Business groups discuss NAFTA this week. Business groups discuss NAFTA this week.

Mexico may have to leave NAFTA table

Business groups cite unreasonable demands by US, call them 'attack' on Mexico

For the first time since NAFTA renegotiation talks began two Mexican business groups have suggested that Mexico may have to leave the negotiating table in the face of unfavorable proposals being pushed by the United States.

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The president of the Business Coordinating Council (CCE), Juan Pablo Castañón, and his National Agricultural Council (CNA) counterpart, Bosco de la Vega, both believe that if aspects of the new deal sought by the U.S. remain unreasonable, abandoning the 23-year-old North American Free Trade Agreement would be Mexico’s only viable option.

“There is a possibility that we will leave the table. The cause is that we cannot comply with what the partners are asking of us in circumstances that are no longer a reality in Mexico,” Castañón said.

The CCE head said that Mexico should instead seek opportunities in other parts of the world, especially South America.

Grain currently imported from the United States and Canada could be brought from South America, he argued, adding that greater ties with Europe will make technologies needed by small and medium-sized businesses easier to access.

Castañón also talked up Mexico’s existing industries, simultaneously downplaying any perceived dependence on its northern neighbor. An aerospace industry as well as several others with technology-based production already exist and Mexico is the world’s fifth largest automotive exporter and 12th largest agri-food producer, he said.

“We live in a very different reality compared to that of 25 years ago,” he added.

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The CNA president also strongly criticized the United States’ tougher stance.

He described its posturing at the third round of talks held last week in Ottawa, Canada, as an “attack” on Mexico, citing proposals for the textile and agricultural industries as the biggest sticking points.

“They don’t want exports from Mexico when they have [their own] output so they’re going to put up trade barriers, which is an unacceptable situation,” de la Vega said.

In that context, he said, the CNA would prefer a dignified exit from the agreement and instead wait until both Canada and the U.S. have new leaders before negotiating a new pact. World Trade Organization rules would fill the void in the interim.

The next big test of the negotiations is just a week away when the three parties return to Washington for the fourth of seven scheduled rounds of talks.

The director of GMCA — a strategic consultancy that specializes in the agriculture sector — believes that Mexico has the opportunity to launch a counter-attack on a U.S. proposal regarding seasonal products with one or both of two available “weapons.”

Juan Carlos Anaya said that the first is to seek the support of Canada, which also opposes the proposal, in order to stymie the U.S. on the issue while the second is to apply seasonal tariffs on agricultural products entering Mexico from the United States.

Some of the United States’ largest export products to Mexico, including red apples, chicken, pork and powdered milk, could all be targets of new barriers, Anaya said.

But Economy Secretary Ildefonso Guajardo looks set to argue to try to keep agricultural markets as open as possible before considering a tit-for-tat approach.

“We believe that the [seasonal] proposal is damaging for both nations,” he said at the conclusion of last week’s talks.

“It opens a door to unstitch advances in the integration of the North American agricultural market.”

The CNA, along with other affected parties, lays the blame for the United States’ tough stance squarely on the shoulders of the president, yet remains defiant in the face of his repeated threats to withdraw from the deal if it’s not renegotiated to his liking.

“A man like United States President Donald Trump can’t destroy what has been built by generations,” de la Vega said.

“It’s not an issue that is at the whim of just one person . . . .”

Source: Milenio (sp), Expansión (sp)

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  • cooncats

    Juan Pablo is the guy living in an alternate world. $200 billion per year flows out of the U.S. into Mexico. That’s the real world. This article fails to note the Canadians are also criticizing the starvation wages of Mexico being used by cynical corporatists to gain an unfair advantage. And then, anyone who lives in Mexico can’t help but notice all the protectionism, great and small, that keeps things priced far higher here than the U.S. or even Canada.

    Macho posturing doesn’t cut it when it comes down to reality.

