20 DC VELOCITY DECEMBER 2017 www.dcvelocity.com
U.S. could learn from Mexico’s approach to NAFTA, observers say
Mexican business and trade interests are astonished that an
array of U.S. industries, as well as the 3 million-member
U.S. Chamber of Commerce, are at odds with their own
government over what should be included in the renegotiated North American Free Trade Agreement (NAFTA),
according to a Mexican attorney with extensive international trade experience.
Such conflicts don’t arise between Mexican businesses and
the country’s trade negotiators, Edmundo Elías-Fernández,
who practices with Guadalajara-based Cacheaux, Cavazos &
Newton, said at the Coalition of New England Companies
for Trade’s (CONECT) 16th Annual Northeast Cargo
Conference in Providence, R.I.
Mexico has a private-sector advisory group commonly referred to as the “Cuarto de Junto” (“in the next
room”). These advisers represent the interests of Mexico’s
major industrial and service sectors. Though they don’t
participate in the negotiations, they are present at every
round to provide immediate feedback to negotiators, Elías-Fernández said. As a result, Mexican private industry will
not be “blindsided” by negotiators’ proposals, as has been
the case in the U.S., he said.
There has been no shortage of squabbling between the
U.S. government and industry over NAFTA. In October,
several automotive industry groups formed the “Driving
American Jobs” coalition to fight the White House’s stance
on renegotiating the treaty, including a proposal that cars
made in North America contain 85 percent NAFTA-origin
content, with 50 percent of inputs manufactured in the
U.S., to qualify for duty-free treatment. Numerous business
groups and companies have slammed President Trump’s
assertions that he will pull the U.S. out of NAFTA if he does
not get what he wants. The groups have warned that the
three North American economies would suffer irreparable
harm if the agreement were to fall apart.
Nicolas Guzmán, a senior associate with U.S.-based law
firm Drinker Biddle & Reath who spoke on the same panel,
said Mexico seeks four things from an updated accord:
strengthened competitiveness across North America;
regional trade policies that are “inclusive and responsible”;
rules changes that will allow Mexico, Canada, and the U.S.
to take full advantage of “21st century” economic oppor-
tunities; and economic certainty that encourages trade and
investment in all three countries
POINTS OF CONTENTION
Elías-Fernández and Guzmán also highlighted several areas
of disagreement between the U.S. and Mexican positions.
Number one on their list is the U.S. demand that cars made
in North America include 50 percent U.S.-made content in
order to qualify for preferential treatment under NAFTA.
This has “set off a lot of fireworks” because U.S. automakers
have invested heavily in Mexican assembly plants, Guzmán
said. “The capacity doesn’t exist in the U.S.” to meet the
50-percent requirement, he contended.
Elías-Fernández said that although the 50-percent proposal is unacceptable, he thinks the automotive rules of
origin “are going to change in some way.” He also believes
the U.S. will try to push similar U.S.-content requirements
on other industry sectors. Both Canada and Mexico strongly oppose such positions.
Other concerns include the Trump administration’s proposal to renegotiate NAFTA every five years, a plan that
would create enormous uncertainty for businesses, Elías-Fernández said. “Nobody makes
plans or invests in five-year time spans,” he said.
Mexico is also worried about the U.S. demand
that its trade partners follow Washington’s
lead and raise the de minimis threshold for
formal customs entries to US$800, meaning
that imports valued below that level would be
exempt from certain documentation requirements. Mexico calls the demand a non-starter
due to concerns about smuggling and security.
The next round of talks is scheduled for
January in Canada, Guzmán said. Mexico’s
negotiators will “remain at the table” and
will respond firmly even to proposals that
are unacceptable, he asserted. Mexico “is not
taking the bait, but it’s not backing off, either,”
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