“These talks are consequential. There may be some dramatic moments ahead,” Canada’s foreign minister, Chrystia Freeland, said Monday, in anticipation of the first round of NAFTA renegotiations, 23 years after the agreement first came into effect.
As talks begin Wednesday — the second round is expected to be held in Mexico in early September, with the third in Canada at a date yet to be determined — we bring you up to speed on the priorities identified so far by Canada, the United States and Mexico, along with the players who will be at the table this week in Washington and those who hold influence behind the scenes.
With reporting from Bryan Borzykowski in Toronto, Liz Enochs in San Francisco and David Agren in Mexico City.
NAFTA, Take Two: Your guide to who's who
Team Canada: Well-prepared, with firm priorities
what happens with NAFTA renegotiations, no one can say that Canada wasn’t
prepared. Over the last several months, ministers, officials, business
executives and others have been blanketing the U.S. to ensure people there know
just how important NAFTA is to the Canadian and American economies. Prime
Minister Justin Trudeau has also put together a top-notch team, led by Foreign
Affairs Minister Chrystia Freeland, that brings together decades of trade
“You might think, based on media reports, that
we’ve been preparing since February,” Freeland said in a speech
delivered Monday, in advance of this week’s negotiations. “In fact, we began
planning as soon as NAFTA emerged as an issue in the U.S. presidential
chief negotiators of the Trans Pacific Partnership (TPP) and the Canada-European Union Comprehensive Economic and Trade
Agreement (CETA) both
playing central roles in these talks, Canada has put its best people on the
job. “It’s an excellent and well-prepared team,” says John Curtis, a senior fellow at the C.D.
Howe Institute and
founding chief economist at what was then the Department of Foreign Affairs and
will have their work cut out for them. With U.S. President Donald Trump saying
repeatedly how bad a deal NAFTA is for America, there’s no doubt his team will
try and put the U.S. ahead where they can. Does that mean scrapping Chapter 19
— the trade dispute panel that the U.S. calls unfair, but which allows Canada
and Mexico to appeal duties placed on non-U.S. products? Will they try and find
a way to reduce their trade deficit with Canada? Is Canada really not worth
worrying about, as Trump said in a call to Mexico’s president in January?
will tell just what the Americans hope to get out of re-opening NAFTA, but
nothing major will likely get done over the first few days of talks. “This week
is going to be a taking-stock exercise,” says Patrick Leblond, a senior fellow
at the Centre for International Governance Innovation and an associate
professor at the University of Ottawa. “They’re going to scope out the
negotiations because the mandate is not clear.”
Freeland made Canada’s core positions known on Monday, including bringing
stronger labour safeguards and enhanced environmental provisions into the
agreement, more details on these points and others will likely merge over the
next few days. Canadians may also get a sense of whether hot button issues such
as Chapter 19 are deal breakers or negotiation points. “I would not be
surprised to see the Mexicans and Canadians say that you can forget [negotiating]
Chapter 19 because it’s not going to happen,” says Leblond. “That could be on the
table right away.”
any case, Canada’s team at home and in Washington is going to be busy talking
to NAFTA’s many stakeholders here and abroad. Here are the Canadians leading
Normally, Canada’s trade minister —
currently François-Philippe Champagne — would be the lead politician on free
trade agreements, but there’s nothing normal about this renegotiation. Instead,
Chrystia Freeland, the minister of foreign affairs, will be the go-to Liberal
for all things NAFTA.
her? Because she knows America better than most, having been a high-ranking
journalist with Thomson Reuters in New York, covering banking, trade and the
economy. “She knows her files really well and she’s known across the U.S.,”
has already been hard at work meeting counterparts in the U.S. and sending
others, including premiers and mayors, to small town America to promote the
virtues of NAFTA, but she’ll now be dealing with more trade minutia as negotiations
main role will be to stay in regular communication with Canada’s chief negotiator
Steve Verheul —
and relay anything important to the prime minister. She’ll also oversee the NAFTA
advisory council and speak
to the media when needed. “She’ll be giving ongoing advice to the negotiating
team and back up to the cabinet and the prime minister,” says Curtis.
