By Dave Graham and Jarrett Renshaw
MEXICO CITY (Reuters) -U.S. President Joe Biden and his Mexican counterpart aim to make progress on strengthening economic integration, combating drug cartels and managing immigration on Monday, even as friction over Mexico’s energy policies weighs on joint cooperation.
In initial remarks at the start of a U.S.-Mexico bilateral meeting on Monday evening, President Andres Manuel Lopez Obrador urged Biden to deepen integration and investment in the region.
“There are unmatched conditions to start a new policy of economic and social integration in our continent,” he said.
Biden responded that the two would discuss “how we can further deepen our relationship, not only with Mexico but the Western Hemisphere. This includes strengthening our supply chains to make us more competitive.”
Biden emphasized the substantial aid that the U.S. gives to other countries in the Americas.
Lopez Obrador is hosting Biden and Canadian Prime Minister Justin Trudeau from Monday to Wednesday for the first summit between the three since late 2021.
Earlier on Monday, U.S. national security adviser Jake Sullivan said Biden believed he would emerge from the summit with “commitments for stronger cooperation” to tackle fentanyl, a synthetic opioid blamed for thousands of U.S. deaths.
The plan, in essence, is for Mexico to reduce the amount of fentanyl smuggled across the border in exchange for the United States’ bringing down the number of guns being trafficked into Mexico, two Mexican officials said, speaking on condition of anonymity.
Mexico last week arrested a prominent cartel leader, Ovidio Guzman, who is wanted in the United States. Weaponry used by Guzman’s gang had come into the country from U.S. border states, one of the Mexican officials said.
The talk about deepening economic ties comes even as disagreements persist over Lopez Obrador’s nationalist energy policies, which led to the launch of a formal trade complaint in July by Washington and Ottawa.
Sullivan told reporters that subsequent consultations had identified “potential pathways forward” on the impasse.
“But we’re not there yet,” he said. “And we’ll make determinations about next steps based how things unfold here.”
Lopez Obrador later said a trade agreement has proven to be a valuable instrument to consolidate “production processes,” but that there was continuous growth in its Pacific ports with goods from Asia, signaling that the countries remained dependent on Asian industrial production.
“Couldn’t we produce in America what we consume? Of course, it is a matter of definition and joint planning of our future development,” he said during a meeting with Biden.
Since the COVID-19 pandemic battered supply chains, policymakers have stepped up calls for firms to relocate business from Asia to beef up the economy covered by the United States-Mexico-Canada regional trade agreement.
Lopez Obrador has also alarmed the United States with a plan to prohibit imports of genetically-modified corn. Mexico agreed to delay the ban until 2025, but the issue is likely to surface. The three trading partners have also been at loggerheads over auto rules of origin.
“Trade tensions over automobiles, customs rules, genetically-modified corn and Mexico’s energy policies are already high and could sharpen,” said Jake Colvin, president of the Washington-based National Foreign Trade Council.
“To create a North American corridor to outcompete China, the United States, Canada and Mexico need to be on the same economic page,” he added.
Lopez Obrador, a combative leftist, says his energy policy is a matter of national sovereignty, arguing that past governments skewed the market to favor private interests.
The United States and Canada say their firms have been disadvantaged by Lopez Obrador’s campaign to give control of the market to his cash-strapped state energy companies, and the row has taken the shine off the outlook for investment.
Trudeau told Reuters on Friday he would make the case that resolving the energy dispute would help bring more foreign capital to Mexico, and was confident of making progress.
As part of that drive, Lopez Obrador — who in June snubbed Biden’s invitation to the Summit of the Americas in Los Angeles in protest at his exclusion of the leaders of Cuba, Venezuela and Nicaragua — wants to discuss his plan to boost solar power in northern Mexico and secure U.S. financial support for it.
Mexico has also urged the United States to commit funds to Central America and southern Mexico to boost development and stem migration from what has long been a poor region, and to make it easier for migrants to get U.S. jobs.
Christopher Landau, U.S. ambassador to Mexico under former President Donald Trump, said domestic politics meant finding compromises on energy and migration would be difficult.
“There’s no obvious deal that satisfies all of their domestic interests,” he said, “but I think it’s in all their domestic interest to say they get along.”
(Reporting by Dave Graham and Jarrett RenshawAdditional reporting by Andrea Shalal Editing by Chizu Nomiyama, Alistair Bell and Leslie Adler)