July 2, 2018 / 1:10 PM / 4 months ago

Mexico's Lopez Obrador commits to NAFTA after big election win

MEXICO CITY (Reuters) - Mexico’s next president, Andres Manuel Lopez Obrador, said on Monday he will seek to remain in NAFTA along with the United States and Canada and that he respects the existing Mexican team renegotiating the trade pact.

Presidential candidate Andres Manuel Lopez Obrador gestures as he addresses supporters after polls closed in the presidential election, in Mexico City, Mexico July 2, 2018. REUTERS/Goran Tomasevic

Lopez Obrador, a 64-year-old former mayor of Mexico City, won a landslide election victory on Sunday, getting more than double the votes of his nearest rival, dealing a crushing blow to establishment parties and becoming the first leftist to win the Mexican presidency since one-party rule ended in 2000.

“We are going to accompany the current government in this negotiation, we are going to be very respectful, and we are going to support the signing of the agreement,” he told Milenio TV in an telephone interview, saying the aim was a deal on the North Atlantic Free Trade Agreement that was good for Mexico.

A veteran of two previous unsuccessful presidential runs who moderated some of his policies this time around, he said he would pursue a frank dialogue and friendly relations with the United States. Lopez Obrador, who will take office in December, said he would discuss NAFTA with President Enrique Pena Nieto when they have their first meeting after the election, set for Tuesday.

U.S. President Donald Trump has been openly antagonistic to Mexico over trade and migration since his own presidential campaign. The current NAFTA talks began last year after Trump called for the agreement to be renegotiated to better serve U.S. interests.

Although Trump congratulated Lopez Obrador in a Twitter message on Sunday night, a White House aide then reiterated one of the U.S. leader’s most controversial campaign promises.

“In the case of Mexico, obviously we share a border with them (and) this president has made very clear about building that wall and having Mexico pay for it,” Kellyanne Conway said on Fox News.

Mexican politicians across the political spectrum have long said Mexico will not pay for Trump’s proposed wall along the southern U.S. border, which he has said is needed to keep out both illegal immigrants and narcotics.

STRONG MANDATE

Lopez Obrador won more than 53 percent of votes in Sunday’s election, preliminary results showed. That was the biggest share of the vote in a Mexican presidential election since the early 1980s and gave him a strong mandate both to address the country’s domestic problems and to face external challenges such as U.S. trade tariffs.

In his victory speech and in comments to local TV networks, Lopez Obrador sought to assure investors he would pursue prudent economic policies and the independence of the central bank. His economic advisers repeated this message in a call on Monday with investors and in an interview with Reuters.

Even so, the peso weakened 1.3 percent against the dollar and Mexico's S&P/BMV IPC .MXX benchmark stock index was also down almost 1.5 percent as exit polls showed Lopez Obrador's MORENA party performed strongly in the elections, which were also for members of Congress.

MORENA and its allies could win majorities in both chambers of Congress, according to projections based on results still trickling in.

That would make it easier for Lopez Obrador to work with Congress, but the parties are expected to fall short of the two-thirds majority that would be needed to unwind a five-year-old energy sector reform that has attracted oil majors such as Shell (RDSa.L) to Mexico.

OIL CONTRACTS REVIEW

During the campaign, Lopez Obrador often flirted with the idea of overturning the energy sector opening, although his only firm promise was to say he would review more than 100 oil and gas contracts that have already been awarded, checking for signs of corruption. Fighting corruption in government was a major plank of his campaign.

Credit ratings agency Fitch warned on Monday of prolonged uncertainty over the future of the oil sector opening, achieved via a constitutional reform enacted in 2013.

Rating agency Moody’s said Lopez Obrador’s election win brought short-term market volatility and raised risks for the oil sector.

Others believe that little will change.

“His coalition is unlikely to secure the two-thirds Congressional majority required to reverse constitutional reforms, and existing contracts do not appear to be at risk,” said Paul Sheldon, Chief Geopolitical Adviser at S&P Global Platts Analytics.

The man tipped to be Lopez Obrador’s senior finance official also said the next government was not planning on pursuing major legislative overhauls.

“I would say that (majorities in Congress) will make day-to-day management easier... but we really aren’t thinking about changing the Constitution or major laws,” Carlos Urzua told Reuters.

Additional reporting by Dave Graham, Julia Love, Christine Murray, Anthony Esposito, Berengere Sim and Delphine Schrank; Editing by Frank Jack Daniel and Frances Kerry

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below