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International Trade

Mexico’s Outlook on the New NAFTA

Karla Sanchez  

Karla Sanchez  

On July 1st, Mexican voters elected their new President, Andrés Manuel López Obrador, also referred to as AMLO. AMLO, who won with over 50% of the popular vote, will officially take office in December 2018.

On September 30th, after over a year of intense negotiations, the United States, Canada and Mexico finally came to an agreement on an improved North American Free Trade Agreement (NAFTA), what will now be known as the United States Mexico Canada Agreement, or USMCA. On October 10th, the Mexico Institute hosted AMLO’s elected Chief NAFTA negotiator, Dr. Jesus Seade, for a discussion on his outlook of the new trade agreement under the new Mexican administration. Dr. Seade is a former Ambassador to the General Agreement on Tariffs and Trade (GATT) and has served as Deputy Director General of the World Trade Organization. During his discussions at the Mexico Institute, Dr. Seade was able to provide an insider’s look at how the negotiations progressed and what this means for the future of Mexico.

Dr. Seade jokingly stated that he sees Free Trade Agreements in two parts.  The first is that we create free trade, and the second consists of thousands of pages explaining how “not quite”. Seade explained how even though the presidential elections in Mexico put a halt on negotiations, once President Elect AMLO appointed Seade, he was given clear instructions to move negotiations forward. AMLO was in full support of the U.S.’s desire to review and update NAFTA, and instructed Dr. Seade to help progress things along. AMLO’s hope was that negotiations would be complete prior to him officially taking office, so that he would be able to direct his focus on other key initiatives.

The outcome of AMLO’s support toward these negotiations was critical to the successful outcome, according to Dr. Seade. Dr. Seade believes that this new trade agreement will provide Mexico with a rich social agenda that will help protect Mexico’s cultural diversity. In addition, he believes that the USMCA will improve foreign investment for Mexico. Dr. Seade stated that Mexico will be viewed as the more cost-effective emerging market economy in North America, providing a competitive advantage for the region over Asia and South America.

By bringing Mexico to the table to renegotiate one of the largest free trade agreements in the world, with full presidential support to handle negotiations expediently, negotiations successfully concluded in a timely manner; a relief to many.  However, we will need to wait and see how these new improvements will directly impact both producers and consumers. President Elect AMLO feels that Mexico will benefit from the USMCA, by having a stronger deal in place; ultimately leading to improved investor confidence, supporting his economic agenda as he dedicates his efforts toward a more solid economy for Mexico.

 References:

AMLO and the Outlook for North American Free Trade Webcast, Mexico Institute

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