    • Mike S

      I believe the trade imbalance is $60 billion out out $550 billion in total trade not $200 billion. As far as remittances to families go, Mexicans work hard for that money and that makes your life better and our economy stronger. I have not noticed things being higher priced in Mx unless you are talking about specialty foods in small import amounts for US tastes. I will agree that prices tend to be cheaper in US at massive Chinese retailers like Target, Walmart, True Value, Harbor Freight etc , but that’s because US imports much more from China. Food quality and prices, medical/dental are definitely cheaper in Mx. NAFTA has been good for both countries and had nothing to do with the complete GOP inspired meltdown of US economy in 2008. Wages, benefits, and worker safety are issues that need to be discussed. Trump is dismantling our EPA and loves full employment and hates wage increases. Our manufacturing jobs were wiped out when US capitalists ran to China chasing slave labor and lax environmental standards. Automation has hurt a lot too. US should be investing in education and not scape goating Mx which buys lots of US goods and supports millions of high paid jobs here that depend on that trade.

      • The trade deficit is unimportant – what is important is where the profits go. Most of the maquiladoras are structured for contracting low cost labor. The US company pays the expenses and wages + 3% to their Mexican company. The products are counted as exports with their wholesale value. A product that wholesales for $1000.00 USD does not mean that $1000.00 benefit is enjoyed by Mexico. A small percentage of that stays in Mexico paid as wages, rent, etc. Trade deficits between Mexico do not accurately reflect the benefit to Mexico. As an attorney I represent several US manufacturers as legal representative and I have several clients with large manufacturing sites that pay less taxes in Mexico than I do.

        • US manufacturers had a better deal with Mexico before NAFTA than after NAFTA with its certificates of origin and Sectoral Programs and restrictions on preferential tariff treatments conditioned on exporting the finished products. Manufacturers used to be able to temporarily import raw materials and components from any country conditioned on the final export of the end product – it is much more difficult now.

          • Mike S

            So you are saying the the trade increase from $30 billion before NAFTA to $550 billion today was bad for US manufactures??? Are you a graduate of Trump University?

          • NAFTA had nothing to do with US or other foreign manufacturers being able to manufacture in Mexico. They could already do everything that they are doing now but it was easier. NAFTA eliminated tariffs on products to Mexico, there were very few tariffs going to the US. It also gave legal certainty for companies to do business in Mexico or for Mexican companies to do business in the US with its dispute resolution and arbitration procedures. Most disputes between the countries are settled not by lawsuits but by arbitration. Maquiladoras before NAFTA could import any materials from anywhere in the world with a temporary importation with no duty and no IVA and they were required to export the product. Today, because of NAFTA’s restrictions on importation from non-NAFTA countries conditioned on export, the Maquiladora’s cannot import from countries like China without doing a study and showing the government that they cannot purchase the same materials in NAFTA countries. They have to apply for a permit for each material from every non NAFTA country. The personnel has to have much more training and there is an expense. As you may know, very few Chinese products are imported in to Mexico because the duties are over 100% on most Chinese goods. If you go into Walmart in Mexico you will find products from Bangladesh and Viet Nam but not China. NAFTA did not make it easier for manufacturers – they had a less restricted environment before NAFTA. It did make it possible for businesses to sell their products in Mexico. Go to any of the Maquiladora Associations in Mexico or the US and those that have been around since before 1994 will tell you that it was easier for them before. I went to an Association breakfast in San Diego 2 weeks ago and many people made the comment that they would like to see Mexico withdraw from NAFTA as I would and as will probably happen if either of the 2 main candidates for President in 2018 win.

        • Mike S

          I do not disagree with you. Many years ago I visited some maquiladoras in the Tijuana area and am familiar with the wages and working conditions. It is pure unadulterated laissez faire capitalist exploitation of poor people. Pressure should be brought to bear within the framework of NAFTA on both Mexican government and US capitalists to improve wages, working conditions, and environmental standards. Raising those conditions and standards would in the long run help workers on both sides of the border. Trump is not interested in any of that.

