Videgaray in the Senate yesterday. Videgaray in the Senate yesterday.

NAFTA talks resume amid growing doubts

Mexico is bigger than the trade agreement, foreign affairs secretary tells senators

Trade talks resumed today amid growing doubts on both sides of the border about the likelihood of a successful conclusion to renegotiating the North American Free Trade Agreement (NAFTA).

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Some observers say there is a real possibility that a new NAFTA deal will not be reached while Mexico has given further indications that it is prepared to walk away from the 23-year-old agreement.

The fourth round of renegotiation talks in Washington comes on the heels of further threats by United States President Donald Trump to terminate the accord.

Speaking in the Senate yesterday, Foreign Affairs Secretary Luis Videgaray warned that Mexico would leave NAFTA if it wasn’t favorable to its interests and took aim at President Trump’s predilection for firing broadsides and threats via Twitter.

“We are not negotiating the agreement on social networks, we are not negotiating NAFTA through Twitter, we’re doing it with professionals, acting in good faith and that’s how we’ll continue. But we’ll only continue with this process and in this agreement if it’s in the national interest,” he said.

Videgaray also said that the objective remained to reach an agreement that is beneficial to all three countries but stressed that Mexico’s prosperity didn’t depend on it.

“Mexico is much bigger than the North American Free Trade Agreement and we must be prepared for the different scenarios that could result from this negotiation.”

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Videgaray’s comments came after Trump once again weighed in on the issue by making another threat to abandon the trilateral trade treaty.

“I happen to think that NAFTA will have to be terminated if we’re going to make it good,” Trump said in an interview published by Forbes yesterday, adding, “I like bilateral deals.”

As a result of the increased uncertainty, the peso has sunk to its lowest level since June and is now trading at just below 19 to the dollar.

Trump’s hardline stance also attracted renewed criticism this week from business groups and farmers within the United States, including the country’s most powerful business lobby.

The U.S. Chamber of Commerce sent a letter to the White House yesterday, co-signed by over 300 other U.S. business groups, to express their support for NAFTA as it currently stands.

Chamber president Thomas Donohue reiterated the organization’s views, saying that some of the proposals pursued by the Trump administration would undermine trade between the three NAFTA countries — Mexico, the U.S. and Canada — that is worth more than US $1 trillion annually.

“There are several poison-pill proposals still on the table that could doom the entire deal,” Donohue said at a business event in Mexico City.

He specifically referred to the controversial rules of origin proposal which would force automotive manufacturers to source more parts in North America, changes that have been proposed to a dispute resolution mechanism and a “sunset clause” that would force the three countries to reaffirm their commitment to the agreement every five years in order for it to continue.

The “existential threat” to NAFTA also threatened regional security, Donahue said.

Mexico and the U.S. cooperate on a range of bilateral issues beyond trade including the fight against drug trafficking and illegal immigration. Videgaray also said that an end to NAFTA would hurt bilateral cooperation.

At this week’s talks, the U.S. is expected to push a proposal that would require vehicles made in Mexico to have 85% NAFTA content in order to remain free of tariffs, up from the 62.5 % content rule currently in force. Fifty per cent U.S. content may also be proposed, sources told CNBC.

But auto makers in Mexico say that any such move would have a detrimental impact on the industry’s competitiveness while Donohue said that it may have an opposite effect to the one intended because industry would seek to source more input from Asia.

He also criticized the emphasis that Trump has placed on reducing the US $64-billion trade deficit the country has with Mexico.

“It’s the wrong focus and is impossible to achieve without crippling the economy,” Donohue said.

Several analysts believe that there is a definite possibility that the talks — and the agreement — could break down as negotiations continue on the most contentious issues.

Karen Antebi, a senior economic advisor to the Mexican embassy in Washington, said “the risks of withdrawal are high, and we are preparing for that possibility,” while Juan Carlos Hartasánchez, a senior director at the consultancy Albright Stonebridge, said “I definitely think there’s a real chance this could fall apart.”

The chief global strategist at Horizon Investment was a bit more optimistic. Although Greg Valliere described NAFTA as being on “very thin ice” he said that even if threats to abandon the talks became a reality it would not necessarily put a final end to the agreement.

“I do think there is a chance the U.S. or Mexico could walk out,” Greg Valliere said.

“[But] I think people would consider it a stunt and maybe we could resurrect the talks.”

The Washington round is scheduled to conclude on Sunday although there is a possibility it could be extended by two days to October 17.

