Mexico Sees Opportunity in NAFTA 'Modernization' Negotiations, Official Says

NEWPORT, Rhode Island -- Mexico hopes formal negotiations with the U.S. and Canada on a revised NAFTA will begin this summer, said Kenneth Smith Ramos, head of the Mexican Ministry of Economy’s trade and NAFTA office, at the Coalition of New England Companies for Trade Northeast Trade and Transportation Conference on April 12. Mexico now welcomes the renegotiation promised by President Donald Trump, seeing it as an opportunity to modernize the 23-year-old agreement, he said. Many provisions of modern free trade agreements, such as rules on intellectual property rights, labor and the environment, were non-existent when the original agreement came into effect, Smith said.

Modernization of NAFTA is an opportunity to “do a lot that we tried to do” in the Trans-Pacific Partnership, which will serve as a “useful model.” A draft of the notification to Congress required to begin pre-negotiation consultations has been compared to a similar letter on TPP (see 1703300056). Formal negotiations cannot begin until 90 days after the formal notification is submitted, which will not happen until a U.S. trade representative is confirmed, the White House has said (see 1703300056). Congress is not expected to take up the nomination until late April. Mexico began a similar 90-day consultation period in early February (see 1702020057). Unlike in the U.S., the Mexican consultations were not required by law, and were meant instead to align with U.S. procedures, Smith said.

The U.S.-Mexico relationship is in a “better spot” than it was four months ago, when there was “absolute uncertainty” about the new administration’s trade policy, Smith said. The first contacts between the Mexican government and its U.S. counterparts, including at the White House and with Commerce Secretary Wilbur Ross, have been “constructive,” though key figures in any negotiation, such as the USTR and the secretary of agriculture, are still unconfirmed, he said.

Any renegotiated agreement must be beneficial for all of North America, based on promoting liberalization, integration and competitiveness, Smith said. NAFTA’s trilateral structure must be maintained, he said. NAFTA has benefited the U.S., Mexico and Canada by creating integrated supply chains that operate in all three countries, which would be difficult to maintain if the agreement is broken up into two separate agreements with different rules of origin, technical regulations and customs procedures. There has been a “lot of interaction” between the Mexican and Canadian governments and a “recognition” that the agreement must remain trilateral, Smith said.