          • I agree with you on all except the latter part. Wages are unrealistically low, although not as low as people outside of Mexico think. I am an Attorney with many maquiladoras as clients but my specialty is Industrial health and safety and environmental compliance. I perform audits on manufacturers and consult with companies to improve their programs and compliance.Workers in Mexico have protections that workers in the US can only dream of. They all have medical care, disability, maternity, through the social security system which is obligatory – all employers must enroll their workers in the program. There are no co-pays or anything similar. Workers pay nothing for consultation, surgery or medications. Pregnant women receive 12 weeks paid maternity leave, vacations are obligatory, overtime is obligatory, virtually all workers are unionized, employers cannot fire workers at will or lay them off without a very expensive severance. A worker who is fired has the right to demand 3 months wages, 12 days wages for every year worked, and their proportion of vacations and Aquinaldo earned. A worker who has an accident receives 100% of his pay until the Social Security releases him to work. Daycare is free for parents that are employed in very good day care run by Social Security. My 2 grandchildren both spent time in Social Security day care. Many manufacturers provide transport and hot meals. There is considerable competition for workers. Workers have good benefits and ample protections and wages that are too low. Health and Safety and environmental legislation is much stricter than anything in the US and enforcement with hefty fines is a source of income for the government. My principal work is auditing health and safety and environmental programs and making recommendations to companies to avoid heavy fines. My European clients are usually not surprised but US companies that start doing in business are usually in a state of shock when I explain their obligations.

          • Mike S

            Things have improved a lot since I was there 30 years ago. I was under impression things were much worse. Thanks for the update.

          • Donald Blair Godier

            That really sounds great, a little utopian in my opinion, I live in rural Mexico, excepting medical care, the free part is pretty much like herding cattle here, there are hundreds being seen and it may be all day you wait, everyone I know, including myself get our healthcare a la carte and we pay for it, there are no corporations or big employers and basically the government doesn’t provide a damn thing to anyone here unless they work for the government, the mayor’s steal everything the central government sends their way, a few cosmetic things get done in the cities but the government does not a damn thing to provide anything to these folks. Everything you describe is non existent in rural Mexico, but I would rather be here than ever live in any large city here. But what the hey, I am a rural mentality guy, all cities suck, no matter where in the world they are located, real people live off the land.

          • Güerito

            In Mexico, $2 per hour workers make $40,000 SUVs. By MARK STEVENSON THE ASSOCIATED PRESS MEXICO CITY — Sep 25, 2017, 3:02 PM ET

            “The premise of the auto industry since the times of Henry Ford was that workers would make enough to buy the cars they produced. Across the U.S. and Europe, the arrival of an auto plant meant the creation of middle-class communities, with employees taking vacations, buying homes, cars, perhaps even cottages and boats.

            But in Mexico — where the auto industry has boomed under the North American Free Trade Agreement, with plants like the Audi factory that opened in Puebla state in 2016 — the industry has created something different: a class of workers who are barely getting by, crammed into tiny 500-square-foot apartments in government-subsidized projects that they pay for over decades. Many can’t afford even a used car, taking home as little as $50 per week after deductions for mortgages and cafeteria meals.

            Why have Mexican auto salaries stagnated or declined while pay for Chinese auto workers rose, despite all the promises that North American Free Trade Agreement would increase Mexican wages? That’s the question U.S. negotiators are asking as the third round of NAFTA talks resumes in Ottawa, Canada.

            Ironically, U.S. President Donald Trump, widely seen here as one of Mexico’s worst enemies, is pressing the issue of low Mexican wage rates, saying labor protections should be strengthened.

            “It’s ironic, right, that he’s always criticizing us, but at the same time, he could do something that benefits us, by exposing the rot in the system” said Audi worker Eduardo Badillo, 34.

            The key, in Mexico’s auto industry, may be the so-called “protection” contracts signed long before plants open.

            Alex Covarrubias, a labor professor at Mexico’s Sonora College, said such “protection” contracts are almost universal in Mexico. “Almost all the (labor) contracts that are signed in Mexico are unlawful, which means that they are company contracts, which the workers aren’t aware of.”

            Critics have long accused Mexican unions of doing more to control workers than represent them. The country’s biggest labor federation forms part of the ruling Institutional Revolutionary Party.”

            http://www.chicagotribune.com/sns-bc-lt–mexico-low-wages-20170925-story.html

          • Güerito

            Badillo, the Audi worker, said he’d be satisfied making half the $34 an hour received by U.S. autoworkers.

            Badillo is typical of the plant’s employees. He works in the paint shop, and lives with his son, Alejandro, 13, and daughter Noemi, 11, in a tiny 500 square-foot (47 square meter) government-subsidized apartment that he’ll be paying off for decades.

