NAFTA talks are clouded by Trump threats
MEXICO CITY — A second round of NAFTA renegotiations began Friday with officials expressing optimism despite President Trump’s suggestions he could withdraw the United States from the 23-yearold trade pact.
Mexico has also said it won’t stay at the table if it doesn’t get a fair shake or if Washington triggers an exit clause, and the uncertainty has raised fears among businesspeople on both sides of the border that billions of dollars in trade and investment could be threatened.
Delegations from the United States, Mexico and Canada gathered at a Mexico City hotel for discussions on the North American Free Trade Agreement that Mexico’s Economy Department said would focus on issues such as rules of origin, electronic commerce, the environment and anticorruption measures.
On Wednesday, Trump said: “We’ve got to change this deal, and hopefully we can renegotiate it, but if we can’t we’ll terminate it and we’ll start all over again with a real deal.”
Mexican Foreign Relations Secretary Luis Videgaray responded to that by saying, “if the result of the negotiations isn’t beneficial for Mexico, of course, Mexico won’t stay.”
Mexico’s Economy Secretary Ildefonso Guajardo also took a swipe at Trump’s use of Twitter to lay out U.S. stands. “Negotiations aren’t carried out on social media,” he said.
Among other things, Washington wants localcontent rules tightened to avoid imports largely made in third countries from being considered “made in North America” just because they were assembled in Mexico.
Gerardo Gutierrez Candiani, head of Mexico’s special economic zones agency, said other issues on the table include labor standards and dispute resolution mechanisms. The U.S. also opposes the current system of private arbitration panels.
The current agreement allows binational panels of private experts to decide differences, making it harder for one nation to unilaterally impose tariffs on another. Washington wants to eliminate those panels, but Canada and Mexico fear that would allow it to throw its greater weight around and impose tariffs on imports that allegedly harm local producers or are being “dumped,” or sold below their real price.
Talk of more such tariffs drew concern from a newly formed alliance of U.S. and Canadian fruit and vegetable companies. In a letter to the U.S. government Wednesday, the Produce Coalition for NAFTA said “the result will be more tariffs on fruits and vegetables ... what is more, this provision will be used against U.S. growers.”
U.S. companies now frequently grow produce in Mexico in the winter or contract it from Mexican companies.
U.S. negotiators also want to tighten enforcement of labor standards, which are currently covered in a largely toothless NAFTA side agreement. A key draw for foreign assembly plants and investment has been Mexico’s low wages. While average manufacturing wages in China had risen to $3.60 per hour by 2016, Mexico’s had shrunk to $2.10, a level some economists say is artificially low.
Mexico’s Economy Department said the five days of talks will be conducted in 25 working groups with an expected wrap-up date of Tuesday. The first round of talks took place in Washington in mid-August, and several more rounds are expected.