Mexico Predicts NAFTA Success After Reaching New Trade Pact with Europe

By Mark Browne | April 25, 2018 | 5:30 PM EDT

Mexico City ( – Government and industry leaders in Mexico predict ongoing NAFTA talks will end in success after announcing agreement on an update to Mexico’s free-trade pact with the European Union.

The update will replace a previous agreement between the E.U. and Mexico signed in 2000, according to the European Commission.

Mexico is the European Union’s second biggest export market after the U.S.

Speaking at an industrial trade fair in Hannover, Germany on Sunday, Mexican President Enrique Peña Nieto said there was “optimism” that negotiations to renew the North American Free Trade Agreement with Canada and the U.S. will also be successfully concluded.

Industry leaders in Mexico were even more positive about the NAFTA talks outcome.

Consensus on the terms of a renegotiated NAFTA could possibly be reached within two weeks, a spokesman for the Mexican Business Council for Foreign Trade, Investment and Technology told

Dispute over a proposal by the U.S. to insert a “sunset clause” that would end NAFTA and force its renegotiation every five years has been resolved.

An agreement on terms calls for NAFTA to be reviewed every five years at which point a country could end its participation, but the trade agreement would not automatically be terminated, the spokesman said.

Mexico’s central bank also expects NAFTA negotiations to produce a new trade agreement.

“In the baseline scenario of the central bank, we have that there will be a version of NAFTA,” Alejandro Diaz de Leon, governor of the Central Bank of Mexico, told CNBC this week.

“We know there have been ups and downs in the negotiations,” he said. “There has been important progress on several fronts. We do hope that the advantages for the three countries will prevail in some version of the agreement.”

Presidential elections in Mexico in July and mid-term elections in the U.S. in November could explain why officials in both countries want to wrap up NAFTA negotiations as soon as possible, said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics.

Since both houses of Congress would have to approve a new NAFTA, the Trump administration would prefer to get it done before the election in case Democrats take control of the House.

The Trump administration is “not sure a new Congress will approve a deal that they want,” de Bolle said.

Business interests in the U.S., including the U.S. Chamber of Commerce and agricultural groups, have been “extremely active on NAFTA” and “very effective” at pressuring Washington to approve a new trade agreement.

Moreover, the Trump administration is now more focused on trade relations with China than with Mexico.

In Mexico, Peña Nieto hopes to deny the left-leaning front-runner in the presidential election, Andres Manuel Lopez Obrador, any chance to determine the outcome of NAFTA negotiations should he win in July.

“They want to tie his hands and say this is how it has to be and we’re not going to leave you any space to do anything crazy,” de Bolle said.

While both Mexico and the U.S. may want to announce a preliminary deal on NAFTA as soon as possible, Canadian officials have been less vocal about possible outcomes.

“The Canadians are being very mum about this whole thing. They are not saying anything,” de Bolle said. “Canada does not have the same kind of urgency and they are pretty quiet.”

For his part, President Trump threatened in a tweet Monday to make immigration a part of the NAFTA negotiations, saying Mexico “must stop people from going through Mexico and into the U.S.”

“We may make this a condition of the new NAFTA Agreement. Our Country cannot accept what is happening! Also, we must get Wall funding fast.”

Mexican Foreign Minister Luis Videgaray responded immediately, tweeting that inserting immigration conditions into NAFTA negotiations would be “unacceptable.”

“It is more important than ever to build bridges and not construct walls,” E.U. trade commissioner Cecilia Malmstrom said when announcing the agreement on an updated trade pact with Mexico.

“Mexico has 128 million potential consumers and customers so it’s of course a hugely important market for the E.U.,” she said. “We are standing up together for more open trade.”

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