            Like many of the Audi employees, he has some college education — he started a bachelors’ degree in electronics — and he makes about $120 per week. His wife works in a department store, making less than he does. After paying their mortgage, utilities and taxes, they might have $50 per week to spend on food, entertainment and schools supplies.

            Badillo can’t afford a car. He takes the company bus two hours to work and two hours back. Alejandro would like an Xbox video game and Noemi would like a tablet, but they know their father can’t afford it.

            Wage rates are so low now that even auto companies from China — where average manufacturing wages rose to $3.60 per hour in 2016— are beginning to set up plants here.

            Badillo said the persistence of such low wages makes him fear for the country.

            “What we don’t want to see later is children assembling cellphones, but that’s where we’re heading,” said Badillo. “I don’t want to see Mexico like that. I want to see Mexico make progress.”

            http://www.chicagotribune.com/sns-bc-lt–mexico-low-wages-20170925-story.html

      • cooncats

        Now add in remittances, $30 billion, direct aid, narco profits, heavy spending by tourists in Mexico and see whatcha get.

      • From South of the Border

        Hi Mike S. Back on your leftist high horse again I see. One of the major stumbling blocks is that both Canada and the U.S. want a much higher minimum wage here in Mexico. The U.S. and Canada tried to push a per hour minimum wage, but the Mexican government backed by the multinationals said no a per day minimum such as the current $85 pesos a day is what they want. So Canada and the U.S. are demanding at least a $400 to$450 a day peso minimum wage. This is the real major blockage in the talks. The Mexican government taking orders from the multinationals wants only an increase to $100 pesos per day. I teach in many factories the engineers and executives are paid OK, but workers on the line get paid $157 to $200 pesos a day or $8 to $12 dollars a day is the normal wage. Who is the bad guy here not Trudeau or Trump, but the actual government of Mexico which is looking out for itself and its multinational partners not the Mexican people most of the rest of the noise in this article are red herrings to get people mad so the Mexican government can get out of NAFTA and protect it’s Multinational corporation masters.

        • Lloyd Le Blanc

          In a supposed civil discussion it’s not necessary to resort to juvenile name calling.
          Typical of the us and particular the lame brain that is the current president negotiating will consist of american bullying to cause Canada and Mexico to leave the negotiating table.They will also be blamed for ending the talks.When you have a guy like Trump who throughout his election campaign termed as NAFTA being the worst trade deal ever I would suspect he never read or still does not understand what trade deals are all about and as a Canadian I hope,for many reasons,the negotiations do fail and that Mexico and Canada can forge new trade agreements with the rest of the real world.

          • Donald Blair Godier

            Hahaha you’re friggin hilarious, the prior US administrations sold out America and now that Trump is putting America first all you little crybabies are so offended, the reason Trump is President is because the American people are tired of getting shit on by the rest of the world, you only see the US as a giant piggy bank to fund your silly socialist agenda, well that’s going to start coming to a screeching halt, if this Congress doesn’t get off it’s ass then come e018 we’ll vote in 10 more Real Republicans and vote the DINO scum along with them, We’ll get the wall, less taxes, way less social programs and by the end of 2024 there’ll be do much prosperity the democratic party will be dead for fifty years!