On Aug. 2, Canada got something it has
never had before: a deputy ambassador in Washington. It’s not just an honourary
position — with trade veteran Kirsten Hillman in the role, it’s another sign
that the Liberals are taking these negotiations extremely seriously.
When it comes to trade and foreign affairs,
there may be no one more experienced than Hillman. She was Canada’s chief
negotiator on the TPP and most recently served as an assistant deputy minister
at Global Affairs, where she helped ratify CETA. “She has such vast experience
in this area,” says Walid Hejazi, an associate professor of economic analysis
and policy at the Rotman School of Management.
One of the main plusses of having her on the
team is that she already knows the personalities Canada will be dealing with
and the issues they’ll be discussing. Many of the provisions in the TPP will
likely pop up again here. “She understands the trade issues and the people,” Hejazi
says. “She’s plugged in.”
There may be
no more challenging a job than being Canada’s chief NAFTA negotiator, but if
anyone’s up to task it’s Steve Verheul, says Curtis. The longtime negotiator
has plenty of experience hammering out major trade deals — he was the chief
negotiator for CETA, Canada’s chief agriculture negotiator from 2003 to 2009
and even had a hand in NAFTA when he worked at Agriculture and Agri-Food
make him the right person for the job: he can handle the pressure and he has a
history of bringing numerous sides together. “He’s calm as a church mouse,”
says Curtis. “He’s steady, trustworthy and has the confidence of all the
provincial, territorial and federal people.”
last point that’s especially key. As with CETA, there are many interests that
Verheul must take into account during negotiations. Most industries have
something at stake here, while certain requests that the U.S. and Mexico may make
could fall under provincial authority.
be liaising with Hillman and Freeland, talking to businesses and NGOs and
overseeing a large domestic negotiating team, too. “It’s a tough job, but he
has the personality for it,” says Curtis.
Verheul will get the glory if things go Canada’s way, he’s by no means the only
one trying to renegotiate this monstrous trade deal. David Usher, director
general of trade negotiations at Global Affairs Canada, has the important task
of gathering information from provinces, federal departments and others who
have a stake in this process.
former ambassador to Ethiopia who has represented Canada at the WTO and OPEC
and has held numerous trade-related roles, likely won’t be in Washington during
the negotiations. Instead, he’ll be setting up interdepartmental meetings,
relaying information from other interested parties to Verheul and making sure
all voices are heard.
“You won’t hear
much from him, but he’s very strong and very quiet and he’ll be working behind
the scenes,” says Curtis.
people does it take to wrangle opinions from NAFTA’s various stakeholders? A
lot. While Usher will be talking to the country’s various trade teams, Kendall
Hembroff will be doing yeoman’s work, asking academics for their thoughts,
gathering economist’ opinions and dealing with interdepartmental trade teams on
a more ground floor level.
director at Global Affairs Canada, has been working in the department since
2000, holding increasingly more senior positions, so she knows her stuff, says
Curtis. She’ll be reporting to Usher.
One of her
more important duties will be to ask academics, economists and think tanks to
come up with ideas on how certain deals will impact Canadian industry and our
economy. “It’s behind the scenes, but it’s quite elaborate,” says Curtis. “She
has to find out what the impact of something will be on the Canadian and
provincial economies. It’s that kind of level.”
While NAFTA is a deal between countries, some
of the things America or Mexico may want could fall under provincial
jurisdiction, says Leblond.
For instance, American wine producers would
like more access to the Canadian market — there are restrictions that
prevent non-Canadian wines from entering our market — but alcohol
regulation is a provincial matter. “The federal government can say ‘we agree to
this,’ but the provinces can say ‘we don’t care,’” says Leblond.
Most provinces have a trade team, with the
bigger ones having chief negotiators — Raymond Bachand, Quebéc’s former finance
minister, is that province’s top negotiator, for instance, while Janel Quiring
is B.C.’s top negotiator. It’ll be their job, and the other main provincial
negotiators’, to work with Usher and the rest of Verheul’s group to get their positions heard.
be the people interfacing with the various teams at Global Affairs,” says
Leblond. “They’re not at the actual negotiating table, but they’ll be the ones
who say on their end what they can or cannot do.”
