NAFTA Negotiations Expected Settled Between U.S. and Mexico Before Mid-Term Elections

 By Stefan M. Kløvning

International Relations, U.S.-Mexico – U.S. President Donald Trump tweeted late Friday that a “deal with Mexico is coming along nicely,” as North American Free Trade Agreement (NAFTA) negotiations between Mexico and the United States has been announced to continue next week.

After the tweet, Canada quickly responded in a statement asserting that “Our focus is unchanged. We’ll keep standing up for Canadian interests as we work toward a modernized trilateral NAFTA agreement.” A spokesman for the Canadian Foreign Minister also said that “We’re glad Mexico and the U.S. continue to work out their bilateral issues. It’s the only way we’ll get to a deal.”

Trump has been highly critical of NAFTA, calling it the “worst deal ever made”, and suggested its termination on Twitter last year. Before becoming president, he even said that he would withdraw the U.S. from the agreement when elected if they didn’t agree to a renegotiation. In a campaign speech, he announced that he is going to “tell our NAFTA partners that I intend to immediately renegotiate the terms of that agreement to get a better deal for our workers. And I don’t mean just a little bit better, I mean a lot better.”

Having withdrawn the country both from the Iran Nuclear Agreement and the Paris Climate Accord, Trump has proven himself to be serious about threats of leaving international treaties if they aren’t renegotiated satisfactorily. After infamously making a scene at the G7 meeting, he’s now pushing hard to modernize the 1994 deal with Mexico, having Canada wait in the back of the queue, and potentially instating a tax against their cars in retaliation.

According to Investing.com, auto industry officials familiar with the talks between Mexico and the U.S. about the future of NAFTA revealed that Mexico’s currently existing auto plants will be exempted from any “Section 232” (aluminium and steel) tariffs Trump may impose, but that new auto plants would be discouraged from the U.S. market, facing a potential 25% tax. The U.S. has also sought to discourage its factories and jobs from moving to Mexico for cheaper labour. The Commerce Department investigated in May whether imports of cars, trucks and auto parts could be seen as a national security threat, invoking the 1962 trade law used to justify broad tariffs on steel and aluminium, which Trump first instated after calls for trade wars at the beginning of March.

Negotiators are also reported to be preparing for a showdown over the suggestion of including a sunset clause in the agreement by the Trump administration, ending the agreement unless its participants agree to continue it every five years. Mexico’s Economy Finance Minister, Ildefonso Guajardo, said that this would be one of the difficult issues that would have to be resolved at the end of the agreement. He told reporters it was still possible that a deal could be settled by the end of the month, but that “We still have a lot of work to do.”

We are working like we’ve been doing for the last three weeks and making a lot of advancements. We are coming back next week. But as I said before: nothing is closed until everything is closed

According to Reuters, Guajardo also said on Thursday that “There are a lot of things, at least 20 items, that have been worked through, and there is very good advancement in all of them.”

Mexican officials have called the sunset clause redundant as members already have the option of withdrawing from the agreement on a 6-months notice. Guajardo suggested that its results could be evaluated by its three members (U.S., Canada and Mexico) instead of setting it up to automatically expire.

Moises Kalach, the trade head for the Mexican business chamber CCE, told interviewers last week that “A free-trade agreement is supposed to provide certainty, and this [sunset clause] would hurt investment in Mexico and the competitiveness of North America. It’s not something we can work with.”

New hopes for an agreement between Mexico and U.S. has risen since the election of Andres Manuel Lopez Obrador on July 1, as their interests conflate in the goal to raise wages for automotive workers.