          • From South of the Border

            Lloyd Le Blanc, Trump owns a multi-billion dollar business in at least 10 countries, so I think he understands trade deals and, if he didn’t he’d hire the best trade lawyers he could find. You certainly show your hatred for both Trump and the U.S. well the U.S. can do without Mexico, but I doubt that Canada will back Mexico over the U.S. since it is actually a joint demand from both countries that Mexico increase its daily minimum wage from $85 pesos to $400 to $450 pesos a day. So Lloyd you are in favor of the Mexican workers here in Mexico making $5.00 a day minimum wage instead of $24.00 a day. What a great guy you are attacking Trump when he is actually trying to help ordinary Mexicans who make at most $200 pesos a day on the production lines here in Mexico. Until you have been in these factories here in Mexico and have seen the long hours people work for such low pay please don’t comment when you don’t know what your talking about.
            Even white collar engineers are only paid near 30,000 pesos a month . These engineers work from about 8am till 7 or 8 pm, for such a low wage. I have been teaching in companies here in Mexico for about 6 years since 2011, so I know the wages of both blue and white collar jobs here in Mexico. These wages especially for blue collar workers on the line are near starvation wages. Higher wages are good for the Mexican people and good for the U.S. and Canada. If you think, that the U.S. and Canada should just not interfere with the daily minimum wage here in Mexico then you support the corrupt government and multi-national corporations who are stealing from the Mexican people. I would say that unlike in the U.S. and Canada the average Mexican doesn’t have the protections that unions provide and that such protections such as a per hour minimum wage and unemployment insurance provides. Overtime pay and other benefits all, because the corrupt government keeps wages low doing the bidding of the multi-nationals. So Trump is a lame brain, well I’d rather have a lame brain who created a multi-billion dollar company negotiating for me instead of the run of the mill politician who is an economic illiterate( no specific politician in mind here).
            Have you taken a small Brooklyn based house and apartment building company worth 20 million dollars and turned it into a multi-billion dollar empire based in Manhattan with 6 Skyscrapers owned by Trump himself including Trump Tower. The Trump organizations value is estimated from 9 to 12.5 billion in value. I’d say that is quite a feat of business building. His name on any building allows the owners of these buildings to price them 20 to 30% above the market price. He makes more money today by having his name on a building instead of having to invest in building himself. He has hotels and golf resorts all over the world. If this kind of business smarts doesn’t qualify him to fix what is wrong with an economy or with trade deals then I’d like to know what kind of background would.
            I would say Lloyd jealous and envious much on your behalf. Unlike you I admire people who have a dream and execute that dream to becoming true. Trump might be a little loud and boorish, but that is something that a lot of New Yorkers share in common, but I’ll take the rudeness, if he can get the job done.

          • Mike S

            Trump knows nothing about trade deals. He rents his name (“brand”) and picks the drapes- he does not deal in manufactured goods, financial services, agriculture, entertainment, software, energy, or patents.. He took a big inheritance and sued and bullied his way to greater wealth. Beauty pageants, celebrity golf tournaments,casinos, and reality TV are his hobbies. Read up on Trump University…he is a total conman out for himself. He got his political start as “birther-in-chief”.

          • From South of the Border

            Like I said Mike Trump might or might not be an expert in the trade area, if he isn’t he’ll hire the best there is to do the job. Yes, His brand is rented out to many people, but first he had to create that brand. Look at Trump Tower and at least 5 other buildings in New York he does own and did build along with other buildings around the world.
            Mike S. it is typical of you leftists whatever Trump inherited he took it and created something more than 10 times plus larger. You and the other leftists here are so full of envy and spite that you can’t see the forest for the trees. This is why I get sick when I’m around people like you. Envy, spite and hatred all negative all evil in nature. You can’t be happy for someone who is successful. You will never understand why blue collar guys and gals from Michigan,Ohio, Iowa,North Carolina, Wisconsin and Pennsylvania all voted for a billionaire. Why did they vote for Trump, because there tired of political correctness there tired of worn out political ideology like, so called Global Warming and Climate Change, being more important than real people with families that need good jobs just ask the coal and iron miners in Pennsylvania, southern Ohio, West Virginia and Kentucky who are back at work and collecting good pay checks again not trying to feed their children on $10.00 an hour instead $60,00 to $70,000 dollars a year again. These are the workers who will be loyal to Trump for giving them their jobs back. For you Mike its about theories and ideology to Trump and people like me who grew up in a blue collar families where people like my father left for work at 4 am and worked 70 hours a week so he could send his children to University. He had pride in using his hands and getting a paycheck for his hard work. Trump even though a billionaire remembers working along side of men like my dad growing up his father made him understand what a job was and what hard work meant, but I don’t expect you Mike and the leftists here to understand working in a factory at age 16 during the hot summer making $6.00 an hour. You have to have grown up in such a family to understand it and respect people like my DAD. Trump not only respects the working man he knows about such people, because of his DAD!.
            This is why you leftists who have probably never worked with your hands in your life will never get why a coal miner and a carpenter know they have more in common with Trump then they will have have with today’s Democratic Party and the left wing people in it. Just remember when Hillary was running for president she said to miners in West Virginia and in Pennsylvania that she was going to close the mines and lose those men their jobs. She promised to end their careers. Men who are in their 50’s who are to old to start over what happens to them and their families who will pay for their children to go to University or anything else. Trump the billionaire on the other hand promised to stop the bad trade deals and to get these men their jobs back. Well, in 9 plus months he has brought back 200,000 plus mining jobs and others as well. Do you really think people are going to vote for people like Hillary or give Trump their support and vote in 2020.
            Like I said your not from a blue collar background, so you will never understand why a billionaire builder and showman can capture and keep the loyalty of working men and women. You are incapable of understanding this fact. Time will tell who is right me or you Mike.. In 2020 in look forward to a second Trump victory and to seeing working men and women respected for their work and ideology sent to the garbage can of history.

