There are signs that Mexico and Canada are increasingly less worried by the idea of the North American Free Trade Agreement (NAFTA) falling apart.
Mexico’s foreign minister Luis Videgaray recently told Reuters that “Mexico is much bigger than NAFTA,” arguing that an average 3% increase in tariffs that he thinks would come if NAFTA ended wouldn’t stop trade with the US.
Today (Sept. 22), with negotiations among the US, Mexico, and Canada due to resume this weekend, he went further: “If NAFTA goes away…it’s not the end of the world,” he said at a Council on Foreign Affairs event in New York. “It certainly is not the end of trade between Mexico and the United States.”
His basis for that argument? Most trade between the two countries is done under World Trade Organization rules rather than NAFTA, Videgaray said.
He was broadly optimistic about the talks. “We’re working hard to make this a win-win, or, I should say, a win-win-win because…Canada is a major part of this,” he said, adding—perhaps with a nod at US president Donald Trump’s transactional foreign policy: “We don’t believe trade deals are zero-sum games…and we hope that in the next few months we can have a very positive outcome.”
Despite the acrimony over Trump’s promise to make Mexico pay for a border wall and his slurs about Mexican immigrants, Videgaray insisted that president Enrique Pena Nieto’s administration has “an outstanding relationship with the White House and the key members of the Trump administration, which is probably closer and certainly more frequent than what we had with the previous administrations—not only the Obama administration, but some others.”
That didn’t stop some polite trolling of Trump’s decision to scrap president Barack Obama’s executive order to bring hundreds of thousands of young immigrants into legal status. Videgaray said between half and two-thirds of the 800,000 people who have been allowed to stay in the US under the Deferred Action for Childhood Arrivals (DACA) program would return to Mexico if Congress fails to act. “That will be a big win for Mexico, if they actually returned,” he said. “You’re talking about potentially a free transfer of human capital. That’s what it would be. I don’t know what country’s willing to export—for free—the computer scientists, engineers, doctors. It’s hard to me to understand.” Despite that, he said Mexico wants Congress to pass a bill that would let them stay.
The former finance minister was generally bullish on Mexico’s economy, pointing out that foreign direct investment in the country was at its highest point in history in the first quarter, despite the noise about NAFTA. “That means there’s something more appealing about the Mexican economy,” said Videgaray. His optimism about his country’s future was backed up by a recent Reuters poll of 38 banks and economists, the majority of whom said they think NAFTA negotiations will end with a positive outcome for Mexico.