The business community
will be discussed and negotiated by politicians and government-appointed
officials, it’s the business community that might have the most at stake. If
the country loosens supply management rules, dairy farmers may see their
livelihoods impacted, for instance. Other changes related to duties and taxes
could impact a host of industries, like retail, e-commerce, aerospace and more.
community doesn’t have a direct seat at the negotiating table, but some
organizations, such as the Canadian Chamber of Commerce and the Canadian
Manufacturers and Exporters, could be in a nearby room, waiting for details and
relaying their thoughts to the negotiating team, says Leblond. “They’re going
to have someone there to at least listen and monitor what’s going on,” he says.
companies, ones that may be more directly impacted by any changes to trade,
could have executives on site, as well. “Business will be a huge player,” Leblond
says. “They’ll be available for informational briefings and consultations.”
One of Freeland’s more astute moves was putting former Conservative
cabinet minister and newly appointed global fellow of the D.C.-based Wilson
Center Rona Ambrose on the NAFTA advisory council. While the council is made up
of several important individuals, it’s Ambrose who will “channel the Conservative view,” says Hejazi.
Ambrose, who is well respected in her party,
most recently serving as its interim leader, is also from Alberta, and will
likely ensure her home province’s needs are represented, too, he says. But most
importantly, she’s there, along with former cabinet minister James Moore, as a Conservative.
“She’s there to alleviate any concerns that
the Liberal government is ruling without cross-party communication,” says
Hejazi. “They want to present a unified front.”
ways, the prime minister is the most important person in trade negotiations — he’s
the one who will sign off on the final document, whenever that may be complete.
and prime ministers stand mostly on the sidelines, letting everyone else do the
difficult work. With this negotiation, though, Trudeau may be busier than
usual, says Leblond.
If the U.S.
takes a hard line on, say, Chapter 19 — which is possible — Freeland will
ask Trudeau if he wants to step away from the negotiating table or continue
If Trump starts
tweeting about Canada in a negative way, Trudeau may be the one to calm the
public or give his U.S. counterpart a call. “He’s already had to talk to Trump
when he threatened to leave NAFTA. It was him who tried to change his mind,”
says Leblond. “He may have to step in at that level.”
Team United States: Focused on reducing trade deficit
Despite the fact that regional trade has more than tripled
since NAFTA went into effect in 1994, U.S. President Donald Trump has
notoriously called the pact “the worst trade deal ever negotiated.”
That kind of rhetoric, appealing to the laid-off miners,
factory workers and others who blamed free trade for their woes, helped elect
the most populist American president in decades. Trump’s move to renegotiate
NAFTA is meant to appeal to his supporters by signalling that he intends to rewrite
trade rules to ease their pain.
One problem with the president’s framework, according to
economists, is that it places trade front and centre in a process where it
doesn’t belong. While a rising trade deficit from 2000 to 2010 coincided with
the loss of almost six million U.S. manufacturing jobs, economists lay those
losses at the feet of not trade, but of increased automation and the adoption
of advanced, productivity-enhancing technologies.
“Worker dislocation in the U.S. is really a story about
technology and productivity,” said Josh Meltzer, a trade expert at the
Brookings Institution. “There’s no indication the administration has wrapped
its head around this in the slightest. In fact, if you look at the Trump
budget, they would be basically proposing to get rid of almost all the support
for training and worker relocation.”
Still, the Trump administration has said labour and
environmental obligations will be renegotiated, and observers expect both areas
to be elevated from the existing “side agreements” to full chapters in a
renegotiated NAFTA, which would give the provisions more clout. Labour leaders
are pushing for stronger grievance procedures and wage protections, as well as
heightened workplace inspection protocols.
The overarching objective announced by the Office of the
United States Trade Representative (USTR) is reducing the U.S. trade deficit.
Given that the U.S. has a trade surplus with Canada of almost US$8 billion,
this essentially implies a focus on reducing the US$63 billion trade deficit
Trade experts scoffed at this goal. The idea that both
Canada and Mexico would agree to accept larger trade deficits for themselves in
order to reduce the U.S. trade deficit “makes absolutely no sense,” said Monica
de Bolle, a senior fellow at the Washington-based Peterson Institute for
International Economics. “If the premise is to reduce the U.S. trade deficit,
nothing’s going to get done by the end of the year.”