Source: El Economista (sp), Reuters (en), CNBC (en)

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  • Mike S

    Trump is an angry infant and is never happy unless he is firing somebody…somebody please change his diapers before does anymore damage. He runs a pathetic reality TV Administration where it is important that his mug is on TV and he is the center of attention 24/7 good or bad for the country. He is an unread and unscientific man who can’t be bothered with details. Read what the real author of the “Art of the Deal” Tony Schwartz had to say about him:

    https://www.newyorker.com/magazine/2016/07/25/donald-trumps-ghostwriter-tells-all

    Trump says over and over the trillion dollar NAFTA trade agreement is the worst in US history and he hasn’t read it nor does he have any idea what it is all about. Trade has gone from $40 billion to $550 billion between US & Mx since NAFTA and both countries have benefited immensely. It fits with his political scenario that somehow Mexicans are bad people stealing Joe SixPack’s jobs. He would be better off looking at Wall Street and hedge funds if he wants to find the real culprits of the GREAT BUSH RECESSION that Obama dug us out of. If Trump isn’t stopped, I predict another GREAT RECESSION by 2019. He wants to cook the planet, diminish NATO, trash and pollute the environment, eliminate health insurance for 20 million Americans, deport 800k Dreamers, give big tax breaks to the wealthy, stir up racial animosity, promote an out-of-control gun culture, stop the green/clean/renewable energy revolution (and millions of jobs), do nothing about Chinese Mercantilism, build an absurd and useless ugly wall, eliminate the free mainstream news media, ruin NAFTA, and kiss Saudi Royalty and Putin’s asses. The infant is a menace to society..

    • DeplorableVI

      you sound like an angry old racist.

      • gypsyken

        The white supremacist racist monster who occupies the White House is, of course, supported by white supremacist racists, including those who are living in Mexico.

    • TioDon

      Wow, using the New Yorker as a reference for your lame, inaccurate dribble? We can end NAFTA manana and the US would be better off for it. Mexico, however, will just become a bigger ghetto than they already are….Nope, TRUMP is in charge and he’ll decide what/when to do about NAFTA. Sit down, have a tortilla lunch and shut the hell up. Gracias…..

  • DeplorableVI

    Nafta caused enough damaged and crushed too many American families and American towns. Nafta is a worse deal than when we gave our entire shoe industry to Dominican Republic only to see them lose it all to china. Dozens of busted dilapidated towns in the north east where our shoe industry was based. Nafta destroyed towns from every corner of the United States. It’s time to say adios.

    • Mike S

      Several things destroyed manufacturing jobs in the US and it wasn’t NAFTA. American capitalists closed US plants and took their money to China chasing slave labor and lax environmental standards. They shipped back inferior goods at very low prices and sold them through Walmart, Kmart, Target, TrueValue, Harbor Freight, and a hundred other big box Chinese retailers. This might have been tolerable if China had imported and bought US made goods but they didn’t. That was not true of Mx. Meanwhile, automation led by advanced software and robotics began replacing assembly-line workers and the US did not institute retraining and education for a new changing work force. Older workers sat stupefied, depressed, and angry longing for a world that left them never to return. Silicone Valley thrived but the rust-belt was devastated and paralyzed. Add that to the criminal and corrupt activities of Big Banks and Wall Street after Glass-Steagall was repealed in 2000 and the result was a complete economic meltdown in 2007-8 with record foreclosures. NAFTA had nothing to do with any of this. NAFTA has been a huge success. Trade between US and MX went from $40 billion to $550 billion in 22 years and 6 million Americans with high paid jobs depend on that trade. It has been a boom for US agribusiness. The world is a competitive and changing place. The next big boom that could last 40 years will be the green/clean/renewable energy revolution. Trump seems determined to leave the US out of that while China and Europe assert dominance. Obama left Trump a sold and “healed” economy. Too bad he is such a clueless demagogue.

      • DeplorableVI

        This is a typical left wing Hollywood script where we are have to suspend ourselves in fantasy.

        • From South of the Border

          Deplorable 6, Your right look at other posts by Mike S. pure fantasy. He wouldn’t even recognize more than 1.5 million jobs created in the last 9 months by the Trump admin. Especially the 250,000 plus mining jobs created with the reopening of mines in West Virginia, Pennsylvania and Ohio. He lives in this Blue Bubble and thinks that his echo chamber of global warming or is it now climate change is the real world. He cares more about winning debating points than giving people back their jobs. He doesn’t understand economics except for maybe buying penny candies at a local 5 and dime store! First it was both sides of the isle that allowed companies to close and go to China and Mexico, but also, the democratic party raised taxes so high 35% corporate tax rate so companies couldn’t make money in the U.S. as well. Therefore the rust belt. People like Mike S. are economic ideologues who would rather tax businesses at 35% than lower taxes and keep companies in the states. Well, Thank goodness we have a man with a high business IQ and not Obama who told people along with Hillary that they were going to close the mines and take people’s jobs away, but they still expected for these people to vote for Hillary. FAT CHANCE of that ever happening 9 to 10 months later and 250,000 coal and iron ore jobs later and people are cheering Trump wherever he goes in Ohio, Pennsylvania and other Mid-West states. People appreciate a person making promises and keeping those promises just wait till the tax cuts pass and the jobs will pour in twice as fast. It is sort of elementary my dear Watson end red tape lower taxes and jobs come back and people will reelect the 45th president of the U.S., because he made specific proposals and he is fighting for the working class guy who doesn’t have lawyers and accountants to protect his/her interests they have to rely on someone and in this situation Trump is doing his job that he was elected to do. The left wing lawyers and global warming or climate change crowd don’t care about ordinary people they care about their big fat scam they now see unraveling, before them. Great for TRUMP!

