Before NAFTA round #1 began Minister Guajardo stated angrily if the U.S. did not concede to the demands of Mexico his government would flood the U.S. with drugs and illegal aliens.
However, in the face of actually seeing NAFTA discussions possibly leading to collapse, Mr. Guajardo has a change in tone. The minister is looking at alternatives, bi-lateral trade deal options are analyzed, and the reality of the Mexican economic position is settling in.
What happens next? Mexican officials are dispatched to Washington DC to enlist the lobbying efforts of K-Street and their allies in the U.S. CoC. “Halp“:
MEXICO CITY (Reuters) – Mexico sees a serious risk the United States will withdraw from NAFTA and is preparing a plan for that eventuality, Economy Minister Ildefonso Guajardo said on Tuesday, calling talks to renegotiate the deal a “roller coaster.”
[…] “This is not going to be easy,” Guajardo said at a meeting with senators in Mexico City. “The start of the talks is like a roller coaster.”
The need for a back-up plan in case Trump shreds the deal underpinning a trillion dollars in annual trade in North America has been a long-standing position of Guajardo, who travels to Washington on Tuesday with foreign minister Luis Videgaray to meet senior White House and trade officials.
“We are also analyzing a scenario with no NAFTA,” Guajardo said.
In an interview published earlier on Tuesday in Mexican business daily El Economista, Guajardo said “there is a risk, and it’s high” that the Trump administration abandons NAFTA.
[…] Overlapping with the NAFTA talks, Mexico will participate in separate trade meetings with Australia and New Zealand in Peru, and President Enrique Pena Nieto travels to China this weekend.
Still, attempts to diversify trade will not be easy. Some 80 percent of all Mexican exports go to the United States, and economies such as Brazil and China often compete with Mexico. (read more)
Mexico is quickly realizing something that Canada is also learning in discussions with the EU and Asia. The U.S. Market is the world’s most valuable customer in the trade equation. With that value comes incredible leverage.
Mexico can go to other nations as a “Plan B” to shore up trade deals, but those same nations will also be engaging in bilateral agreements with the U.S. and trying to keep a strong relationship with the best customer, the American Market.
If NAFTA ends, the U.S. simply switches to engage in disconnected bilateral trade with Mexico and independent bilateral trade with Canada. There are many nations who would love to replace Mexico and Canada as U.S. suppliers, and be a provider for the goods and services we might import.
Mexico might turn to Brazil as a trade partner, but Brazil doesn’t want to put their relationship with the U.S. at risk.
As a customer, the scope and scale of the U.S. economic market is the ultimate leverage. Mexico is beginning to recognize what they have taken for granted.
Sucks to be you Ildefonso !