Still, many concur that the trade deal needs to be
modernized. “Technological innovations — the Internet, information and
communication technology, and automation — have fundamentally altered the way goods
and services are produced, traded, transported, and financed,” said a report from
the Peterson Institute. The report estimates that 12 percent of global goods
trade is now conducted via e-commerce and that international data flows have
increased 45 times over the past decade.
The Trump administration aims to add a digital economy
chapter to a revised NAFTA. Other priorities include targeting “unfair
subsidies, market-distorting practices by state-owned enterprises, and
burdensome restrictions on intellectual property,” according to the USTR’s
statement on the U.S. agenda for the talks.
The goal of the upcoming talks, according to the Peterson
Institute, should be to fix NAFTA’s flaws and “bring the pact up to code with
21st century trading practices.”
Commerce Secretary Wilbur Ross built his US$2.5 billion
fortune buying and restructuring failed companies. As Trump’s point man on
international trade, he seems to think U.S. trade policy needs a similar
turnaround. “Just about every other country in the world has more protectionist
rules than we do,” he said in a June interview with the Wall Street Journal. “We’ve been in a trade war for decades. The
only difference is now the American troops are coming to the ramparts for the
Ross has been vocal about what he sees as shortcomings of
past trade agreements, complaining that the U.S., with a 2016 trade deficit of US$504
billion, has absorbed the trade surplus of the rest of the world. He argues for
narrowing U.S. trade deficits by forcing other countries to buy more American
goods and services in exchange for access to the large U.S. market.
The commerce secretary worked closely with Mexican Economy
Minister Ildefonso Guajardo earlier this year to hammer out an agreement on the
sugar trade in a process that “bodes well for our long-term relationship,” Ross
said. The deal averted the imposition of duties and limited Mexican imports that
U.S. producers had complained undercut their business. The process suggests
Ross’ perspective, which will carry much weight with the NAFTA negotiating
team, could be more focused on trade’s impact on big producers than its impact
on the U.S. economy as a whole.
Whether Trump’s threat to withdraw from NAFTA was a real
possibility or simply a negotiating tactic, it was one indication of Peter
Navarro’s hard-line influence on trade policy.
Navarro, whose economic expertise is in utilities, not
trade, has argued that trade is the world’s central problem — especially trade
with China — and that global prosperity isn’t possible until trade is “fixed.”
He views trade with nations such as China and Mexico as a zero-sum game, in
which any gains on their part come at the expense of the U.S. Many economists
view his focus on reducing trade deficits as, at best, simplistic, and at
worst, a dangerous precursor to possible trade wars.
When the Navarro-led White House National Trade Council was
replaced in late April with a newly created Office of Trade and Manufacturing
Policy, which with a narrower agenda, one trade economist described Navarro as
“marginalized.” Navarro didn’t see it that way, noting that he still advises
Ross and U.S. Trade Representative Robert Lighthizer. In the upcoming negotiations,
he has said he’s focused on revising “rules of origin” that limit foreign-made
content in goods, in order to make the NAFTA trading bloc a manufacturing powerhouse.
Robert Lighthizer and John Melle
Robert Lighthizer has been down this road before. The U.S. trade
representative handled trade talks with Japan as deputy U.S. trade representative
in Ronald Reagan’s administration, winning concessions on steel imports through
a blunt and sometimes hardheaded style.
Lighthizer’s approach could be balanced by career diplomat
John Melle, the assistant USTR tapped to handle the day-to-day negotiations.
With almost 30 years of experience in the USTR office, Melle has worked with
Mexico on NAFTA-related issues for years, as well as handling other trade
disputes with Canada and Latin America. The relationships he’s developed over
those years could help smooth the way to finding common ground this time
From 1985 until his appointment as USTR head this year,
Lighthizer had worked at New York-based law firm Skadden Arps Meagher and Flom doing
the kind of spadework he has argued the U.S. should do more of: bringing trade
complaints on behalf of U.S. companies such as U.S. Steel Corp. in various
Thanks to his work as the chief counsel to the Senate Finance Committee from
1978 to 1983, Lighthizer is also experienced at moving deals through Congress,
a key constituency due to its constitutional authority over trade. The USTR is
Congress’s main point of contact on trade policy, a role that could test
Lighthizer’s skills of persuasion when it comes time to selling a renegotiated
The agriculture sector
Agriculture Secretary Sonny Perdue played a key role in
averting Trump’s plan to withdraw from NAFTA. When he and Ross met with the
president to try to change his mind, Perdue brought along a map showing the
areas of the country that would suffer the worst job losses in agriculture and
manufacturing from such a move — many of them were counties that had voted for
Trump in November. Added to pressure from the leaders of Canada and Mexico, the
map was persuasive. The president decided to renegotiate rather than withdraw.
