[CTC] Mexico’s TPP concessions ‘will not be considered for free’ in NAFTA

[Arthur Stamoulis]

INSIDE US TRADE

Guajardo Villarreal: Mexico’s TPP concessions ‘will not be considered for free’ in NAFTA

June 14, 2017 
Concessions on contentious issues made by Mexico during Trans-Pacific Partnership negotiations will not be the country’s starting point in talks to modernize NAFTA, Economy Minister Ildefonso Guajardo Villarreal told Inside U.S. Trade in an interview -- a position that runs counter to the U.S.’ plans to move Mexico and Canada to concede even more.

“I mean we’re willing to listen as long as we get the balance,” Guajardo Villarreal said last week, citing the market exclusivity period for biologics in TPP as one of those thorny issues.

However, he added, “everything that will be considered will not be considered for free.”

In TPP, Guajardo Villarreal said, “we started at zero years of protection for biotechnologicals. And eventually we moved to five, with the additional measures for three. Now, obviously, we started at zero. But something happened in between where we needed to move. But we have to find that balance.”

The minister said the expectations held by U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross -- that negotiations for a NAFTA re-do in some cases could lead to provisions that go beyond what was agreed to in TPP -- amount to “a natural position of a U.S. negotiator.”

Senate Finance Committee Orrin Hatch (R-UT), who has lamented that TPP’s biologics provisions did not live up to the U.S. standard of 12 years of protection, pressed Lighthizer during his March confirmation hearing on how he would handle the issue in future trade agreements.

Lighthizer pledged to draw on what was negotiated in TPP -- and, in some areas, to push Mexico and Canada even further. In the case of biologics, Lighthizer said, he would “do everything I can to have new trade agreements reflect that standard <https://insidetrade.com/node/158021>.”

“I've had conversations with several members -- I know that there's a split on this,” he said of the biologics controversy. “And I am certainly with the chairman on this issue, which is to say yes, that would be my objective.”

Ross late last month said the administration’s “guiding principle” for NAFTA talks was “do no harm,” and that a second “rule of thumb” would be to view concessions made by Mexico and Canada in TPP “as sort of a starting point <https://insidetrade.com/node/158958>.”

Guajardo Villarreal last week told Inside U.S. Trade he believed “TPP has very interesting areas where we can explore and Mexico is willing to consider them.” But, he reiterated, the balance of the 12-nation pact cannot be replicated in a trilateral agreement. Instead, he said, the three NAFTA countries have to find a new balance.

“Remember, all those concessions were balanced with new markets that will open in Asia, like the Japanese market. You subtract that from TPP, since the U.S. has refused to join TPP, our balance has been broken,” he said.

“And we have to reestablish balance. Yes, we are willing to consider the five-year protection for biotechnologicals. But vis-a-vis what -- what is the new balance going to look like? Definitely we are willing to consider many good ideas that we’re exploring in TPP that were part of a balanced package. We have to find that new balance.”

Guajardo Villarreal also said NAFTA talks could not be divorced from U.S.-Mexico issues like immigration and security -- and that developments on trade would impact Mexico’s responses in those other areas.

“Nothing will be negotiated without the overall balance, which means if something goes wrong in terms of trade, obviously Mexicans will not have the same willingness to cooperate on immigration issues or security issues,” he said.

“So the whole thing has to have a balance; it’s called the integral character of this process,” he continued. “So in that, I know that my trade work has to be balanced in terms of the overall agenda.” On trade, he added, his mandate is “very specific.”

Priorities for Mexico City, the minister said, include the recognition that NAFTA has benefited all three countries and the acknowledgement that the 23-year-old agreement has to be modernized.

As one of the “very clear areas that will be extremely important to capture their advantage,” Guajardo Villarreal listed energy and the need to “lock in the way in which we are going to trade energy and make sure that we have a very efficient way to trade energy.”

One of Mexico’s red lines, however, is any trade reduction through tariffs or quotas, he said, noting the Trump administration’s plans to reduce trade deficits through a revamped NAFTA.

“I told my counterparts Mexico will be willing to cooperate in trade rebalancing as long as it’s through trade expansion, not through trade reduction,” he said. “So as long as we can think creatively, what can we buy from each other more, that is perfect. But not trade reduction. Don’t ask me to withhold my exports of things to the U.S. in order to improve their deficit. That will be bad for me, and it will be bad for you.”

Guajardo Villarreal also refuted the idea that he and Lighthizer had agreed on Dec. 15 as the conclusion date for NAFTA talks, which was reported by one Mexican news outlet <https://insidetrade.com/node/158955>.

“I said the incentives align for the U.S. and for Mexico to wrap up this negotiation process very quickly,” he said. “For Mexico, it can be either the end of the year or early next year. I’m not saying that there is an agreement between Lighthizer and myself -- it is impossible for negotiators to get agreements on dates.”

The minister -- who is said to eye a seat in the Mexican Senate that would require him to retire from his current position in March -- said he would not move on to another responsibility until he has finished his work on NAFTA.

“I think that the president has entrusted me with a responsibility, and the Mexican people is looking very closely of how we handle that responsibility,” he said. “There will not be any new job for me if I don’t show results in what I’m doing.”

“If those things align by luck,” he added, “that will be good. But I will not put my job at risk in negotiating NAFTA because of personal ambitions.” -- Jenny Leonard (jleonard at iwpnews.com <mailto:jleonard at iwpnews.com>)
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