Mexico Economy Minister Queries US Talk on Cutting NAFTA Trade Deficits

Mexico’s economy minister on Tuesday expressed concern that the United States was insisting on reducing trade deficits in objectives it set out for the renegotiation of the NAFTA trade deal, a document he nevertheless said contained “no surprises.”

Speaking on Mexican television, Economy Minister Ildefonso Guajardo also raised questions about U.S. hopes to scrap the North American Free Trade Agreement’s Chapter 19 dispute settlement mechanism that hinders the United States in pursuing anti-dumping and anti-subsidy cases against Mexico and Canada.

Talking by telephone from Japan, Guajardo likened the U.S. desire to cut trade deficits with its NAFTA partners Mexico and Canada to a “mercantilist” vision of international trade.

“What I have said insistently in my conversations with my colleagues is that we’re delighted to review trade balances provided that we focus on how to improve them by expanding commerce, not by reducing it,” he said.

U.S. President Donald Trump has pushed for a renegotiation of NAFTA, threatening to dump it if he cannot rework the accord to the benefit of the United States. He argues it has fueled a trade deficit with Mexico and cost thousands of U.S. jobs.

Guajardo said the document sent by U.S. Trade Representative Robert Lighthizer to lawmakers on Monday contained “no surprises,” and he explicitly welcomed parts of it, including plans to enshrine anti-corruption provisions in NAFTA.

“What is positive is that [the United States] themselves paraphrased that they won’t reintroduce quotas or tariffs during this process [of renegotiation],” he added.

Aside from his concern over Chapter 19, Guajardo also expressed doubts about the United States’ intention to get rid of NAFTA’s so-called “global safeguard exclusion” that curbs Washington’s ability to impose measures on others.

“This will all have to be subject to the three sides being in agreement in the process,” he said.

One Mexican official told Reuters on Monday he expected the Canadian government to fight to the “death” on Chapter 19, suggesting it could become a major bone of contention in negotiations due to begin next month.

Both Mexico and the United States face important elections in 2018 which could complicate the NAFTA revamp, and Guajardo has said it would be in the interests of both nations to wrap up the three-way talks by the end of this year.

However, there was no guarantee the process would be finished as quickly as they would like, Guajardo said.
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