Mexico and the United States have reached an agreement on bilateral issues in the renegotiation of the North American Free Trade Agreement (NAFTA) a Mexican source told Reuters on Monday.
AMLO: Mexico Would Survive Collapse of NAFTA by Focusing on Internal Markets, Rural Economy
Separately, Mexico's President Enrique Pena Nieto said on Twitter on Monday that he had spoken with Canadian Prime Minister Justin Trudeau on the importance of Canada rejoining the NAFTA trade talks with the aim of concluding the year-long trilateral negotiation this week, both agreeing to the tri-lateral nature of the NAFTA deal. “The leaders discussed the ongoing negotiation of the North American Free Trade Agreement and shared their commitment to reaching a successful conclusion to this agreement for all three parties,” the prime minister’s office said in a statement.
Canada had sat out the most recent leg of the NAFTA discussions as Mexico and the United States ironed out their outstanding bilateral issues.
The U.S.-Mexico deal would require 75 percent of auto content to be made in the United States and Mexico, up from the current level of 62.5 percent, and would require 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour, a second official said.
Trump called for renegotiating a deal after he had referred to NAFTA as the “worst trade deal in history” because of the massive deficit with Mexico and supposedly unfair conditions.
In 2017, the U.S. bought US$71 billion more imports from Mexico than what Mexico got from the United States. Mexico dramatically increased their farm exports to the U.S. since 1994, the year NAFTA was implemented, and hundreds of thousands of auto-manufacturing jobs have been created.
But in fact, the agreement hasn't helped Mexico counter its economic problems and has even widened them. Between 1993 and 2013, Mexico's economy grew an average of a paltry 1.3 percent, unemployment has increased, and poverty rates remain at the same level as in 1994.
Also, Mexico's dependency on food imports has increased, even in the national symbol of food sovereignty: corn.
Farmers and members of the National Zapatista Liberation Army have opposed the deal since the early 1990s citing the detrimental impact it has had on low-scale farmers across the country. Now that the country's politicians and business elite are discussing it again these issues have resurfaced.
President-elect Andres Manuel Lopez Obrador has declared himself a supporter of a more internal market-oriented economy, and admirer of Mexico's import substitution policies.
Also Lopez Obrador's chief economic adviser Gerardo Esquivel said that “no NAFTA is better than a bad NAFTA” while articulating the center-left candidate's policy on trade, but said they are committed to the renegotiation of the agreement.
"We are not looking for a bilateral agreement with the U.S. or Canada. The trilateral agreement is what we want,” he said.