Renegotiating NAFTA, US, Mexican CEOs say prefer no deal to bad deal

The flags of the members of the North American Free Trade Agreement (NAFTA) (file photo)

US and Mexican corporate chief executives involved in renegotiating the North American Free Trade Agreement (NAFTA) say it would be better to live with no deal than be burdened with a badly revised one.

The CEOs made the statement at a meeting in Mexico City on Wednesday, as parallel negotiations are underway in Washington to revamp the 1994 agreement, with Mexico and Canada opposing a number of radical US proposals they say would damage the North American economy.

“We are all much worse off with a bad agreement than with no agreement,” said Guillermo Vogel, who co-chaired the Mexico City event and is a vice president at Tenaris, a global steel company.

Vogel said the US and Mexican corporations still believed talks on NAFTA would produce a good deal and that their executives would continue to lobby their governments and lawmakers to negotiate a good agreement.

“With an agreement, in 10 years I see a strong region that can face Asia or China, without an agreement, I see a weaker region in the medium and long term,” he said.

The bilateral meeting on Wednesday also included a closed-door discussion addressed by Foreign Minister Luis Videgaray and Economy Minister Idelfonso Guajardo, who are in charge of the NAFTA negotiations for Mexico.

FedEx’s CEO Michael Ducker and US Chamber of Commerce President Thomas Donohue also co-chaired the event on the US side, with Donohue expressing alarm that several US proposals in the NAFTA talks were “poison pills” that risked dooming the agreement.

The proposals included removing dispute resolution mechanisms, limiting trade in fresh produce, and introducing minimum quotas for US parts in autos.

US Chamber of Commerce President and CEO Thomas Donohue attends an event with the Mexican Chamber of Commerce members, in Mexico City, Mexico, October 10, 2017. (Photo by Reuters)

The president of the US Chamber of Commerce singled out a provision — the sunset clause — that would allow the agreement to expire in five years unless all parties agreed to extend it.

“We all know that certainty and stability are crucial to successful trade relationships — and necessary to foster a pro-investment environment that drives economic growth and job creation. This clause would achieve the opposite effect,” Donohue said.

The remarks came as US President Donald Trump once again threatened to scrap the trade treaty between the US, Canada, and Mexico ahead of the fourth round of NAFTA negotiations.

Calling NAFTA a catastrophe and the “single worst trade deal ever approved” by the US, Trump blamed the three-nation deal for the outsourcing of thousands of jobs from the United States to Mexico and China.

Mexico’s Foreign Secretary Luis Videgaray speaks during a meeting at the Senate in Mexico City, Mexico, October 10, 2017. (Photo by Reuters)

In a sharp retreat from Mexico’s previous strategy of trying to avoid antagonizing Trump, Videgaray stressed that Mexico “wants an agreement” on NAFTA but also warned that Mexican officials were ready to walk away from talks or even out of the deal.

“We always have to be ready to get up from the table. This is a logical posture in any negotiation. It’s also a principle of dignity and sovereignty,” the Mexican foreign minister said. “Mexico is much bigger than NAFTA and we have to be ready for any scenario in the negotiations.”

Videgaray added that the end of NAFTA “won’t be the end of the world.”

IMF Economic Counsellor Maurice Obstfeld has previously warned that all three NAFTA countries faced economic consequences if the outcome of the talks ended up disrupting trade relations.

NAFTA was first proposed by the administration of former president George H.W. Bush and was finalized by his successor Bill Clinton.

Trump threatened in the buildup to the November 8, 2016 presidential election that he would pull the US out of the pact if he could not secure what he thought were better terms for US workers and industry.