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Mexico’s Chief Nafta Negotiator: ‘There Are Certain Things We Cannot Accept’

Kenneth Smith Ramos talks arbitration, sunset clauses, and other sticking points during an appearance in Dallas.

The Trump administration may think America’s been shafted by the North American Free Trade Agreement among the U.S., Canada, and Mexico. But Kenneth Smith Ramos, Mexico’s chief Nafta negotiator, disagrees. Trade has blossomed since the pact was signed in 1994, Smith says, strengthening the supply chain in key industries and bringing “great benefits” to all three countries.

So, while Mexico supports updating or “modernizing” the agreement, Smith said, “we cannot backtrack. We want free trade to continue.”

During a talk last week at SMU’s Mission Foods Texas-Mexico Center in Dallas, the longtime Mexican government official explained that Mexico, Canada, and the U.S. have been trying to rewrite Nafta’s “22 chapters” since last August, with hundreds of negotiators involved.

Smith said that Mexico, for its part, is keen on adding new provisions to the agreement, such as those related to energy innovation; helping small and medium-sized businesses benefit more from the pact; promoting new environmental, labor, and gender initiatives within the Nafta framework; and bolstering certainty in the area of trade-dispute resolution.

However, Smith said, “there are certain things that Mexico cannot accept. … Balance and quality [in the agreement] will not be sacrificed for politics.”

Among the sticking points: the Trump administration’s insistence that, essentially, more of the “value content” of North American-built autos come from North America and the U.S.; American resistance to arbitration panels deciding trade disputes, allegedly infringing on U.S. sovereignty; and the Trump administration’s demand for a five-year “sunset clause,” under which the agreement would automatically end every five years in the absence of a vote to renew it.

Smith said that Mexico is “willing to explore how to strengthen the rules of origin” for auto content. But he added that there’s “not one iota of evidence that arbitration panels have ever acted unfairly,” and that imposing a sunset clause would create “too much uncertainty” among companies and trading partners. Instead, he said, “let’s do a review” of the agreement every five years, rather than moving to end it outright.

The parties are currently “waiting to hear back from the U.S. to continue negotiations …” Smith went on. “If the U.S. pulls out of the agreement”—as President Donald Trump has threatened to do—”Mexico will have to be ready to diversify, to find new markets. … We will close the deal when the deal is ready to be closed,” he added. “We won’t rush it.”

Smith’s talk was presented by the Texas-Mexico Center at SMU’s Dedman College of Humanities & Sciences in partnership with the Cox School of Business, Pro Mexico, the Consul General of Mexico in Dallas, and the Asociaicion de Empresarios Mexicanos Dallas-Fort Worth.

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