“It is better to have a joint negotiation”

Should there be a lack of agreement, all parties would be at a loss, as this is not only a commercial negotiation, but one dealing with investment uncertainty, warns president of Mexican Council on International Affairs (COMEXI), Luis Rubio
President of Mexican Council on International Affairs (COMEXI), Luis Rubio - Photo: Taken from Wilson Center Mexico Institute
28/01/2017
22:32
Ivette Saldaña
Mexico
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The explosive personality of U.S. president, Donald Trump, leads him to say that levy on Mexican exports will be enforced. This might be easier said than done, as there are domestic counterweights and trade commitments of the United States (U.S.) that will impede its enforcement unless it violates commercial rules, noted the president of the Mexican Council on International Affairs (COMEXI), Luis Rubio: “The U.S. president has no authority over tariffs, this is a Congressional matter and, surely, discussion on the issue will take place here”.

What should really be addressed at present, is that the renegotiation of the North American Free Trade (NAFTA) should be part of a comprehensive agenda to be discussed with the U.S. instead of addressing it as an isolated matter. The best approach to follow is to “have a joint negotiation, instead of a topic by topic basis”, as we are dealing with political, economical, trade and security matters that are very important in the bilateral relation with the U.S. said Rubio in an interview with EL UNIVERSAL.

It should be made abundantly clear that Mexico has to negotiate, as we are dealing with investment certainty, bilateral trade and because both parties would be affected should there be no NAFTA.

While it is true that “we are very vulnerable, as anything that happens in the U.S. will have a significant impact in our country”, it is also true that U.S. citizens will also feel the impact of Mexicans ability to consume goods in the border due to fluctuations in the exchange rates.

All these matters are important as they are part of the relations between the Mexico and the U.S. and because certainty is required in each of the issues they both touch upon. Take trade for example, Mexico has much to loose should NAFTA disappear as it has to do with the exchange of goods, but also with exchange rates, especially with Trump’s statements, which only generate uncertainty and retract foreign and domestic investment in our country.

That is why we are witnessing that a halt has been put on several investment projects, thus foreign direct investment (IED) will hardly reach the estimated US$25,000m: “The chances for this are very small, the planning and development of projects is not happening at present”, said Rubio.

He also explained that Trump looks after his political foundation, which represent the votes of the population that lost with globalization and free trade, as there were companies that left the U.S. to base their operations in Mexico or in China, or that simply closed due to technological issues; these factors have caused unemployment for the last twenty years.

However, there have been sectors of the population benefited by NAFTA; these should come forward either publicly or politically to show Trump how important the relation with Mexico is.

The (business) sector should be warned to take action”, as it has been done in similar occasions, namely during Felipe Calderon’s administration where sanctions where imposed on U.S. goods as authorities restricted access of carriers in the U.S. and thus failed to comply with the agreement. Such pressure by the Mexican government at the time helped to have the issue solved shortly.

Rubio added that some business are currently taking action in the U.S. Congress but lack public exposure as they would be crushed by Trump, who is clearly not a politician, but a businessman with an explosive personality.

Rubio also commented on the possibility of a bilateral negotiation of NAFTA between Canada and the U.S., which would leave Mexico behind. He considered that this is quite tempting for Canadians due to the level of conflict reached between the Mexican and U.S. governments: “It is easier to negotiate as peers than to negotiate single-handed, though their problems are different to ours. The negative press grows more for us than for the Canadian people”.

He noted that Canadians “wanted to go on their own” in several occasions at the time Stephen Harper was Canada’s Prime Minister as they didn’t have good relations with Mexico. In the end, they had to team up with Mexico to perform joint negotiations because it did not suit them to negotiate on their own.

The rhetoric that should reign between Mexican and U.S. leaders should be to pursue cooperation instead of competition. This is why it is convenient to show Trump the complexity of the relation and to demonstrate why a stable relation with Mexico is necessary.

There are additional benefits for the U.S. apart from the trade aspect of the relations if one considers that Mexico keeps a strict control in its south border: “If you go to a prison in Tapachula, Chiapas, you will find about seventy-six different nationalities which do not make it to the north border, Guatemalans and Salvadorians are let go through unlike Pakistani or people from other nationalities”.

This means that Mexico plays a vital role for the security of the U.S., its trade, alongside many other topics of priority that should be considered in the bilateral relation, as we are “addressing a matter of certainty”, he concluded.

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