• A significant shift in the relationship between USMCA leaders, Biden and AMLO. Both found common ground on migration policies and fentanyl interdiction. 
• “Three Amigos” Summit strengthened the North American partnership, highlighting the essence of economic cooperation between the US and Mexico. 
• Tension over the energy dispute under the USMCA still looms large between the two presidents.

Why are Biden and AMLO Frenemies?

Answer: Despite common ground on migration policies and fentanyl interdiction, tension on energy policies between Biden and AMLO still looms large.

On 10 January, US President Joe Biden and Mexico’s President Andres Manuel López Obrador (AMLO) met during the North American Leaders’ Summit (informally called “Three Amigos” Summit), seeking to enhance cooperation on migration, energy policies and to resolve trade disputes. The meeting was significant as it thawed the frosty relationship between Biden and AMLO over the past two years, with the two leaders consolidating their cooperation on migration policies and fentanyl interdiction. 

During the meeting, AMLO thanked Biden for being “the first president of the United States in a very long time that has not built even one meter of wall”. Despite some initial disagreement, AMLO eventually made concessions to Biden’s new immigration policies by accepting monthly deportations of up to 30,000 illegal migrants from Haiti, Venezuela, Cuba and Nicaragua. As Biden came to the summit with migration issues as one of his top priorities, AMLO’s heightened commitment to cooperate with migration can be taken as a victory for Biden. 

In addition to migration issues, AMLO also showed cooperation with Biden in clamping down on fentanyl trafficking which has accelerated drug overdose death in the US. Ahead of the summit, Mexican authorities arrested Ovidio Guzman, the son of Mexican drugs kingpin “El Chapo”, which due to its importance to Biden gave AMLO some leverage during the meeting. 

Despite the success of the summit, tensions over the energy disputes between Biden and AMLO remain. Since coming to power, AMLO has deployed a new energy program, stopping the privatization of the energy sector which the Mexican President deemed as contrary to the national interests. Biden claimed that AMLO’s favor over state-owned energy firms has caused discrimination against foreign and private firms in the US and Canada, hence breaching the United States-Mexico-Canada (USMCA) trade pact. Biden is also concerned when AMLO prioritizes fossil fuels over green energy, especially when tackling global warming is high on the US President’s agenda. However, the thorny problem of the USMCA energy dispute was gracefully passed over at the summit by both leaders. 

What does Biden want?

Answer: Maintain the recently warmed up relationship with AMLO and resolve the USMCA dispute peacefully without resorting to a panel. 

Biden wants AMLO to further his support and collaboration on mitigating unauthorized migration and the flow of fentanyl into the US. Due to the constant pressure from Republicans and even some Democrats, these two thorny issues have remained high on Biden’s political agenda. AMLO’s cooperation will play a key role in helping the US President tackle illegal migration and drug trafficking to maintain the reputation of his mandate. 

Secondly, Biden wants to resolve the USMCA energy dispute with AMLO without resorting to a dispute settlement panel. In July 2022, the US and Canada filed a complaint claiming that Mexico had breached the USMCA trade pact when AMLO overhauled the electricity market favoring state-owned energy companies over foreign private firms. After multiple consultations and resolution talks, the dispute still remains unresolved with little progress. Without a resolution, the ordeal may end up at a settlement panel with the potential of trade sanctions on Mexico, which would antagonize AMLO and lead to further tensions between the countries. Biden, therefore, wants to settle the dispute through dialogue to preserve the newly warmed-up relation with the Mexican President. 

Finally, Biden wants to establish a set of common institutions with AMLO to maintain a long-term relationship. Compared to Trump’s aggressive foreign policy with Mexico, Biden’s accommodative leadership style is marked with a focus on shared interests and reconciling differences. Biden, aware that AMLO is against intervention-like policy, the US President prefers to avoid direct confrontation with AMLO over domestic issues in Mexico such as the increased use of military in civilian life. 

What does AMLO want?

Answer: Ease the USMCA tension with Biden but still maintain the nationalist energy policy as a cornerstone of his presidency. 

As reforming the energy sector with a focus on state-owned energy firms is the cornerstone of his presidency, AMLO doesn’t want to back down in the dispute with the US and Canada. AMLO perceives the energy sector liberalization by his predecessors as a return to the exploitation period of the US and British companies in the 20th century. The period saw little return to Mexico and instead benefitted the foreign enterprises at Mexico’s expense. AMLO therefore wants the state to take back control over the energy sector so that Mexico can soon achieve energy independence. Making too many concessions over the dispute with the US and Canada would affect ALMO’s desired perception as a strong leader, as he is staunchly against US and Canadian interventionism. 

In addition, AMLO wants to enhance partnership with the US government in boosting domestic semiconductor manufacturing. As the US plans to make North America a semiconductor hub and increase the resilience of its supply chains, Mexico seeks to be part of the equation, which would be beneficial for the Mexican economy. Also, the cooperation with the US in the chips sector would improve employment prospects for the young labor force in Mexico, many of whom are struggling for jobs after the pandemic, which is another calculated advantage for AMLO’s Mexico.  

What is AMLO doing?

Answer: Warming up the relationship with Biden and trying to find the solution to the energy dispute.

AMLO and Biden’s relationship had a shaky start when AMLO, who developed a warm relationship with Trump, was among the last world leaders to recognize Biden’s election victory. AMLO has also skipped past meetings with Biden and condemned the US President for his lack of investment in Latin America. However, AMLO shifted his tone and praised Biden during the Three Amigos summit, calling him a “visionary” leader. Despite the lingering energy dispute, AMLO and Biden’s relationship has been progressing for the better of the North American partnership.

AMLO’s government has been working on the proposals to resolve the trade dispute with the US and Canada, though with little progress so far. Realizing the prominence of migration policies and fentanyl interdiction on Biden’s agenda, AMLO is sure to cooperate on those two thorny issues as it can be used as leverage in the upcoming negotiations with the US President. 

Who is winning and what about you?

Answer: Biden and AMLO both leave the summit with wins.

The Three Amigos summit was wrapped up with both leaders satisfied with their own short-term wins. It is an important win for Biden as he revived the summit and his plan to consolidate the North American trade partnership making the region a trade hub. The improvement in the relationship with AMLO is also significant as Biden needs AMLO’s close collaboration in border security issues which are currently atop of his agenda. Due to the high profile of migration and fentanyl interdiction compared to energy policies on Biden’s agenda, any concessions from Biden with AMLO would suggest AMLO is currently winning in the dispute on the North American continent. 

Following the summit, people living in Mexico shall expect a flow of investment in the semiconductor industry, which would lead to the construction of more manufacturing facilities and hence a surge of employment opportunities. In addition, Mexico will see 30,000 more migrants being returned to Mexico under the new agreements and a series of government crackdowns on drug cartels. Finally, the energy bills in Mexico will largely hinge on the result of the unresolved trade dispute with the US and Canada.