          • Mike S

            I’m not going to waste time factually refuting all your nonsense. But I will ask you to read this article from well respected Politifact:

            http://www.politifact.com/truth-o-meter/statements/2017/jun/05/scott-pruitt/are-coal-mining-jobs-50000-last-year-not-exactly/

          • From South of the Border

            Nice try Mike S. another left wing rag! You of course wouldn’t waste your time refuting all my nonsense well, I’m not surprised since what I wrote isn’t nonsense, but I’ll let your silence speak for itself. This is how let wingers lose elections and arguments, because the facts and the people aren’t on their side. Good luck you’ll need it! By the way I did read politifact and as I said a left wing rag.

          • Mike S

            More jobs were created in 2016 than will likely be created in 2017. The “Trump” economy will not kick in until 2018. We are at full employment and have been for several years now. The bigger problem is stagnant wages and the obscene wealth disparity. The “de facto” corporate tax rate when the hundreds of loop holes are taken into account is 22%, not 35% Obama was willing to lower the corporate rate to 25% if most of those loop holes were eliminated. Trump wants the rate at 20% AND keep the loop holes because it will benefit him personally (along with getting rid of inheritance tax which currently allows an $11 million deduction before kicking in- not much help for billionaires). You can be a climate change denier, birther, and believe all Trump’s wild exaggerated claims about coal jobs if you like, but reality says otherwise. I trust the 3000 international climate scientists sounding the alarm over CO2 emissions a lot more than demagogues like Trump, Hannity, and Limbaugh. Your 250,000 new mining jobs claim is a typical Trump gross exaggeration. Coal is not the future. A narcissistic, pathological lying, bigoted, silver-spooned conman who spent his life in a Manhattan penthouse screwing investors and sub-contractors and suing his way to greater wealth will never have the blue collar working class at heart. He is already trying to take their health insurance away and wage growth means nothing to him. Again, NAFTA has been a great success and had nothing to do with the 2007-8 GREAT BUSH RECESSION. I see Trump is also attacking Dodd-Frank for his billionaire Wall Street cronies.

        • rangerrandy

          Fantasy? Just reread the comment. seems pretty factual historically.

  • TioDon

    Hahaha….Mexico, you have NOTHING to say about it. TRUMP will decide how/when/if NAFTA is going to work. You have no leverage and no say in the matter. we’ll let you know what we decide…in the meantime, sit down and shut up.

    • From South of the Border

      Greta posting Tio Don one of these days the left wing might actually care about ordinary people who had lost their jobs and are now getting those jobs back. Check my post below for the details. Mike S. doesn’t have a clue of an idea about anything economic. Just just spouts left wing none sense and ideology all day long!

    • gypsyken

      Yes, Tio Don, the mentally impaired (see “The Dangerous Case of Donald Trump”) monster supported by a third of U.S. voters (those who are stupid and/or misinformed) will decide everything everywhere! Until, that is, he is gotten rid of, one way or another.

      • TioDon

        ” supported by a third of U.S. voters”
        TRUMP won, Hillary lost.
        TRUMP 2020…..

        • gypsyken

          It’s good that an increasing number of the minority of voters who put the monster in the White House no longer support him, and the number will increase, at least among educable ones, as,among other things, they lose access to health care. There is hope that the monster will be gotten rid of, one way or another, before too long.

          • TioDon

            TRUMP won, Hillary lost……TRUMP 2020.

    • Güerito

      Hey TioDon, some censor flagged your TRUMP 2020 comment as spam. It’s hidden.