“While a number of U.S. economic sectors have benefited over
the decades under NAFTA, if you look at the statistics no sector has really
benefited as much as U.S. agriculture,” said Kellie Meiman Hock, a trade expert
at McLarty Associates, an international strategy consulting firm.
U.S. farm exports to Mexico have soared from about US$4
billion at NAFTA’s inception to roughly US$18.5 billion this year, or US$40
billion when Canada is included, and the agriculture industry is keen to
protect those gains. That’s why farm groups and the red-state governors and
senators that represent their members have kept the heat on the administration
to stay hands-off on the provisions of the agreement that affect agricultural
The U.S. Constitution gives Congress authority over
international trade. In recent years, Senators and House members have
effectively ceded some of that authority to the Executive branch, but that
stance has begun to change with a volatile populist in the Oval Office whose
globalist and isolationist wings have struggled to advance a coherent trade
Congress takes its oversight of the trade function extremely
seriously, trade experts say, and lawmakers will likely be watching the NAFTA
renegotiations very closely. While red-state Senators are watching to ensure no
ground is lost on agricultural trade, many Democrats will be focused on the
labour and environment chapters.
“Big votes are hard at the best of times,” said Meltzer of
Brookings, pointing out that free trade opponents, including some Democrats,
have characterized NAFTA as a job-killing agreement, so there are likely to be
demands for trade adjustment assistance for displaced workers. “The updated
NAFTA looks basically like the TPP with a few bells
and whistles,” he added. Considering that, he said, it’s an open question
whether a revised NAFTA can win the support of Congress.
Team Mexico: Trepidation turns to cautious optimism
NAFTA renegotiations couldn’t come fast
enough for Mexico. In the first months after his election, Donald Trump traumatized
the country’s economy with tweets as he jawboned automakers into manufacturing
in the United States and sowed such instability the peso sunk to historic lows.
FDI slipped and companies shelved expansion plans.
But Mexico enters NAFTA negotiations with a
sense the worst is behind it. The peso has rebounded, investment is returning
and the country even reached an agreement with the U.S. on the contentious sugar
issue — a sign to many that deals could be struck with the new U.S.
“There was a definite overreaction,” said
Jonathan Heath, former chief Latin America economist at HSBC and a dual
Mexican-Canadian national. “It wasn’t like the country was going to disappear.”
Mexico outlined its objectives for NAFTA
renegotiations on Aug. 1. Priorities include modernizing the trade deal to incorporate
digital and energy issues — the latter omitted originally, but now necessary after
reforms of 2013. Mexico also will seek to maintain investor protections and
introduce anti-graft measures.
“This will be more about rules and standards,
and not about tariffs,” said Brenda Estefan, former security attaché at the
Mexican embassy in Washington and a foreign affairs analyst. Like Canada, Mexico
has concerns with rules of origin regulations and Trump’s talk of trade
deficits. It also wants to keep trade free rather than managed and would like
to keep intact Chapter 19, the dispute resolution mechanism.
Mexico has signed trade agreements
with 45 countries — more than any other nation. Having pursued so many
trade deals might favour Mexico as it enters NAFTA renegotiations. Its team members
“are all very experienced, very professional and know how to negotiate,” said
Luis de la Calle, a former NAFTA lead negotiator.
In early January, President Enrique Peña
Nieto tapped his closest political confidant, Luis Videgaray, to manage Mexico’s
relationship with the Trump administration by appointing him foreign relations
secretary. It was an obvious choice for Peña Nieto, whose history with
Videgaray dates back more than a decade. Videgaray managed Peña Nieto’s
2012 presidential campaign and served as finance minister for the first four
years after his election.
