U.S. intransigence on NAFTA harmful to Mexico, say analysts

Updated 2017-08-17 17:02:32 Xinhua

The U.S. intransigence in renegotiating the North American Free Trade Agreement (NAFTA) would be damaging to Mexico, according to experts.

Mexico clearly has the most to lose if the United States takes a rigid approach to the talks, which began on Wednesday in Washington with also trade partner Canada, said analysts from Asia Viewers, an Argentine consulting firm.

"Since Donald Trump's presidential campaign, renegotiating or withdrawing from this accord has been a pillar of the deep changes he has wanted to make," said Argentinean economist Cecilia Peralta.

"While the three governments laid out the topics to discuss in the ongoing meetings, the U.S. administration was the one to publish the most extensive and detailed document about the changes it wants to propose," said Peralta.

Peralta reckoned it as an indication that the United States has set an agenda that could prolong the negotiations, which are expected to conclude by the end of the year.

"The central changes proposed directly impact job creation in the three economies," warned Peralta, noting the existing agreement, which took effect in 1994, "has led to a more than 400 percent increase in Mexico's exports to the United States, its main trade partner."

The increase has helped Mexico generate jobs that may now be at risk.

"Employment and trade balance will be two of the main points on the agenda," said Peralta.

Trump claims NAFTA has tipped the trade balance in favor of Mexico, with the United States going from a surplus with its southern trade partner to a deficit of some 64 billion U.S. dollars last year.

The Office of the United States Trade Representative has made reducing the trade deficit its No. 1 priority in its list of 22 objectives to negotiate with Mexico and Canada.

Martin Dukart, Argentinean consultant from Asia Viewers, believes the United States will prove to be a tough negotiator, since "the renegotiation is a matter of high priority" for Trump and "remaining in the trade bloc depends" on the outcome of the talks.

On which points is the U.S. likely to take the toughest stance?

"The most relevant chapters for the world's leading economy will be job creation, the trade deficit, anti-dumping measures and the resolution of disputes," said Dukart.

Canada has its own key areas of interest to protect, said another analyst Andres de Nichilo, who also works in Asia Viewers.

"In Canada's case, the timber, dairy and poultry industries will be the important ones, where they will not want to cede in negotiations," said De Nichilo.

And in the case of both "Mexico and the United States, the automotive sector will be an area to keep an eye on, along with the energy sector and the sugar industry," he said.

Which country has the most to gain and which has the most to lose from a renegotiation of the trade deal?

According to Peralta, "due to its productive structure and its competitive ranking in relation to the United States, the party that could fare worst is surely Mexico."

"The country that will opt for a more flexible approach, but which runs fewer risks of changing its current position, is probably Canada. Its stance towards the negotiation is that everyone wins as a bloc," said Peralta.

"The United States has a more intransigent position and believes that job losses in many sectors were due to the treaty, so its aim in the negotiations is to win in some sectors or withdraw from the bloc," she said.

What it boils down to politically is that renegotiating NAFTA "is the fulfillment of an election campaign promise for the United States, and a challenge to tackle in the lead-up to upcoming elections for Mexico in 2018," said Peralta.

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