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Trump’s Target in NAFTA Negotiations: Mexico

If there was any doubt, President Trump made it clear when Prime Minister Justin Trudeau visited the White House: Mexico is his target during revisions to NAFTA, in the same way he focused during the 2016 campaign on a wall along the southern border and left Canada alone. Mexico is gearing up for talks to begin in May.

Mexican President Enrique Peña Nieto initiated a 90-day internal review, a preliminary step, to prepare a position for renegotiation of the 1994 pact. The White House was less explicit about a time line for action or the mechanism. The three-nation trade agreement says “parties may agree on any modification or addition,” and Article 2205 allows a country to withdraw six months after giving notice.

“I don’t care if it’s a renovation of NAFTA or a brand-new NAFTA, but we do have to make it fair, and it’s very unfair to the American worker and very, very unfair to companies that do business in this country,” Trump said on Capitol Hill in early February.

Gary Hufbauer of the think tank Peterson Institute for International Economics says he expects Trump will “get rid of the NAFTA name and replace the substance of NAFTA with bilateral agreements, one with Canada and secondly with Mexico.” The White House declared its preference for bilateral pacts when it withdrew from TPP. Trade negotiations typically take months or years to complete, and Congress is guaranteed time to review agreements before giving them an up-or-down vote under fast-track rules.

Mexico is the number two market for U.S. corn and soybean exports. It bought $2.3 billion worth of corn and $1.4 billion of soybeans in 2015 and was the top buyer of U.S. pork, poultry, and dairy products. Overall, it’s the number three ag export market after China and Canada. It’s also the number one source of U.S. food and ag imports, mostly fruits and vegetables, wine and beer, and snack foods. Trump’s complaints about U.S.-Mexico trade – “an extremely unfair situation” – have centered on manufactured goods and factory jobs. Farm groups want to preserve cross-border ag trade and fear collateral damage.

A member of Mexico’s senate, Armado Rios Piter, suggested legislation to steer corn purchases to Brazil or Argentina instead of the U.S. as a response to U.S. bullying over trade. Mexico has trade agreements with four dozen countries, including Japan and the EU, although its biggest partner, by far, is the U.S.. Some officials have warned that Mexico would respond to new U.S. tariffs with levies of its own on imports.

“We don’t think that an imminent trade war is there,” said ADM chief executive Juan Luciano during a teleconference with investors. It’s a big leap, he said, to read renegotiation of NAFTA as leading to “closing the borders.”

This article was produced in collaboration with the Food & Environment Reporting Network, an independent, nonprofit news organization producing investigative reporting on food, agriculture, and environmental health.


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