Economy Secretary Ildefonso Guajardo yesterday urged officials to press for a speedy conclusion to an updated North American Free Trade Agreement (NAFTA).
He also said that Mexico and Canada must be ready to strike a deal that doesn’t include the United States if — as U.S. President Donald Trump has repeatedly threatened — it decides to withdraw from the 24-year-old pact.
Speaking at the World Economic Forum on Latin America in São Paulo, Brazil, Guajardo said that if a new NAFTA deal is not completed by April 30, a new political landscape in the region would create further doubt around the agreement because it’s uncertain how incoming lawmakers in Mexico and the United States would view it.
The regular session of Congress ends on the date cited by Guajardo and Mexicans will vote July 1 for a new president who will take office in December, as well as 128 federal senators and 500 deputies.
Midterm elections will be held in the U.S. in November.
“The whole nature of the agreement would change,” Guajardo said. “You either get it done by the end of April or then it doesn’t matter: you can go until the end of the year.”
U.S. Trade Representative Robert Lighthizer also suggested recently that a new “in principle” deal could be reached in the next few weeks.
All three NAFTA countries previously committed to expedite the renegotiation process as much as possible to avoid clashing with campaign periods but progress has been slow and at the conclusion of the most recent round of talks in Mexico City last week, only six of 30 chapters had been concluded.
Despite his enthusiasm to conclude a new deal by the end of next month, Guajardo told news agency Reuters that he expected that negotiations would probably continue beyond that date.
However, he maintained that it could be possible to complete the technical work required for a new deal in a month.
“If there’s political will and flexibility to reach an agreement, I think it’s technically not impossible,” he said.
Guajardo added that his team is willing to keep negotiating a new deal until the end of November as the government is eager to reach an agreement before a change in presidency.
The ruling party’s candidate, José Antonio Meade, is running a distant third in most opinion polls.
Considering a possible withdrawal from the trilateral pact by the United States, Guajardo said that “you have to be ready to live with a NAFTA without the U.S.” However, he ruled out any chance of NAFTA ending completely.
“NAFTA will continue between Canada and Mexico because at the end of the day what is important is you send a message that you believe in free trade. The U.S. is the one that will decide to be in or out,” he said.
Lighthizer said in Mexico City last week that time was running “very short” and that the U.S. could instead negotiate separate bilateral deals with Mexico and Canada if needed.
However, Guajardo said that Trump was coming under increased pressure from supporters in agriculture-based states to renew NAFTA.
The secretary also noted that political developments in the United States, such as the Democratic Party winning control of the Senate, could change the terms of negotiation.
But speaking at a fundraising event in Missouri Wednesday, Trump kept up his hardline rhetoric about NAFTA.
“Let’s start all over again . . . because the best deal is to terminate it and then make a new deal,” the U.S. president said, according to a transcript published by the Washington Post.
“But I don’t know that we can make a deal because Mexico is so spoiled with this horrible deal that they’ve lived with,” he added.
Last week, Trump said that Mexico and Canada would initially be exempt from new tariffs on steel and aluminum imports but framed the concession as conditional on reaching a new trade agreement that better favors the U.S.
Trump has previously referred to NAFTA as “the worst trade deal maybe ever signed anywhere.”
However, the new director of the White House National Economic Council, Larry Kudlow, appeared to contradict the president Wednesday, saying that NAFTA needed to be “reupholstered” in many ways but ditching it altogether would have negative consequences.