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Mexico wants “wins” in NAFTA renegotiation

Feb 24, 2017

Mexico's economy minister says NAFTA talks must lead to "certain victories" and calls it "illogical" to impose import taxes

Aaron Weinman

Keywords: US-Mexico relations free trade NAFTA Ildefonso Guajardo Cumbre Financiera Mexicana

Mexican Economy Minister Ildefonso Guajardo has urged for a deeper dialogue between the US and Mexico that leads to "certain victories" on both sides of the border.

"Mexico needs to be part of the solution and prove we are not part of the problem," Guajardo said at LatinFinance’s 12th Cumbre Financiera Mexicana in Mexico City on Thursday.

Latin America’s second-largest economy has endured heightened volatility in the financial markets since US President Donald Trump won the election in November. Now, as Mexico and the US face a diplomatic standoff over trade, immigration and a proposed border wall, Guajardo has urged that any changes to the North American Free Trade Agreement (NAFTA) provide "wins" for the three member nations.

"[NAFTA] is three countries with different developments in the production sector," he said. "It is very clear that it is necessary to transform NAFTA to be at the level of global changes within the three economies. NAFTA has to be conducted under a formula where Canada and Mexico both have some wins."

He added, however, that it will not be easy to make changes to NAFTA. The more than 10,000 original rules in the trade agreement could be put forward at the renegotiating table, but the purpose of the talks is to "strengthen the original content."

Guajardo also said Mexico will not enter any discussions on trade without a backup plan. "No negotiator will sit at the table without a Plan B. If you don’t have a [Plan B], you will be damaged, simple," he said. "If there is pressure at the table, it will hurt competitiveness in the region."

The minister has told local press that Mexico's Plan B could involve levying a tax on US imports. Guajardo said he expects the negotiations to begin in the summer and finish by the end of the year.

Until then, the first thing Mexico can do is "mitigate uncertainty," he said. "Time is of the essence... We have to be clear about this process."

Trump has threatened to impose a 20% tax on Mexican imports to the US as a way to fund construction of a border wall. But Guajardo said it is "illogical" to open the "Pandora's box" of trade tariffs, adding that any analysis of US-Mexico trade needs to focus on strengthening NAFTA.

Guajardo also said that "tweets have consequences in the market, even though they are not public policy elements," referring to Trump publicizing policy points on social media platforms like Twitter. 

Mexico sends about 80% of its exports to the US. Bilateral trade between the two countries is worth some $500bn.

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  • Rodolfo Ontiveros Mar 15, 2017

    no se confundan los mexicanos tenemos un país rico, tenemos litorales en ambos lados, tenemos minas de oro, plata, carbon, tenemos sierra y con ella madera, tenemos playas para turismo, tenemos millones de recursos naturales, y el mejor clima, es mas hasta miles de tierras para sembrar lo que deseemos, y a parte petroleo, si Donald Trump no quiere de nuestros recursos, pues mucha gente es la que va a batallar para comer y tendrá q pagar mas si se suben los aranceles, si para ustedes es libre el acceso, pues también es mas barato no se confundan.

  • Charles mcgoldrick Mar 15, 2017

    I thank they should pay taxes American pay 25 percent on goods to Mexico and if you are a Mexican you pay 15 per cent to mexico

  • Rambo2 Mar 15, 2017

    Mexico is a great trading partner, we do not want to lose them as trading partners.

  • Johanna Van Zanten Mar 11, 2017

    Mexico was hurt by the US large subsidies for their corn farmers, so the situation is already unbalanced and unfair. Mexico farmers have been hurt, as they cannot compete with the subsidized price of US corn.

  • George Mar 11, 2017

    Your initial point is very important where you state that Mexico needs to be part of the solution. This requires for Mexico to understand and recognize the problems generated by the iligal innigration including crime drug related problems and human trafficking. Also the USA needs to embrace solutions that benefit the 3 participants and abandon the tariff aproach.
    Naftas intent must be to allow flow of goods and services in a fair and balance way to enrich and straghten the participants without favoring one over the others.
    I am a small company that exports row materials to Mexico and return finish product to the USA and the process is not in balance.
    I am charged taxes on my imports to Mexico. And I am not charge with any taxes for my import to the USA.
    Also every year I am leterally robbed by customs sudenly arguing that the same materials I always import are no longer allowed in mexico and they keep my raw materials at least once a year.
    A lot has to be done to really have a fair balance reciprocal trade.

  • Georgina Vega Arroyo Mar 10, 2017

    Nafta must be renegociated under fair rules for Canada, United States & Mexico. It must be a process of renovation & transformation accord the present times.

  • David Mar 10, 2017

    Benjamin is correct VAT tax is just like a sales tax in the USA. It is even charged on services

  • Benjamin Mar 10, 2017

    16% VAT tax is not an import tax "paid by american producers" to the contrary, it is a tax paid by the Mexican importers in Mexico which is then passed on to the final consumer. So yes, it is free trade to the USA based EXPORTER who EXPORTED who sold his product to the MEXICO based IMPORTER who is paying the IVA (VAT) tax in MEXICO and then passed on to the MEXICAN consumer. Do not get confussed. Dummy Trump keeps insisting that the USA exporter pays this TAX and has the american people fooled... it is not the case. Think of the VAT tax that is paid to the Mexic federal government as the local taxes paid by the end consumer the USA, paid to their cities and states.... 8-10%.... for example: A Mexican producer and exporter of goods wholy made or produced in Mexico EXPORTS his product to the USA, export is tax free... however, that same good when bought at the local Walmart when in the USA will be paid with taxes added if applicable by local and state laws, paid by the USA consumer.... so thr inernational trade between countries is free trade, correct? But when purchased by the final consumer on either side of the border, the tax is applied to the product regardless of where it was made, same consumer tax with different name in Mexico and the USA and paid to different levels of goverment but in the end, a tax paid by the domestic population.

    When Trump says that he will impose an import tax on Ford vehicles and parts made in Mexico.... guess who ends up paying that 30% import tax? The Ford plant who is based in Mexico will pay it initially, but then added to the value of the EXPORTED vehicle or part in MEXICO and passed on to the USA consumer who will end up buying the now IMPORTED into USA vehicle. Dont be fooled by this idiot that does bot even understand how basic things work.

  • Sam Sorrell Mar 9, 2017

    Mexico is already levying a tax on all US imports. It is 16% tax they refer to as IVA
    The US currently levies no tax on Mexican imports. This is not free trade.

  • Fernando Torres P. Mar 8, 2017

    It's up to us, Mexican citizens to demand better results from our government. However we must also stand behind our government when the goal is to pursue our commercial and economic interests. Trade under NAFTA has had a strong track record for all three countries. Of course it's a great idea to find better ways to trade with your neighbours; let's go for an improved NAFTA, but keep in mind that the zero sum approach to trade has proven to be a disaster in the past. Much better choice if all can benefit, rather than having all parties ending up worse than before. An improved trade and economic relationship scenario between México and the USA is a job creator.

  • Mar 3, 2017

    Mexican government has nothing to offer its citizens. That's why all they are in USA illegally. Latinos do not want a wall because they could not give work to all the illegals if they get deported back to their countries. Mexican president and Mexico is courupted . USA must inforce the same strict measures to enter our country as Canada.

  • REYMUNDO REYES Feb 27, 2017

    MONEY is vital for all and its fair distribution is key to mantaine stability. IF USA has enough as he does its Fair to allow hardworking countries share its richness to avoid problems of high immigration and constructions of walls.

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