Mexico open to NAFTA changes but calls border tax "counterproductive"
Economy Minister Ildefonso Guajardo tells LatinFinance that digital commerce, environmental, labor and other issues could be a part of talks to revise NAFTA
Mexico is open to discussing changes in the North
American Trade Agreement (NAFTA) to include digital commerce,
energy, environmental and labor issues but it considers a tax
on Mexican imports to be counterproductive, the economy
minister has told LatinFinance.
"Mexico clearly understands that we can include
new areas," Economy Minister Ildefonso Guajardo said.
"When NAFTA was negotiated 23 years ago, issues
like digital commerce, intellectual property, the participation
of small and medium-sized businesses in international commerce
were not priorities," he said in an email.
"Environmental and labor issues were also excluded
from NAFTA because our country didn’t believe it
was the right time to implement those changes," Guajardo added.
"Today these issues are indispensable."
US President Donald Trump has pledged to overhaul
NAFTA, claiming it has encouraged companies to move factories
to Mexico and undermined job creation in the US. The US
president’s threats to deport millions of illegal
immigrants and build a wall along the US-Mexico border have
raised diplomatic tensions between the two countries. Last
month, President Enrique Peña Nieto cancelled a White
House meeting with Trump over renewed tensions over the border
Since then, Trump officials have floated the idea
of a 20% tax on Mexican imports as a way to make Mexico pay for
the wall. Guajardo dismissed the proposed tax as
Asked how the tax could affect the Mexican
economy, he said, "It would be a serious problem, but not only
for Mexico. The exports of other economies would also be
affected, including the United States. You have to remember, on
average, Mexican exports include 40% of supplies from the
United States. So this would only deepen the uncertainty that
we’re seeing now."
He also said a 20% tax on Mexican imports would
violate the rules of the World Trade Organization (WTO).
As it gears up for talks over revising NAFTA, the
Mexican government recently opened a formal 90-day consultation
period with the country’s business leaders. The
government has reached out to representatives from the
agriculture, auto manufacturing and textile industries for
their feedback on NAFTA’s impact.
"We’re focused on the process of
consulting with the productive sectors and will continue to do
so throughout any negotiation," Guajardo said.
With the future of US-Mexican trade up in the air,
Guajardo pointed to forecasts that show Mexico’s
economy will likely grow 1.7% this year.
"However, given the uncertainty in the markets
about Britain’s exit from the European Union and
the lack of clarity in the Trump administration’s
policies, we should react cautiously to those forecasts.
Uncertainty will be the only certainty over the next few
months," he said.