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Guajardo, center, with Canada's Freeland and the US's Lighthizer. Guajardo, center, with Canada's Freeland and the US's Lighthizer.

No early NAFTA deal; chances good for May

Secretary predicts 80% probability for agreement in principle

Economy Secretary Ildefonso Guajardo yesterday ruled out any possibility of reaching a new NAFTA deal this week, but said that there is an 80% chance that an agreement-in-principle will be struck by the first week of May.

Guajardo met with United States Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland in Washington last week amid optimism that the three countries were close to reaching an updated trade agreement.

There was even some speculation that the three countries’ respective leaders could make an announcement about an agreement at the Summit of the Americas in Peru later this week.

However, United States President Donald Trump has now announced that he will not attend the summit.

In an interview with the broadcaster Televisa, Guajardo said that “there are no conditions to reach a NAFTA conclusion this week.”

The economy secretary explained that there is still a lot of outstanding work to be completed and also conceded that Trump’s decision to send the National Guard to the Mexico-U.S. border and President Enrique Peña Nieto’s stern response stymied the possibility of an early agreement.

However, he added that negotiation teams from Mexico, the United States and Canada remain in Washington where they are “trying to overcome” outstanding contentious issues including rules of origin as they apply to the automotive industry, technical trade barriers and environmental concerns.

The United States has softened its stance on the former issue although U.S. Treasury Secretary Steven Mnuchin said last week that Trump “wants to renegotiate the deal but he’s also very determined that we get specific points.”

Guajardo explained that the U.S. was motivated to conclude a deal by early May to ensure that it is the current Congress that votes to approve it rather than one in which the Republican Party may no longer have a majority.

Questioned whether the 24-year-old trade treaty could still be terminated, Guajardo made a thinly-veiled reference to Trump’s tendency to use Twitter to support his assertion that anything could happen.

“In this environment we’re living every day, you can’t absolutely guarantee anything because there is an unpredictable factor; that is the design of public policy, which now starts at six in the morning from a thought inspired by the media . . .” he said, adding that he thought it a strange way to make public policy.

However, Guajardo maintained that “there is a very high probability of 80%” that an agreement-in-principle will be made by the first week of next month.

“A lot will depend on flexibility,” he added without being specific.

Mexico’s chief NAFTA negotiator dismissed the need for another formal round of negotiations, describing ongoing talks as a kind of “permanent round.”

Guajardo also said that when a deal is reached, “markets are probably going to improve a lot . . . [and] it could have a [positive] effect on the exchange rate [of the Mexican peso].”

Source: Expansión (sp), Milenio (sp), Televisa (sp), Bloomberg (en)

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