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Mexico faces the dual challenge of maintaining the North American Free Trade Agreement (NAFTA) under favorable conditions for the country and continuing its trade openness in other markets, badysts said and representatives of the business world. de la Mora, general manager of consulting firm LMM Consulting, pointed out that, to conclude the negotiation of NAFTA, US President Donald Trump, should be flexible in the so-called "poison pills", while Mexico and Canada should In exchange, Eugenio Salinas, Technical Secretary of the Strategic Advisory Council for International Negotiations (CCENI), agreed that the biggest challenge in updating this trade agreement lies in three aspects: the rules of The origin of the automobile sector, dispute settlement mechanisms and the sunset clause.
Mexico continues this process In negotiating, we must open new markets, diversify our exports as well as our imports, to reduce our dependence on the United States, which has implemented – or has not been – are preparing to do so – a series of protectionist measures
. these poison pills include US proposals such as the sunset clause, which would automatically terminate the trade agreement every five years, unless the three countries agree to renew it beforehand; reform of the methodology for setting dumping or subsidy offsets for agricultural products and amendments to the dispute settlement mechanisms.
Salinas pointed out that the NAFTA negotiations are crucial, giving the example of future amendments to this agreement. the rules of origin of the automotive sector will affect the competitiveness of North America and other regions of the world.
Up to now, only nine chapters out of 30 have been completed, pending the most controversial issues. by the government of President Trump and with the explicit goal of reducing the US trade deficit with Mexico and Canada.
In the original rules of the automotive industry, the United States push restrictive measures to trade by requiring that 40% of the contents of a car or 45% of a van is manufactured in using a paid labor force of $ 16 or more per hour to have the right to be exported without imposing tariffs under NAFTA, a threshold that Mexico is far from respect, with payments in the range of 3 dollars at the time
"The biggest challenges of renegotiating NAFTA are in the so-called poison pills," said De la Mora.
The Trump Challenge
Trump made the renegotiation of NAFTA an important initial priority of his government. He considered that it was the "worst commercial agreement" and said he could try to pull out the United States.
Mexico must also strengthen its domestic competitiveness to better cope with ongoing trade liberalization, as well as new negotiations or agreements that are about to enter into force
A new version of Free Trade Agreement between the European Union and Mexico (TLCUEM) should be ratified after the conclusion of an agreement in principle trade goods and services and bilateral flows of productive investment .
It is also expected that the Trans-Pacific Partnership Treaty and the Progressive Trade Treaty (CPTPP) will come into force in early 2019.
The CPPO is composed of Australia , Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Informally, they have applied to join this mega trade agreement between Indonesia, South Korea, the Philippines, Taiwan, Thailand and the United Kingdom. Formally, Colombia has done
Challenges of Mexico's Trade Program
- Renegotiation of NAFTA. Discussions are blocked due to the insistence of the EU to include a clause of automatic termination of the agreement and the refusal of Mexico and Canada. The US government wants to continue the process after the elections in Mexico
- Promote the start of the CPTPP. Mexico has become the first member to ratify the agreement, but at least five more members have yet to ratify it to enter into force. The Ministry of the Economy predicts that this could happen by the end of 2018.
- Ratification of the FTA. In late April, Mexico and the European Union announced an agreement in principle to update the FTA between the two parties, but the version must be submitted and ratified in the corresponding legislative bodies.
- Update of the EFA with EFTA. . In accordance with the FTA update, this FTA should be reviewed with the European Free Trade Association, composed of Iceland, Liechtenstein, Norway and Switzerland, in cooperation with the European Free Trade Association. force since 2001.
- Extension of trade agreements with Brazil and Argentina. Update of Economic Complementarity Agreements (ECAs) with both countries is underway, which will mean the significant expansion of tariff fractions with preferential treatment.
- Expansion of membership in the Pacific Alliance. The bloc of Mexico, Colombia, Peru and Chile has 55 active observer countries; some of them, such as Canada and New Zealand, have shown a keen interest in joining the group.
- FTA with Turkey and Jordan. Enrique Peña Nieto's government has begun talks with both countries and it has been agreed to go ahead to reach trade agreements, but no major breakthrough has been made. made.
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