NAFTA un­cer­tainty threat­ens Mex­ico econ­omy

Manila Times - - BUSINESS -

WASH­ING­TON: Un­cer­tainty over the NAFTA trade agree­ment poses a risk to eco­nomic growth in Mex­ico, the In­ter­na­tional Mone­tary Fund said Mon­day as US, Mex­i­can and Cana­dian ne­go­tia­tors geared up for new talks.

The IMF said in a re­port that Latin Amer­ica’s sec­ond- largest econ­omy was weath­er­ing a dif­fi­cult in­ter­na­tional en­vi­ron­ment rel­a­tively well, but could see growth take a hit be­cause of US Pres­i­dent Don­ald Trump’s moves to over­haul or scrap the North Amer­i­can Free Trade Agree­ment.

“Pro­longed and height­ened un­cer­tainty re­gard­ing the pace and out­come of the ne­go­ti­a­tions” poses a ma­jor risk, the IMF said in a so- called Ar­ti­cle IV re­port af­ter an an­nual factfind­ing visit to Mex­ico.

The re­port comes as Mex­ico City pre­pares to host a fifth round of talks from Novem­ber 17 to 21 be­tween the three NAFTA coun­tries.

The 1994 trade deal has helped turn Mex­ico into a ma­jor ex­porter by giv­ing it duty- free ac­cess to the United States, the des­ti­na­tion for about 80 per­cent of its ex­ports.

But talks on up­dat­ing it have stum­bled over sev­eral con­tro­ver­sial is­sues, and the last round ended with all three sides trad­ing blame and ex­tend­ing the ne­go­ti­a­tions into 2018.

“Pro­tracted ne­go­ti­a­tions could pro­long un­cer­tainty re­gard­ing Mex­ico’s fu­ture eco­nomic re­la­tions with the US,” the IMF said.

Trump has called NAFTA the worst trade deal ever signed by the United States, ac­cus­ing it of ship­ping Amer­i­can man­u­fac­tur­ing jobs south of the bor­der. His ad­min­is­tra­tion has made some hard- to- swal­low de­mands aimed at re­duc­ing the United States’ more than $ 60 bil­lion trade deficit with Mex­ico, in­clud­ing tight­en­ing the “rules of ori­gin” to re­quire a cer­tain per­cent­age of ve­hi­cles be made in the US to qual­ify as duty- free.

The IMF pre­dicted the Mex­i­can econ­omy would grow 2.1 per­cent this year and 1.9 per­cent in 2018, stick­ing to its most re­cent fore­cast from early Oc­to­ber.

But it said Mex­ico also faces risks caused by weak US growth and po­lit­i­cal un­cer­tainty in pres­i­den­tial elec­tions next year. Left­ist pop­ulist Andres Manuel Lopez Obrador -- a fiery critic of both Trump and the NAFTA ne­go­ti­a­tions -- cur­rently holds the lead in opin­ion polls.

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