But his appointment stirred outrage: during
the 2016 campaign, Videgaray convinced the president to invite Trump to Mexico
City for an ill-fated appearance at the presidential palace, in which the Peña
Nieto appeared passive and inadvertently made a Mexican enemy look
presidential. Videgaray made matters worse by telling a skeptical staff at the
foreign relations secretariat: “I’ve come to learn” — not reassuring
comments as Mexico confronted the Trump threat.
Videgaray, an MIT-trained economist, has
earned some plaudits, though, especially for his handling of the temperamental
Trump. Pundits suggested he was picked for the U.S. file also because of a
relationship with Trump’s son-in-law and adviser, Jared Kushner. Leaked
transcripts of a Trump-Peña Nieto phone call suggest the strategy wasn’t the
wrong idea, though analysts say U.S. and Mexican secretaries have since formed
“He’s working the deal with the Trumps,
with the top circle there,” said Federico Estévez, political science professor
at the Autonomous Technological Institute of Mexico. “He brings in whoever he
wants [into the negotiations] and Peña will trust him to the end.”
As a sign of the importance of NAFTA
negotiations — or an indication of the time it may take to reach a deal —
Videgaray ruled himself out as presidential hopeful in 2018, as he would have
to exit government by the New Year to be eligible (though he also sits low in
Among Videgaray’s first appointments was a
new ambassador to the United States: Geronimo Gutiérrez, a friend from
university and then-head of the North American Development Bank (NADB,) which funds
water, environmental and infrastructure projects in U.S. and Mexican borders
states. Gutiérrez formed part of a small team with Videgaray, which kept its
dealings with Kushner and Trump discreet — and didn’t leak to the Mexican
Gutiérrez is an old hand on U.S.
relations; he served as undersecretary for North America in the Vicente Fox
administration from 2003 to 2006. While overseeing the San Antonio, Texas-base
NAD bank, analysts say he developed relationships which may prove profitable in
the NAFTA negotiations.
“He dealt with lots of border state
congressmen and senators,” says a trade consultant, who knows Gutiérrez but
preferred anonymity to be able to speak candidly. “There’s a reason he was
appointed ambassador. Yes, he has the technical expertise, knowledge of Mexico and
the U.S., but also his developing of political and friendly relationships.”
Gutiérrez was the fourth Mexican ambassador
to Washington in four years — a show of neglect in what is Mexico’s most
important international relationship, according to analysts. “It took [Peña
Nieto] a while to prioritize foreign relations in general,” said José Briseño,
Washington correspondent for the Mexican newspaper Reforma. “He thought trying to modernize the economy and doing some
domestic things would be enough.”
Whereas Videgaray is overseeing the
political parts of the NAFTA renegotiations, as minister of the economy, Ildefonso
Guajardo, 60, is the point person for dealing with the domestic constituencies
impacted by NAFTA and overseeing the Mexican negotiating team.
“He is the technical expert on all of these
negotiations,” Briseño said. “He’s the one who has been developing the
relationships with the private sector on the Canadian side and the U.S. side
and what’s going to be on the timeline.”
Guajardo, an economist by training and
politician with the Institutional Revolutionary Party (PRI) in his native Nuevo
León state, headed Mexico’s free trade office in its embassy in Washington in
the early 1990s, “so he knows the issues,” Briseño said. “He also presents a
very competent face in the media in general.”
Diminutive and diplomatic, Guajardo often
appeared in Mexican and foreign media to rebut Trump’s tweets and tirades
targeting Mexico — often playing the bad cop to Videgaray’s good cop. “Toyota
has 10 plants in the United States…if I were Mr. Trump, I’d treat them with
more respect,” he
told Mexico television after a Trump tweet targeting the automaker. He
later told The Globe and Mail, “You
cannot ask me to [accept poor] conditions in terms of trade and then request my
help to manage migration issues from other nations or…the prosecution of
criminal activities and narcotics.”
