Renegotiation of NAFTA: Positive Signs, but Caution is Recommended

MEXICO - Report 20 Jul 2017 by Mauricio González and Esteban Manteca

The “Summary of Objectives for the NAFTA Renegotiation” published by the U.S Government was in general well received by Mexican editorialists as well as financial markets. The document confirms the US goal to “maintain existing reciprocal duty-free market access… for goods and services”.

Here are our major takeaways from the Summary:
• Mexican editorialists and economic analysts, as well as the markets, have received the Objectives for Renegotiation of NAFTA in a positive way.
• There are doubts as to how the US will reduce its deficit with NAFTA partners in the short term, given its dependence on Canadian and Mexican imports.
• Several of the aspects included by the US government have already been discussed between the two governments in light of the TPP agreement.
• Interesting signaling included in the Objectives, in particular regarding government corruption and environmental issues.
• A sign of difficult times ahead in the negotiation is the US proposal for eliminating the Chapter 19 dispute settlement mechanism.

Now read on...

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