It’s fair to say that 2017 has been a turbulent year for Mexico, given that the new White House occupant keeps making public comments threatening North American trade relations. A rocky start to talks on the North American Free Trade Agreement (NAFTA) in Washington this week is raising questions about the 23-year-old trade accord’s fate.
Victor Herrera, who’s spent 35 years covering Latin American financial markets, warns that NAFTA’s demise would have major effects. Over half the products in Mexican supermarkets are U.S. and Canadian imports, he explains to AS/COA Online Editor-in-Chief Carin Zissis. “If the agreement dies overnight, this is going to have an impact on the daily lives of a lot of people, because all of a sudden there’s going to be a scarcity of almost everything that we consume in Mexico—especially of foodstuffs,” says the former office head for S&P’s Global Ratings in Mexico City. He added that a multi-party deal like NAFTA offers benefits that bilateral pacts can't, pointing to the current Bombardier-Boeing dispute as one example.
“Growth could be 1 percent higher if the country had better accountability and more transparency.”
Herrera suggests that the nature of negotiations means cooler heads can prevail in future rounds. “The problem is that we are running against a clock,” he says.
One reason for the short time frame is Mexico’s highly contested 2018 presidential race. Commenting on a recent article he penned for Americas Quarterly, Herrera outlines why he thinks that more independents and parties competing to win will dampen prospects for one frontrunner in particular—leftist ex-Mayor of Mexico City Andrés Manuel López Obrador.
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