Mexican Economic Minister Ildefonso Guajardo said Thursday his country is preparing for the possibility that the U.S. will pull out of the North American Free Trade Agreement, and said the 1993 trade deal would continue with just Mexico and Canada as its members, if necessary.
“You have to be ready to live with a NAFTA without the U.S.,” Guajardo said at the World Economic Forum on Latin America in Sao Paulo. “NAFTA at risk of ending? No. NAFTA will continue between Canada and Mexico because at the end of the day, what is important is you send a message that you believe in free trade. The U.S. is the one that will decide to be in or out.”
The economic minister said if a new, renegotiated deal wasn’t reached by the end of April, when the current Mexican congress concludes its session, it may be impossible to reach a deal until next year due to potential political shifts. Mexico has a presidential election in July and the U.S. has congressional mid-term elections in November.
“You either get it done by the end of April or then it doesn’t matter,” Guajardo said.
The most recent round of re-negotiations concluded in Mexico City last week. The talks have been tense, and Canada and Mexico have resisted most U.S. demands, prompting fears that President Trump will follow through with earlier threats to pull the U.S. out of the deal. The White House has also proposed pursuing separate bilateral deals with Mexico and Canada instead.
The White House pointedly excluded Canada and Mexico from the 25 percent steel tariff and 10 percent aluminum tariff Trump signed last week. A senior administration official speaking on background told reporters that the White House was reserving the right to apply the tariffs later on, and made clear that this was contingent on the trade partners making concessions in NAFTA.
“Essentially, what we are doing is giving Canada and Mexico sufficient time to address these issues at the request of the governments but it is not open-ended. We fully expect this to be resolved in a short enough time period … to allow constructive discussions,” the official said.
The official did not specifically say that this required concessions in NAFTA relate to steel and aluminum. The source said that if the countries came up with “alternate means” to address the U.S.’s concerns then the administration would “flexibly modify the orders.”
