- Posted by Dr. Lukasz Gruszczynski
- On October 23, 2017
- FTAs, international trade, local content, NAFTA, quotas
One day before the conclusion of the fourth –out of seven rounds of renegotiation of NAFTA, Fernando González-Rojas, our representative in Latin America, gave an interview for the radio broadcaster in Mexico, Radio UNAM on the possible future of one of the most important free trade agreements in history.
During this interview, Dr. González-Rojas recognized that some of the boldest reform proposals have escaped the Twitter universe and permeated into the negotiation table discussions. In particular, certain US’ tough proposals such as requiring higher percentages of national and regional content for the automobile industry, or adopting seasonal importation quotas for agricultural products have generated public statements from the Mexican negotiators, private sector and advisors that there might be no NAFTA after all. Even former negotiators such as Herminio Blanco and Robert Zoellik admitted last week that the chances that the US may abandon the agreement if their demands are not accepted are higher than ever before.
Nevertheless, Dr. González-Rojas also highlighted that despite the tense climate surrounding the negotiations, external observers such as Fitch still estimate that there are higher probabilities that NAFTA will survive this review process. Furthermore, although there is a considerable amount of uncertainty about the outcome, institutions such as the IMF and the Swiss bank UBS predict that Mexico’s GDP will grow 2.1% this year. Our expert also observed that trade between Mexico and the United States has significantly grown this year, which is a reflection of an increasingly deeper level of integration between the North American economies. This close connection explains Thomas Donohue’s, President of the American Chamber of Commerce, recent announcement that this organization would fight in courts the US eventual decision to leave NAFTA.
Based on this scenario and those that may unfold after the conclusion of the negotiations, Dr. González-Rojas expressed his view that the renegotiation of NAFTA entails very important challenges as well as very interesting opportunities. Many large companies and SMEs in and outside North America will have the chance to revamp their trading strategies based on the new legal landscape that will emerge from these negotiations.
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