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Tuesday 15, October 2019
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NAFTA Renegotiations

An interruption of NAFTA would not be a logical move but in Mexico the Donald Trump administration is considered “erratic” by most observers
By The News · 17 of May 2017 10:20:08
Larry Rubin, CIUDAD DE MÉXICO, 14FEBRERO2017.- Larry Rubin, presidente de The American Society, ofrecio una conferencia de prensa para hablar sobre la relación entre Estados Unidos y México. FOTO: MOISÉS PABLO /CUARTOSCURO.COM, photo: Cuartoscuro/Moisés Pablo

The stage is set to begin the procedures to restart renegotiations of the North American Free Trade Agreement (NAFTA). The announcement was officially made on Tuesday by Economy Secretary Ildefonso Guajardo who announced that his U.S. counterpart Wilbur Ross notified him that next week he would file with the U.S. Congress a notification to start renegotiation as soon 90 days thereafter.

The notification is a formality within the U.S. Congress, mainly at the Senate, so that there is an arrangement to start fast-track negotiations with Canada and Mexico. During that 90-day period Congress and private business organizations will outline the road to follow by Washington negotiators.

Also, Congress has already approved the nomination of veteran trade lawyer Robert Lighthizer more than 100 days after his nomination to become the U.S. Trade Representative. Lighthizer won support from both Republicans and Democrats in the Republican-led Senate last Thursday, with an 82-14 vote to confirm his nomination.

In Mexico, starting the negotiations ASAP is a priority because hopefully they will be over by next December and avoid the turmoil expected by the presidential elections on June 3, 2018. There is no question that the elections will contaminate the NAFTA negotiations.

Another issue creating anxiety is the fact that renegotiations might bring NAFTA to a halt for several months in which the Mexican economy might be negatively affected and even go into a recession with the dollar-peso exchange rates suffering significant alterations. Also of deep concern is that inflation is now at 5.82 percent for the year and the immediate future looks like it may continue climbing.

An interruption of NAFTA would not be a logical move but in Mexico the Donald Trump administration is considered “erratic” by most observers and really at this point about the only certainty is that Congress will get the request to renegotiate as of next week. That is, however, a significant step forward.

There is a lot of enthusiasm in Mexico because there will definitely be new chapters that were not included in the 1993 negotiations and a most important one will be the on the table.

One of them will be the proposition to restructure, already being put forward by the National Electronic and Telecommunication and Information Technology Industries National Chamber (Canieti), which is worth nowadays $60 billion in trilateral trade.

Canieti president Mario de la Cruz said Tuesday in Mérida that Mexico is an industry that has developed exponentially over the past 14 years and has become an important niche for Mexican economic growth.

Along with electronics, De la Cruz foresees that issues that ought to be on the negotiating table are electronic commerce, intellectual property, security and trustworthy information, rules of origin, and still unannounced issues that will be made public by late August.

In Querétaro, Larry Rubin, one of the most enthusiastic supporters in Mexico of the Donald Trump candidacy and who runs the local Republican Party chapter, was present at a meeting of the local chamber of the National Manufacturing Industry Chamber (Canacintra) and feels very enthusiastic mostly because it will include new subjects and surely the regulatory framework NAFTA still in effect.

“I think a full revision of NAFTA is something natural and the objective of the new renegotiations will be to benefit the three nations”, Rubin told the Querétaro Canacintra members.

Of course, he hopes to participate in the negotiations either as the new U.S. Ambassador to Mexico or working directly with the U.S. Trade Representation.

Unlike many in Mexico whom fear the effect the upcoming presidential elections in Mexico, they should not affect negotiations and that regardless of personality and ideology, the United States is willing to work along with the candidate elected by Mexican voters.

The good news is that the procedure has already started and that there is a lot of enthusiasm and nervousness, particularly in Mexico.