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