Guajardo: US-Mexico deal is "insurance" against protectionism
Mexican economy minister Ildefonso Guajardo (pictured) said on Wednesday that Mexico's achievement in signing a preliminary trade agreement with the US would serve as an "insurance policy" against the growing climate of protectionism and inoculate the country against political turbulence in the future.
Guajardo, speaking at an event in Mexico City hosted by the Institute of International Finance (IIF) and local bank Banorte, said he hopes that Canada and the US will settle differences this week or next in order for a trilateral agreement to become reality.
The window is closing to reach a trilateral agreement in time for Mexican President Enrique Peña Nieto to sign the agreement on November 30, before leaving office - which is the goal of both the outgoing administration and the incoming government of president-elect Andrés Manuel López Obrador (AMLO).
AMLO takes office on December 1.
"There is clearly a need to have a couple of weeks, a 10-day horizon to organize [a deal] ... I would expect that in the next few days or at the latest the next week there will be a solution [between Canada and the US]," Guajardo said at the IIF's Mexico Economic Forum.
Guajardo said Mexico's interest continues to focus on Canada joining the trade pact since the ideal situation is to have a trilateral agreement.
"We are very interested in the accompaniment of Canada in this process, Nafta is a trilateral agreement and that quality is a great asset. If we see that the scenario ends up being not what we hope for ... Mexico has to take the next step, which is to move forward in the context of a bilateral agreement," he said.
At the end of his address, Guajardo broke from his Spanish-language script to add a final comment in English, saying that the central theme of his message at the event was to express the "why" behind Mexico's acceptance of tough terms in the bilateral agreement, including rules-of-origin changes that give a new advantage to US manufacturers.
Guajardo said Mexico has made significant strides in its trade integration with the rest of the world through recent agreements with Pacific Rim nations (CPTPP) and Europe (FTA EU-MEX). And in the attempt to save Nafta, a key motivator was the threat of renewed protectionism that had been so prevalent in the 1960s and 70s - a situation that Mexico was keen to avoid as the US and China move towards a trade war.
"We realized that losing Nafta had a much bigger price tag," said Guajardo.
In other comments, in Spanish, Guajardo said the "agreement in principal" with the US and the so-called side deal for the auto sector would protect Mexico from Trump and the "temptation to regress" on free global trade.
In a further sign of a coordinated political transition in Mexico and that the outgoing and incoming administrations are looking at what is best for the country and the economy, Guajardo said that the appointment of ambassador Jesús Seade as chief negotiator for AMLO's transition team was the "correct decision."
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