NAFTA Modernization and the Prospects for USMCA

Ratification

Fernando Mayer De Leeuw

Former General Director of the Ministry of Economy and negotiator for the modernization of the USMCA

September 2019

Since NAFTA, trade between the US and Mexico has grown 6 times

Since NAFTA, commercial activities between Mexico and the USA has grown dramatically Mexico is the US’s largest trading partner

$1.5 billion dollars in goods are traded bilaterally every day.

Fuente: USDOC.

Trade relationship between Mexico and Canada

Trade between Mexico and Canada has grown 9 times, reaching $37 billion dollars in 2017.

Mexico is Canada’s third largest trading partner.

Canada’s main commercial partners

USA [VALOR]

China 8.5%

Mexico [VALOR]

Japan [VALOR]

UK [VALOR]

Others [VALOR]

Fuente: Secretaría de Economía y BANXICO

Consultation Process

Federal Government

Mexican Senate Advisory Group

Strategic consulting Council for International

Negotiations

Civil Society Negotiation Proposals

Mexico Priorities for USMCA Negotiation

Competitiveness

Preferential access

Regulatory Improvement

Investment

Temporary movement of professionala

Cooperation and

development

Technical barriers

Inclusive and

responsable commerce

SMEs

Gender

Anti- corruption

Environ. Opportunities in the modern

economy

Energy Integration

Intellectual Property

E-commerce

Certainty for commerce

and investment

State Owned

enterprises

Solving controversies

Competition

Government procurement

Negotiations in every key sector

Agriculture

Competitiveness Services Customs

procedures E-commerce

Environment

Financial Services

Good regulatory practices

Market access

Government

purchases

Intellectual Property

Investment Labor Legal and

institutional

Non-conforming

measures

Rules of Origin

Sanitary and Phytosanitary

meassures

Trade Remedy

SMEs State companies

Technical Barriers to

Trade

Telecommunications

Temporary entry

Textiles Gender

Transparency and anti-

corruption

Energy

Sectoral annexes

Red flags during the negotiations

7 R

ed F

lags

Fixing the trade deficit

Dispute Settlement

Rules of Origin

Government Procurement

Trucking

Restrictions to Agricultural

Trade

Sunset Clause

Not reducing access

Chapter XIX, and agreeing on changes to chapters XI and XX that improve the Agreement

Avoiding damaging regional integration

Trade balance improvements by expanding trade

Preserving NAFTA commitments

Managed trade in the agricultural sector not acceptable

Uncertainty to traders and investors

Negotiation Strategy

1

2

3

4

5

Making progress in Chapters with minor differences

Tackling hot topics:

Being firm against unviable proposals

Counterproposals and negotiation

a. Autos b. Sunset c. Dispute resolution

Proposals that promote free trade and strengthen NAFTA

- SPS Measures

- Temporary Entry

- Trade Facilitation

Time should not be a factor and main goal is ensuring the balance and quality of the Trade Agreement.

Closing well, not fast

Negotiate the best deal possible for the country

Final result...

First agreement

MX-USA

USA-Canada Negotiations

Trilateral Agreement

A Trilateral Agreement USA-Mexico-Canada

(USMCA)

August 27, 2018 September 30, 2018 September 30, 2018

Lobbying in the US

Private Sector Academics/Think

Tanks Federal Congress

Effort “GRASSROOTS”: “All Politics is local”

National Conference of Mayors

National Governors Association

Local Universities

Objective: Mobilizing economic actors in the US

What did we achieve?

1. Digital Trade

2. Telecommunications

3. Anticorruption

4. Competitiveness

5. SMEs

New chapters that

modernize the

Agreement

What did we achieve? Sunset Clause

Modified and with no sudden death

Rules of Origin in Automotive Sector

Guaranteeing free trade

Robust rules to promote regional integration

Insurance policy for Mexico in case of extraordinary measures (232)

Dispute Settlement Mechanism

We preserved:

Chapter XI (Investor-State)

Chapter XIX (AD/Subsidies)

Chapter XX (State-State)

Agreement On

Controversial Issues

What did we achieve?

Eliminating unacceptable

proposals

Agricultural seasonality

Textiles

No Reductions in access to Government Procurement

No Trade Deficit Provisions

Mexico should continue its trade diversification strategy

Reaching out to

Asia-Pacific CPTPP

Ratified

Updating NAFTA (USMCA)

Strengthen the AP (Alianza del Pacífico) Member States:

Canada, Australia, Singapur and New Zealand

Improving Access Brazil and Argentina

Updating Mexico-EU FTA

The future: Mexico as a G7 economy in 2050?

Mexico is open to the world: FTA Network

Implementation of structural reforms

Strengthening the Rule of Law

Guarantees for national and international investors

16

Thank you!

For additional questions please contact:

Fernando Mayer de Leeuw Partner - Natcom Solutions

fmayer@natcomsolutions.com.mx