Mexico ready for Nafta update to avoid stand-off with Trump

President Enrique Pena Nieto seeks to avoid a stand-off with US President-elect Donald Trump over labour and environmental rules in talks over modernising a trade deal between the United States and Mexico.
President Enrique Pena Nieto seeks to avoid a stand-off with US President-elect Donald Trump over labour and environmental rules in talks over modernising a trade deal between the United States and Mexico. PHOTO: AFP

LIMA (Peru) • Mexico could include labour and environmental rules in talks over modernising a trade deal between the United States and Mexico, President Enrique Pena Nieto has said as he seeks to avoid a stand-off with US President-elect Donald Trump.

Mr Trump has threatened to ditch the 1994 North American Free Trade Agreement (Nafta) that binds the US, Canada and Mexico if he cannot renegotiate it in favour of the US, arguing that it has led to a loss in US manufacturing jobs.

The New York real estate magnate has also threatened to slap hefty tariffs on Mexican-made goods, sparking anxiety south of the US border because Mexico currently sends four-fifths of its goods exports to the US.

Mexico's government has made clear it is willing to talk to Mr Trump about Nafta.

Mr Pena Nieto said on Saturday during the Asia-Pacific Economic Cooperation summit in Lima that he was in favour of modernising the trade treaty, not renegotiating it.

That meant looking at issues that were not contemplated when the treaty was signed more than two decades ago, he noted.

"There are elements that could be included, issues to do with the environment..." Mr Pena Nieto said. "The labour issue is one I think that wasn't incorporated in Nafta, just to mention some chapters that could be included in this modernisation."

Before Mr Trump's surprise win, Mexico had been hoping to use the Trans-Pacific Partnership (TPP), a wider accord between the Nafta members and nine other countries, to address issues such as labour standards and the environment with the US.

However, Mr Trump was highly critical of the TPP during his election campaign and policymakers are doubtful whether it will be ratified by the US Congress under him.

Without US ratification, the TPP cannot take effect as the deal currently stands, although Mexico's government has said it and five other signatories aim to press on with it regardless.

Mexican Economy Minister Ildefonso Guajardo has said he does not believe Mr Trump will scrap Nafta, but also put forward the idea of adding additional chapters to the accord.

Mexico's government and its business leaders are eager to make the case to Mr Trump that the US' economic integration with Mexico and the latter's lower cost base has made all of North America more competitive on the global stage.

To break up Nafta, they argue, would be to damage both the US and Mexican economies.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 21, 2016, with the headline 'Mexico ready for Nafta update to avoid stand-off with Trump'. Print Edition | Subscribe