Daily Times

MEXICO CITY: Mexico feared the worst when Donald Trump was elected, but nine months on it is cautiously optimistic heading into negotiations on a new version of its crucial trade deal with the US and Canada.

Since taking office, Trump has toned down his rhetoric against the North American Free Trade Agreement (NAFTA), the 1994 deal that helped turn Mexico into a major exporter — but which the US president calls “disastrous” for American jobs.

Now Mexico — whose exports have more than quintupled in the past 23 years — is daring to hope for even deeper trade ties with its wealthy northern neighbors as its negotiators head to Washington for talks on updating the deal, which open Wednesday.

“You don’t lose anything by asking. We’re trying to get (tariffs) removed in the few remaining categories where they apply,” said Ana Riquelme, head of the group that represents Mexico’s booming medical device industry.

Such a boldly free-trade agenda would have been unthinkable back in November, when Trump shocked pundits by winning the US election after a vitriolic campaign in which he vowed to tear up NAFTA and accused Mexico and its people of stealing American jobs.

But Trump grudgingly opted in May to renegotiate rather than scrap the deal, and his tirades against it have grown less fiery.

Now, Riquelme said, Mexican industry is hoping at a minimum to keep basically everything the same.

“Things favor us just the way they are,” she said.

That confident view is shared by Juan Pablo Castanon, president of Mexico’s Business Coordinating Council (CCE).

His reaction to Trump’s victory was to launch a database of US and international companies that depend on NAFTA and lobby them.

He believes it has paid off. He is hoping for a new deal that “leads to deeper ties in terms of finding synergies and policies to make (North America) more competitive,” he said.

The Mexican government has been careful to hew to similar arguments, answering Trump’s outbursts on American job losses and trade deficits with talk of “North American competitiveness.”

Negotiators involved in the original deal say it was ripe for an update — and that they are glad to see Trump has decided not to kill it after all. “I was relieved,” said Carla Hills, US Trade Representative under former president George Bush. “I believe that it needs to be updated,” she told AFP.

“We didn’t have a cell phone in 1991, I didn’t, and much has changed in terms of technology wich has affected commerce and the way we live…. I think all three governments will agree on most of the things listed like rules governing digital flows, communications, services.” But the Trump administration is unpredictable, and touchy subjects abound. Number one on the list: the US trade balance with Mexico, which has gone from a surplus of $1.3 billion to a deficit of $64 billion under NAFTA.

“That’s not something that can be resolved in a trade relationship,” said Jaime Zabludovsky, deputy head of Mexico’s negotiating team for the original NAFTA.

“The deficit is related to the macroeconomic situation in the United States, which is an economy that consumes more than it produces.”

Another big bone of contention for both Mexico and Canada is NAFTA’s dispute resolution mechanism, Article 19. It allows exporters to appeal to a special arbitration commission if they believe they are being wronged by tariffs or dumping.

“It’s worked very well for all three countries, but those who have a protectionist view feel that it takes away their room to maneuver, because there is a kind of cop watching over them,” Zabludovsky told AFP.

The three countries are planning seven to nine rounds of negotiations, hoping to wrap them up by the end of the year — before the talks get caught up in the politics of next year’s mid-term elections in the US and presidential elections in Mexico.

A tight calendar, but not an impossible one, said Zabludovsky.

“It can be done. Twenty years ago, we concluded our negotiations in 14 months, starting from scratch,” he said.

Published in Daily Times, August 16^th 2017.