Mexico and the NAFTA Negotiations

This week, negotiators from the United States, Mexico, and Canada will begin talks to modernize NAFTA.   How will the agreement change? Will all three countries remain in it? Top experts weighed in on what Mexico’s goals and red lines are, how the United States will likely respond, and what challenges and opportunities North America faces in the upcoming talks.  

Key Quotes:

Duncan Wood:

“[The NAFTA negotiations] come with an enormous amount of anxiety – anxiety about whether or not this can be a successful negotiation, anxiety about whether the U.S. executive branch will stick with it, anxiety about questions of timing and political change.”

“It’s worth remembering how far Mexico has come since NAFTA was negotiated…The changes that took place during the 1980s, largely because of the Latin American debt crisis and the Mexican debt crisis in particular, and then locked in by the NAFTA, those are things we kind of take for granted nowadays, but it is an extraordinary journey.”

Luz Maria De La Mora Sanchez:

“It will be a daunting task for Canada and Mexico to sit down with the U.S. when it seems that President Trump views this opportunity as payback time and also has outlined an agenda that is clearly tainted with protectionist and nationalist perspectives.”

“The question is: How do we revitalize NAFTA in order to strengthen the competitive position of the region and integrate those that have been left behind into the benefits of globalization…The integration of the North American market is the way to boost the region’s competitiveness, job creation, business opportunities, and innovation.”

Francisco de Rosenzweig

“When NAFTA was negotiated, somehow the dispute mechanism was the best approach that was possible to negotiate then, but maybe there are some new provisions and elements that could be added to NAFTA 2.0.”

“If we’re going to be able to deliver [a new NAFTA] by early 2018, it depends on the strategy that each country will follow. Because if you start from scratch, and you put on the table chapters…that have been in place over the last 23 years, I think it’s going to be quite hard to deliver by then.” 

Fred Bergsten

“Failure is an option. We don’t like to say that. We don’t like to think that, but it’s true… And that means it’s critically important for [Canada and Mexico]… to keep foremost in everyone’s mind how costly that would be to the United States.” 

“The best outcome obviously is a traditional trade-type negotiation that will strengthen the Mexican economy… If the United States and the Trump administration really want to strengthen the U.S. trade balance toward Mexico, there’s only one obvious way to do it: strengthen the Mexican economy. Because if [Mexico] grows faster, it will import more. If it has a stronger peso, the U.S. will be more price-competitive.”

Christopher Wilson

“The fundamental red line for Mexico is market access. If you can deal with the [trade] deficit by expanding trade rather than limiting and restricting trade, well then dealing with the deficit might be something you can tackle in the negotiations. There are other areas where you can see potential conflict based on this principle of a red line being market access.”

“I’m actually rather optimistic that we can reach a moderate update to the agreement that is acceptable to both sides… [I’m optimistic] because U.S., Mexican, and Canadian interests on trade are fundamentally quite well aligned. I’m not talking about the politics, but at a real level – a real economic level – our interests are quite well aligned, and that will and that does filter into the politics of the situation.”