Foreign Trade Offices Face the Ax as AMLO Pushes Social Spending

(Bloomberg) -- President Andres Manuel Lopez Obrador's party plans to pass a law that would close Mexico's economy ministry offices in cities from Washington to Geneva, arguing that it would help free up billions of dollars to be spent on the nation's most destitute communities.

The bill would prohibit foreign work by any public entity that isn't dedicated to security and justice, other than the foreign ministry. While backers from the president's Morena party say the changes will save 50 billion pesos ($2.62 billion) that can be spent on the poor, opponents argue they would leave Mexico without adequate representation to defend itself in economic controversies including trade disputes with the U.S. and cases in the World Trade Organization.

“I'm definitely concerned that the people working in places like the Nafta office in Washington or before the WTO could be replaced by people at the foreign service that lack expertise on trade matters,” said Carlos Vejar, a lawyer at Holland & Knight in Mexico City who previously served as general counsel for trade at the Economy Ministry. “You lose the capacity to react properly to future measures. Many trade issues have been resolved by the presence of Mexican experts in the U.S.”

AMLO, as the leftist president is known, rode to power last year with pledges to stamp out social woes and look after "the poor and the forgotten." His anti-establishment tone has resonated in an electorate that has seen its living standards stagnate in recent years. The latest measures are part of an initiative endorsed by AMLO called the “The Law of Republican Austerity,” that would eliminate pensions for former presidents and limit security spending for public officials.

The same bill would also ban public employees from working for private companies that they regulated for at least 10 years after they leave government to avoid conflicts of interest, an idea championed by AMLO.

That proposal, which passed the Senate early Tuesday morning after an all-night session and now heads to the lower house, is a violation of the rights of public employees, according to opposition senators who voted against it. Opposition lawmakers have promised to bring a constitutional challenge to the initiative before Mexico's Supreme Court.

To contact the reporter on this story: Eric Martin in Mexico City at emartin21@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, ;Walter Brandimarte at wbrandimarte@bloomberg.net, Matthew Malinowski

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