The renegotiation of the North American Free Trade Agreement (NAFTA) is proceeding at a slow pace, too slow if Mexico, the United States and Canada want to comply with the new timetable that has been fixed reach an agreement in the first quarter of next year.
The fifth round of talks has concluded this Tuesday in the Mexican capital with progress in minor points, which the positions are less distant, but without agreement on the most thorny issues put on the table by Washington automatic termination clause each five years if the three countries do not agree otherwise; the attempt to liquidate the dispute resolution method and the claim that its southern neighbor can only sell agricultural products out of season; and, above all, the hardening of the rules of origin for the automotive sector .
The United States tightened the rope to the maximum at the last meeting, held in Washington. Knowing that he would have the rejection of his partners, he undermined the negotiation of demands not present in any free trade agreement. This Tuesday, minutes after the fifth round of negotiations concluded, it has tensed even more: “Although we have made progress in some of our efforts to modernize the FTA, I am still worried about the lack of progress.
Canada or Mexico are willing to commit themselves seriously to provisions that will lead to a rebalanced agreement, “stressed the representative of US Commerce, Robert Lighthizer, in a statement. ” And in the absence of rebalancing, we will not achieve a satisfactory result. I hope our partners sit down at the table in a serious way so that we can see significant progress before the end of the year. “A few words that sound more threatening than emplacement to redouble the dialogue: either American maxims are accepted, or goodbye TLC
Mexico and Canada consider most of the ideas proposed by the United States “unacceptable” and have only articulated a counterproposal: on the automatic termination clause, which the Latin American country wants to convert into a mere site for dialogue to regularly study the pros and cons of the treaty.
They have not yet received a response from the US delegation. In the rest, the resounding no of Mexicans or Canadians remains, although at the last hour of Tuesday, the Mexican holder of Economy, Ildefonso Guajardo, left the door open to negotiate also the rules of origin of the automotive sector, until now one of his Red lines.
To avoid the dreaded but, in view of the null and recent progress, inevitable stagnation in the talks, in the meetings held in Mexico City the three countries have preferred to focus on the few points where there is consensus, such as basis on which to build a global agreement telecommunications and electronic commerce, among others.
The fundamental premise is that the more you advance, the harder it will be for Trump and his team to destroy a treaty that has more than achieved its goal of multiplying North American trade over the past 23 years. In the brief statement with which the round has been closed, the three governments limit themselves to highlighting the “advances in several chapters”, which do not materialize, and announce a new technical meeting in Washington in December and another,
With the Mexican presidential elections just around the corner and the electoral campaign almost launched, time is short. But Jonathan Heath, former chief economist at HSBC for Latin America, keeps the positive side. “While the fourth round was a failure, this can be perceived as chiaroscuro: it is true that the most critical points remain, but there have also been important technical agreements.”
It also downplays the lack of presence of the top political leaders of the conversations in this round: “It has been given more importance than it has, is quite normal in this type of negotiations.” If at the end of October, when the United States put its toughest demands on the table, Heath saw a 50% chance that the treaty would be dynamited, now “marginally” reduces this percentage to 45%. “At least I see interest in having something,” he adds.
As the playing field has been muddied, the warnings of the businessmen the ones that play the most in this renegotiation – have gone up in tone. The bosses of the three countries, including the powerful automotive sector, have defended seamlessly in recent weeks the validity and utility of the largest trade agreement in the world. They fear the worst of outcomes: that Trump will fulfill his promise to abandon the FTA and come to question the authority of the World Trade Organization (WTO).
The last to speak out has been the US Chamber of Commerce, the largest business organization on the planet, with more than three million members behind it, which in the fifth round of negotiations has put figures to the severe damage of a potential break for a handful of states that the Republican tycoon based his victory in the elections of November last year: Michigan, Ohio, Pennsylvania, Wisconsin and Indiana.
One year later, and 12 months before the mid-term elections in which the governors of four of these states all except Indiana are taking office, almost two million jobs are at risk of disappearing, according to the figures of the US employers. If the FTA breaks down, the same people who took Trump to the presidency of the world’s leading power would today see their job jeopardized today: a major risk for the electoral expectations of a Republican Party in which the cracks between its traditional sector, which has always had in free trade one of its basic ideological pillars, and Trumpism .
In parallel, the Mexican and Canadian delegations have redoubled their lobbying action with businessmen and, above all, politicians from key states to make them see what is at stake with the treaty, which regulates one of the most fruitful commercial relations on the planet, with hundreds of interconnected production chains.
Even isolating Canada, the figures are overwhelming: the US giant buys 80% of the foreign sales of its southern neighbor and Mexico acquires more American products than the sum of the three largest European powers Germany, France and the United Kingdom and the second Asian -Japan-. With the treaty in tatters, much of that exchange volume and billions of dollars in investments would be left in limbo. That is the scenario that Ottawa, Mexico and a growing number of American businessmen try, by all means, to avoid.