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The election of Mexican left-wing candidate Andres Manuel Lopez Obrador as president could have augured other trade problems between the two countries, but companies will see Donald Trump Trump: Democratic voters will support Republicans because of critics of ICE Barrett, Kavanaugh among the candidates who met with Trump: Trump administration report recommends not to allow access from China Mobile to US market PLUS as the largest Threat to the North American Free Trade Agreement (NAFTA)
Lopez Obrador, known as AMLO, NAFTA at the time it was signed. But, like many others on the Canadian left, it has come back since the Mexican economy opened up and the conventional wisdom of the country saw the agreement as a central element of its economic prospects
"In both countries, the NAFTA in 1994 came out to defend it. Perhaps not with much enthusiasm, but they defend it, "said Joydeep Mukherji, who heads the Americas Sovereign Ratings section at S & P Global." The bad news is that the general fate NAFTA negotiations remain in abeyance. "
Trump, for his part, threatened to withdraw the United States from the agreement, which he considers to be one of the Worst the United States came into play.
This is part of a nationalist trade program that also included the imposition of tariffs on steel imports and imports. Trump used the Article 232 law to impose tariffs on these imports, claiming that they threatened national security.He is considering a similar argument for imposing high import taxes on automobiles
While businesses worried about some of Lopez Obrador's economic plans, his election raised serious concerns about NAFTA. [TRADUCTION] "AMLO has not participated in a NAFTA-friendly campaign, but NAFTA has never been part of the campaign and it has repeatedly expressed support for NAFTA and its renegotiation, "said Monica DeBolle,
Lopez Obrador raised concerns over how a new deal could affect Mexican agriculture, but this particular issue does not not so far played a central role in the negotiations.
Beyond that, Lopez Obrador's cabinet chooses who to be responsible for much of the negotiation, signaling interest in a successful renegotiation of NAFTA.
"On the NAFTA negotiations, it would not be them who would leave the table," said Richard Miles, director of the United States. -Mexico Futures Initiative at the Center for International Strategic Studies
Instead, all eyes remain on Trump.
"We are in the midst of this tit-for-tat tariff war, and it could go both ways" Miles sa
M. Trump attempted to use his trade sabotage as a cudgel in the NAFTA negotiations
He hoped that tariffs on steel and aluminum imports of the Canada and Mexico could be used as a means of negotiation. think of potential car rates in the same way. So far, both countries have reacted against the United States.
Trade groups and conservative lobbies attacked Trump vocally on tariffs. Tom Donohue, president of the US Chamber of Commerce, said it was not the right approach, while Koch-backed groups launched a multi-million dollar campaign on what they call a "Misguided policy" that would have "unintended consequences".
NAFTA talks were blocked, which prevented them from concluding before the mid-term elections – when Trump faces the real danger that Republicans will lose the majority of the House.
Several friction points slowed the talks include a sunset clause, rules of origin on products such as the automobile and the use of an international dispute settlement mechanism. disputes when problems arise.
Trump's threat to impose new car rates could destabilize new talks. The addition of a new 25% import tax on cars built in Mexico could explode the discussions about the rules of origin, which determine the amount of car that can be built in the United States. Mexico or Canada to be sold in the United States under NAFTA. Trump has ordered the Commerce Department to look into the matter, and could act as soon as it issues a report, potentially as early as September.
Another potentially important factor is the personal chemistry of AMLO and Trump
. It depends on the personal relationship that develops between Lopez Obrador and Trump, "Miles said.
DeBolle said Lopez Obrador's great personality could be an asset or a responsibility in Trump's treatment.
" It could cut in both directions. He is much more frank than Pena Nieto, so the tensions on these points of friction could degenerate. If the United States says anything about Mexico, you will get a lot more response than you would ever get under Pena Nieto, "she said, referring to the current president. from Mexico, Enrique Pena Nieto
. The two men could find the style of each other.
"Their personalities match that, and it may be that Trump finds it easier to work with someone like AMLO than with Pena Nieto, because they're very similar characters."
this front, the initial signs are positive. Trump spent half an hour on the phone with Lopez Obrador on Monday, and told reporters afterward that the conversation went well.
"I think the relationship will be very good," he said.
S & P Global predicted that, despite the hiccups, a new deal would finally be signed. Even though negotiations to renew NAFTA are collapsing, the total elimination of the trade agreement remains a distant prospect.
This would force Trump to formally withdraw from the treaty, in addition to the measures taken by Congress to overturn NAFTA-related legislation.
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