  • There is tremendous pressure on the Mexican government to pull out of NAFTA and that is exactly what will happen if there is not a deal before the elections July 2018. Mexico in the last year has made major advances in sourcing agricultural products from South America. NAFTA had nothing to do with US manufacturers moving to Mexico, they could already do that before and they had a much more favorable deal with the Mexican government before NAFTA. Since 1994 the US has lost 5 million manufacturing jobs, most to China and automation. Mexico gained 300,000 manufacturing jobs in the same time period. The biggest loss of jobs and exports will be on the US side. When NAFTA disappears there will be little effect as the GATT will kick in. Trump has no idea what NAFTA is about.

    • From South of the Border

      McBride, You certainly aren’t an expert either on NAFTA and it is up to Mexico whether NAFTA survives or not I hope it doesn’t about time we reasserted our place in the world. Like Tio Don said we will decide and, if Mexico goes along NAFTA will survive, if not its dead. Not our problem!

      • I have been working in the Maquiladora industry since 1985. I am a Mexican attorney and I help companies set up manufacturing companies and apply for their import/export programs and their Mexican tax structure, and then act as their legal representative. So yes, I am an expert in the field.

        • From South of the Border

          Mcbride, I’m not going to spend a lot of time on this suffice it to say that, if Mexico wants to spend more money importing food from South America good luck! Good luck with the TPP and other such agreements. If your such an expert then you know that the U.S. market is the biggest in the world anyone we lose we’ll pick up others. We are in the process to begin negotiations with Britain on a free trade agreement so good bye and good luck you’ll need it. China as I’ve written, before has a great facade of power, but the closer you look the worse it gets importing 20% of its fresh water for it’s citizens importing more and more food each year. Plus the pollution problem they need us, so they can pay for all this. The U.S. will be happy to let China and Mexico and other countries go it alone there are others such as India who are now negotiating with us. India can take up all the slack of China and more and India is quickly becoming one of Americas most important allies, so go it alone we’ll see who comes out on top. I’ll give you a hint the country has a 2 letter abbreviation. Better nations have tried and have been sorry for crossing the U.S. ask Japan what happened when they tried to beat us it wasn’t pretty. Good Luck, NOT!!

        • gypsyken

          No matter how well-founded your arguments are, Glenn Mcbride, you are merely wasting your time arguing with From South of the Border, because, as he says, it’s about time we [that is, the U.S.] reasserted our place in the in the world” and “we [that is, the U.S.] will decide.”

          • This is an issue I am involved with daily as I consult with many companies in Mexico on trade practices. I am not the only one who thinks that it is better for Mexico to withdraw from NAFTA. These trade agreements are very complicated issues, nothing is black and white. If NAFTA is rescinded, the WTO kicks and we will have new tariffs. Tariffs on US agricultural exports to Mexico are particularly costly, including a 15 percent tariff on wheat, a 25 percent on beef and a 75 percent tariff on chicken and potatoes. But goods like soap, fireworks, handbags and many articles of clothing face tariffs of 15 to 20 percent. Mexican goods would, in turn,face an average United States tariff of 3.5 percent. This raise in the price of US products will make it more feasible for Mexico to buy its 18 billion dollars worth of agricultural products elsewhere, and the countries are lining up to make deals. There are other effects from Trump rejecting the TPP that are causing an increase in investment in Mexico. The TPP eliminates tariffs on beef to Japan and would have eliminated the 39% tariff on beef from the US to Japan also. The Texas ranchers that were counting on the new market for beef are now moving operations to Mexico, because they can ship beef to Japan with no tariff. These are very complex issues, more complex that people not involved in them can grasp, especially Trump. Many automakers are ramping up auto production in Mexico, Ford and GM sold more cars in China last year than in the US. The US is a big market but not the only market and certainly not the center of the Universe.

          • gypsyken

            The fundamental problem, Glenn Mcbride, is that the monster who occupies the U.S. White House, whose grasp of reality is seriously impaired, thinks that it is “the center of the Universe, and its deluded followers go along with it.

  • 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

    Canadian Prime Minister Trudeau just appeared before the Mexican Senate and asked Mexico to raise salaries and improve working conditions for Mexicans.

  • gypsyken

    Mexico, Canada, and, regrettably, many other nations, fail to recognize the simple fact that the U.S. should rule the world (for the benefit of its corporations) and that Trump should rule the U.S.

  • Güerito

    Hey, César, I posted these two comments here last night and both were flagged as “detected as spam.” Do we have another censor running loose?

    1. 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.”

    2. 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

    • no censorship going on. three posts with the same link or two posts with the same text will get you in the spam bin.

      • Güerito

        Well, I never use the same text or link in the comment section for a single MND article. I will, however, continue to repost relevant articles and their links in different MND articles, and be careful to change the text of my post if I do so. Thanks.

  • Peter Maiz

    55,000 Americ suppliers depend on the Mexican assembly program (maquilas). Is this a way to way to produce jobs in the midwest?

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