Mexico is looking toward strengthening trading deals with other countries should the talks to renegotiate the North America Free Trade Agreement fail, said a source with knowledge of the country’s plans who requested anonymity.
The shift comes as the talks, the fourth round of which is set to begin in Mexico City in mid-November, appear to be teetering. Canadian and Mexican negotiators have slammed the U.S. demands as excessive, while U.S. Trade Representative Robert Lighthizer has complained that the trading partners are being inflexible.
The conflict has raised concerns that President Trump will follow through with his threats to unilaterally pull the U.S. out of the deal. Mexico, at least, believes that it can find other markets.
“If the U.S. withdraws from NAFTA, Mexico has made preparations to widen its trade portfolio and strengthen its commercial relationships with key markets, including Brazil, the [European Union] and Asia, including Japan and China,” according to a source with knowledge of Mexico's plans.
That will create a high stakes environment for the fifth round of talks, which are set to begin Nov. 17. The nations are in engaged in a tense stand-off to see who will blink first.
Mexican Economic Minister Ildefonso Guajardo has made a point of saying in recent weeks that his country has numerous trading partners vying for its attention. The country has ongoing talks to modernize its free trade agreement with the European Union and has initiated talks to open a separate deal with the United Kingdom should it follow through with its plans to exit the EU. It also has had talks with Brazil and Argentina as well. China has recently expressed interest in creating its own trade deal with Mexico.
“It’s very simple: If today I’m the top buyer of yellow corn, of fructose, rice, chicken, pork from the U.S., I need to open a space for trade with Brazil and Argentina so that at the table people realize that we have options,” Guajardo said last week in Mexican city of San Luis Potosi, according to a Bloomberg report.
The renegotiations are already in a perilous state. "Frankly, I am surprised and disappointed by the resistance" to the Trump administration’s proposals, Lighthizer said at a press conference this month in Arlington, Va., at the end of the third round of talks.
At the same event, Guajardo warned, "In order for the efforts of Mexico, the United States and Canada to be fruitful, we must understand that we all have limits," he said, calling the approach under discussion, "lose-lose-lose."
The situation has business groups on edge. “If we all of the sudden had a lot of cancellations of contracts between the Mexico or Canada with the U.S., it takes a lot of time to get it back. In this last negotiation, the Mexican negotiator showed up with a contract for a billion dollars with Argentina for wheat. Hello, that is a billion dollars the U.S. didn’t sell,” said Chamber of Commerce President Tom Donohue at a forum Tuesday.
A spokesman for the U.S. Trade Representative’s Office declined to comment.