          • Mike S

            I am a proud liberal and progressive in the FDR and Eisenhower vein. I support Bernie Sanders although I disagree with him on NFTA and agree with him on China. Trump wildly exaggerated his worth during the campaign and it has been demonstrated that if he had put all his inheritances in a passive indexed mutual fund, he would be worth more today. New presidents following previous 8 year presidents do not begin to change economies until their second year. That is the momentum of big economies. This was true of Reagan, Clinton, Bush, and Obama. The Trump economy will kick in beginning in 2018. Right now he is riding the coattails of the Obama economy. He failed at health care and we shall see what the effects of his tax cuts for the wealthy , gutting the EPA, building a wall, destroying NAFTA , gutting the ACA, pumping up the military, and deporting 800k Dreamers produces.. The greatest job producers we could have would be BIG spending on infrastructure and a major shift to green/clean/renewable energy. Coal is dead and climate change is very real and dangerous for our grand children. Pulling out of the Paris accords was really stupid and if Trump sabotages the Iran nuclear agreement…that will be the end of our long alliances with our faithful European allies. Putin is getting a big return on a relatively small investment. You my friend have been totally conned.

  • TioDon

    Don’t, I repeat, don’t, try to intimidate TRUMP. And, be careful what you wish for…

  • Jerry Vas

    I think its time for Mexico, Central and south americans countries to boycot all united states products.

  • Donald Blair Godier

    Here’s the bottom line as i see it, NAFTA was negotiated years before IVA, therefore US products which entered Mexico prior to IVA were on par with Mexico products entering US, now Mexico products not taxed entering US, however US products entering Mexico are extorted by IVA for nearly 20%, 16% IVA and Mexico import fees which easily reach 5 to 10%, plus the Mexican exporters get rebated their 16%, it’s no wonder the US wants renegotiating. It’s long overdue and only fair.

    • Mike S

      VAT taxes are not tariffs. The US collects taxes at point of sale, on profits, as inventory., fees…lots of areas. The method each country uses to fund public services and government is their business. VAT taxes apply to domestic products as well as imports unlike tariffs.

      • Donald Blair Godier

        Sorry, i simply disagree, it is a huge burden for the common people of Mexico and a giveaway to exporters and manufacturers and continues to fuel Mexico’s corruption filled bureaucracy and Politico’s. What do they do with all those billions of pesos? Run their corrupt political machines and none of it benefits the people.

        • Mike S

          That’s a whole different ugly subject.

          • Donald Blair Godier

            We can agree there.

      • Donald Blair Godier

        Tell that to someone trying to buy any electronics, when a 500 dollars phone or TV costs you 1000 dollars, somebody’s getting f..ked, and it ain’t the government.

    • When NAFTA was negotiated IVA was 16% except for in the border zones where it was 11%. It is now 16% in the entire country. Only companies with a maquiladora program are rebated the IVA and they do not pay IVA on materials they import temporarily for manufacturing their products to be exported. IVA is basically a consumption tax paid on products and services in Mexico. Much of the population pay no other taxes. Prior to NAFTA, Mexican markets were closed to US imports. Tariffs on all products imported from the US were over 100%. Most Mexican exports to the US were from maquiladoras which do not pay duty nor IVA. NAFTA opened Mexican markets to US products.

      • Donald Blair Godier

        Well I see you’re right on the IVA, although when I was a small exporter here in the mid to late 80s you never saw anyone collecting or documenting any collection of IVA, so maybe that’s why I never noticed it. All my business was done pre NAFTA and admittedly small scale, there were no tariffs on goods I bought here, no IVA, no nothing when I returned or shipped them to USA, I paid some brokerage fees through my customs broker but everything I entered the US with was duty free.

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