[CTC] Mexico’s Incoming Administration Willing to Offer Flexibility on Nafta

[Arthur Stamoulis]

https://www.wsj.com/articles/mexicos-incoming-administration-willing-to-offer-flexibility-on-nafta-1532468389 <https://www.wsj.com/articles/mexicos-incoming-administration-willing-to-offer-flexibility-on-nafta-1532468389>
Mexico’s Incoming Administration Willing to Offer Flexibility on Nafta
Jesús Seade, tapped as Mexico’s incoming chief trade negotiator, urged U.S. to make concessions on ‘red lines’ for Mexico
 
By Juan Montes and Santiago Pérez
Wall Street Journal
Updated July 24, 2018 10:14 p.m. ET
 
MEXICO CITY—The man tapped as chief trade negotiator for Mexican President-elect Andrés Manuel López Obrador suggested flexibility in making a new deal to revamp the North American Free Trade Agreement before his boss takes office in December.

Jesús Seade, the World Trade Organization veteran who will join Mexico’s negotiating team for talks in Washington, D.C., this week, said he is willing “to explore options” in some of the sticking points that have brought Nafta talks to a crawl.

He also urged U.S. counterparts to make concessions on “red lines” for Mexico, such as some of the America First provisions that President Donald Trump wants to put in any new deal to return manufacturing jobs to the U.S.

“The whole negotiation has to evolve,” Mr. Seade said in an interview Tuesday. “After one year, things haven’t changed that much. The controversial topics are still there.”

Mr. Trump campaigned on pledges to rewrite or abandon Nafta. His administration wants to remove mechanisms to solve commercial disputes, and insert a sunset clause under which the accord would expire every five years unless explicitly renewed. Both Canada and Mexico say those measures are unacceptable.

Talks to revamp Nafta stalled in mid-May, and tensions increased in June, as the U.S. imposed steel tariffs on Mexico and Canada, prompting retaliation against U.S. exports.

Mr. López Obrador’s landslide election victory early this month, and his position in favor of Nafta talks, removed an element of uncertainty, Mr. Seade said.

A delegation led by Canadian Foreign Minister Chrystia Freeland will meet in Mexico City on Wednesday with senior Mexican government officials and members of Mr. López Obrador’s team, including Mr. Seade.

He will then travel to Washington with Mexico’s Economy Minister Ildefonso Guajardo and Foreign Minister Luis Videgaray for meetings with U.S. Trade Representative Robert Lighthizer on Thursday. Mr. Seade said he has known Mr. Lighthizer for 25 years.

Senior U.S. and Mexican officials have agreed to aim for a preliminary deal by late August. <https://www.wsj.com/articles/mexico-says-u-s-mexico-aim-to-reach-nafta-deal-by-late-august-1531953483?mod=article_inline>
Mr. Seade said he is willing to show some flexibility on two hot topics: requirements for how much auto content must originate in North America and investor-state dispute settlement mechanisms that allow investors or companies from one country to challenge the actions of a foreign government.

“We should be willing to explore options and alternatives that would give certainty to companies, and look for an intermediate position on rules of origin for autos,” Mr. Seade said.

But he labeled as unacceptable U.S. demands for a five-year sunset clause, seasonal tariffs on fruits and vegetables from Mexico, and the elimination of panels to resolve disagreements between Nafta countries.

Mr. Seade said he supports the stance taken by Mr. Guajardo, Mexico’s outgoing chief trade negotiator. Although Mr. Seade’s presence in talks will be informal, since Mr. López Obrador isn’t scheduled to take office until Dec. 1, he thinks fresh eyes can help to unlock talks.

“We now need to launch closing negotiations,” he said. Outgoing President Enrique Peña Nieto and Mr. López Obrador have agreed to act in tandem during the transition period.

In recent days, positive signals have raised hopes that a deal may be at hand, Mr. Seade said. A senior delegation of Trump administration officials led by Secretary of State Mike Pompeo, Treasury Secretary Steven Mnuchin and White House adviser Jared Kushner met with Mr. López Obrador and members of his future cabinet in Mexico City earlier this month.

The meeting to discuss bilateral issues “was terrific,” said Mr. Seade. Mr. López Obrador gave the visitors a conciliatory letter for Mr. Trump, urging him to step up efforts to conclude Nafta talks. He praised Mr. Trump saying that the U.S. president, like himself, had triumphed over the political establishment.

On Monday, Mr. Trump returned the compliment. He said that Mr. López Obrador was a “terrific person” and that he is heading toward a “dramatic” deal with Mexico, without elaborating.

In his response to Mr. López Obrador´s letter, Mr. Trump said that a successful renegotiation of Nafta will lead to more jobs and higher wages for American and Mexican workers—“but only if it can go quickly, because otherwise I must go a much different route.” Mr. Trump´s letter, dated July 20, was released by Mr. López Obrador Tuesday night.

In addition to the sunset clause, Mr. Seade opposes the elimination of provisions that allow the three countries to challenge each other for violating Nafta rules. “If you accept that, you don’t have a treaty, you just have a love letter,” he said.

But on the investor-state dispute resolution, contained in Nafta’s Chapter 11, he said that he’s open to discuss alternatives that still give certainty to companies.

“I always put myself in the shoes of the other side to try to maximize the benefit of my counterpart, subject to my needs,” Mr. Seade said.

—William Mauldin in Washington contributed to this article.

Write to Juan Montes at juan.montes at wsj.com <mailto:juan.montes at wsj.com> and Santiago Pérez at santiago.perez at wsj.com <mailto:santiago.perez at wsj.com>
 
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