Leading players in the current status of the North American Free Trade Agreement (NAFTA) on the three participating nations (Canada, the United States and Mexico) agree that NAFTA is renegotiable.
The one problem nowadays is the waiting period between now and January 21 when — if then-President Donald Trump keeps his word — renegotiations will start from day one of his four year period.
But there is a difference between Canada and Mexico, who are not interested in doing away with the deal, but as it’s always been said, the problem with NAFTA is in between those two nations and the United States.
In reality, Canada will not be too affected. It still has its 1989 Free Trade Agreement (FTA) with the United States which was superseded by NAFTA but is still standing. Still, there are many issues Canada could put on the negotiating table such as soft wood and rules of origin, but mainly, the FTA does not take Mexico into consideration and it doesn’t allow — as NAFTA does — U.S. corporations challenging Canada’s import-export laws.
In Mexico, all observers are waiting to see what will happen, but be ready for whatever comes out of the White House. For one, there is some leeway time between day one and Trump’s final decision which will be, he said, 200 days or over six-months into his administration.
Of course what will happen with NAFTA is indeed the talk of the day in Mexico’s business and industrial circles. There are some anxious and even nervous players who could probably suffer from whatever happens.
The one attitude that is prevailing is, first of all, to stop making fun of Trump’s anti-NAFTA tirades and start taking them seriously. Even if during the elections he spoke in arrogant and definite terms against it, as well as Mexico, he’s now in a position to sign the United States out of NAFTA with a mere executive order.
Jaime Zabludovsky, a key negotiating officer working for the Economy Secretariat back in the early 1990s when NAFTA was drafted and currently president of private organization National Mexican Council for International Affairs, said that this is possible.
“We don’t know what’s going to happen, we have to wait to have representatives on the other side (the United States) so we can sit with them and let them know what Mexicans officials feel and have them try to understand that one thing was all that was said in the electoral campaign and what the president wants to say now.”
There’s even a movement now in Mexico to bring back to the future negotiating table top officials such as Jaime Serra Puche and Herminio Blanco, both at the helm of the original negotiation to represent the nation.
Yet it is clear that many of the companies Donald Trump blasted during campaign will put up stiff resistance to a full annihilation of NAFTA.
Mark Fields, executive president of the Ford Motor Company, for instance, announced it will follow up with the opening of a new plant in Mexico at San Luis Potosí, regardless of what Trump’s tirades and criticism of the company and threatening to slap a 35 percent countervailing duty on all vehicles made in Mexico, where Ford boasts several plants.
“I’m not sure if Trump will carry out his threats to do away with negotiations such as NAFTA; we’ll have to wait and see when he takes over what kind of policies he is going to promote,” he said. But still, Ford will go ahead with the new plant.
The thing to watch is how much opposition to doing away with NAFTA Trump will face in the United States. Everyone expects that he will come down to his senses given the importance of trade among the three nations and the fact, regardless of Mexicans moving to the United States legally or illegally, NAFTA has been a great tool to contain migration and create jobs.
There is no doubt that for NAFTA — when George Bush and Carlos Salinas and Brian Mulroney agreed to negotiate it — the United States was the main market, a fact that’s not changed yet. If done away with, NAFTA will continue between Canada and Mexico, both members of the U.S.-led Trans Pacific Partnership. Any prediction beyond that would be mere speculation.
The name of the game for now is wait but be ready but for sure, Mexicans, like matadors, don’t know what kind of bull will come onto the bullring when the gate opens, but nervous and all, they are ready to cape it.
