New Mexican leader’s NAFTA stance questioned

The president-elect has sounded on side with the deal, but an economist isn’t so sure about the nationalist politician

Mexico’s president-elect is saying all the right things.

Since July 1, when he was elected, Andrés Manuel Lopez Obrador has said he wants a quick end to North American Free Trade Agreement negotiations. And he wants to maintain the three-country trading relationship that includes Canada, instead of a bilateral deal between Mexico and the United States.

Hugo Perezcano, who worked in Mexico’s ministry of economy for nearly two decades, isn’t buying it.

“I’m highly skeptical of Lopez Obrador’s conciliatory tone right now,” said Perezcano, deputy director of the international law research program with the Centre for International Governance Innovation in Waterloo, Ont.

“Lopez Obrador, regardless of what he’s been saying for the past year, ideologically and historically, (he) has never been for open trade and free markets…. His heart lies elsewhere.”

Canada, Mexico and the U.S. began formal negotiations to modernize NAFTA in August of 2017. In late 2017 and for the first five months of 2018, there was an urgency to complete negotiations for a new deal for two reasons:

  • The Democrats could win control of the House of Representatives in the midterm elections in November and make it difficult to ratify NAFTA 2.0.
  • Mexico could elect Lopez Obrador, a nationalist and populist.

Securing a new NAFTA is critical for North America’s agriculture industry because agriculture and food trade between the three nations is massive.

Since 1994, when NAFTA was completed, U.S. ag and food exports to Canada and Mexico were worth $11 billion. By 2016 that figure had reached $43 billion.

Mexico now exports about $25 billion annually in food to the U.S. Fruit and vegetables make up about half of those exports.

Canada exports $23 billion in agriculture and food to the U.S. and about $1.7 billion to Mexico.

The president-elect of Mexico doesn’t take office until Dec. 1, but he has promised to collaborate with the outgoing government to complete NAFTA 2.0 in 2018.

“We are going to work together on the revision of the [trade] agreement,” Lopez Obrador said, as reported by Automotive News Canada. “With the goal of signing a (final) accord.”

The friendly comments are puzzling to political analysts, given that U.S. President Donald Trump is planning to build a wall between Mexico and the U.S.

Plus, in the past Lopez Obrador has condemned NAFTA and talked about Mexico becoming self-sufficient in food production.

The question is, who is the true Lopez Obrador? Is he a protectionist like Trump or is he a realist who understands that free trade deals are the global norm?

Canada’s new minister of international trade diversification, Jim Carr, met with Lopez Obrador in late July during a diplomatic trip to Mexico City.

Carr concluded that Obrador is a realist.

“He was the mayor of Mexico City for five years…. He has been very active in social justice movements but I got the impression that he’s highly principled and at the same time he’s pragmatic,” Carr said.

“They are committed to a trilateral relationship on the continent (as) we modernize the NAFTA agreement…. He understands the importance of the continental relationship. That was very clear.”

Perezcano, who served as general counsel for Mexico’s international trade negotiations and dispute settlement cases, isn’t as convinced.

Lopez Obrador may publicly support a new NAFTA, but the president-elect won’t shed any tears if the deal falls apart, Perezcano said.

“He has never really agreed with free trade and NAFTA…. If the U.S. decides, ultimately, to withdraw from NAFTA … he (Lopez Obrador) will have Trump to blame for that.”

In the big picture, Lopez Obrador and his impact on the NAFTA negotiations may be overblown.

Whether a deal happens, or not, depends on Trump, Perezcano said.

“It really is not up to the president-elect (of Mexico)…. It really is a matter if the U.S. can show any flexibility in the difficult issues.”

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