Kenneth Smith Ramos
He might have an Anglo name, but Guajardo described
Mexico’s chief technical negotiator, Kenneth Smith Ramos, as “super Mexican.” At
48, Smith is already seen as a veteran on trade issues. U.S.-educated, Smith
entered the government in 1993 and worked as international affairs coordinator
for the agriculture ministry. He now heads the trade and representation office
in Washington for the Economy Secretariat. People familiar with Smith describe
him as knowing his way around the U.S. capital and very familiar with his
counterparts from the Office of the United States Trade Representative (USTR).
“He has the technical background and
understanding of the North American relationship…how Canada may or may not work
with Mexico in the NAFTA negotiations,” the trade consultant said.
“Ken has known [those within the USTR office]
for 25 years,” said a former civil servant, who knows Smith from government
work and preferred anonymity to speak candidly. “But that’s not where the
difficulties in are in the negotiations. It’s on the high political side.”
The private sector
Mexico has consulted closely on NAFTA
negotiations with its private sector, which is represented by the Consejo
Coordinador Empresarial — a chamber of commerce, voicing the views of
Mexico’s biggest businesses. “Mexico is one of the countries where the private
sector is being consulted every step of the way in negotiations,” said Manuel
Molano, deputy director of the Mexican Institute for Competitiveness. “This
doesn’t happen in other places.”
A name coming up quietly as point person
for industry is Moises Kalach, a
textile titan who has invested in lobbying to keep NAFTA in place. A
profile in the newspaper El Universal
— Kalach doesn’t give many interviews — said he had invested heavily in
lobbying and wants rules of origin regulations preserved. Mexico’s auto
industry has raised similar concerns, which were a sticking point in talks on
the Trans Pacific Partnership. “There’s a defensive agenda to protect the
integrity of NAFTA so it doesn’t become a more closed region,” de la Calle said
of the private sector’s priorities.
Last month, the Economy Secretariat ran an
online consultation for NAFTA, though critics panned the process as a
simulation and alleged big business had the government’s attention, while
poorly-paid and -organized workers had no input. “Because of domestic politics they’re
following the same strategy as ‘92, ‘93, when they firmly believed the only thing
needed was the president’s approval and [that of the] Mexican business council
and that was it,” said Carlos Heredia, professor at the Centre for Teaching and
Research in Economics. “Other voices have been either not heard or suppressed.”
Andrés Manuel López Obrador
Andrés Manuel López Obrador looms large
over NAFTA renegotiations, even though he won’t occupy a seat at the table. The
left-wing populist and two-time electoral runner up, AMLO, as he is commonly
called, leads early polls for the 2018 presidential election. His proximity to
power spooks Mexico’s political and business classes, along with international
investors, who liken him to Venezuelan dictator Nicólas Maduro — a comparison AMLO
His prominence causes disquiet in the U.S.,
too. Investor Tom Barrack, whose name has been floated as a possible ambassador
to Mexico, told
Bloomberg, “You see a Chávez sort of political movement that’s boiling up
that’s really, really dangerous,” in an allusion to AMLO.
AMLO bitterly opposed the structural
reforms promoted by Peña Nieto and compared opening the state-run energy sector
to treason. He has since said he would put the energy reform to a referendum. Other
reforms are likely to remain in the case of an AMLO-led government, Moody’s
Investor Service said
in a recent research note. He has not come out against NAFTA, though he recently
told supporters he would revisit the treaty if there was “a bad negotiation.” But
his refusal to rail against NAFTA as a wedge issues suggests to some that the
anti-NAFTA constituency is small and the trade deal is too difficult to undo.
“There was a time in the ’90s when he was
very critical of it,” says Rodolfo Soriano-Núñez, a sociologist in Mexico City.
“But he knows pulling the cord would wreck entire cities such as Aguascalientes,”
home to two Nissan plants and capital of a state of the same name, where the
economy has expanded at a rate of more than 10 percent at times so far this decade.
“I do not think AMLO is happy with the
number of U.S. agents in Mexican airports,” Soriano-Núñez added, referring to
the close security cooperation between the two countries. “But my guess is that
he understands he cannot blow [up] the security house of cards without tearing
down the trade house of cards.”
A renegotiated NAFTA with any major changes
would go to Mexico’s Congress for approval, which would likely be a formality. The
ruling PRI holds an effective majority in the lower house and could count on
support from the right-leaning National Action Party in the Senate, allowing it
to reach a two-thirds majority.