Fri, May 12, 2017 - Page 7 News List

Mexico lobbies Trump over NAFTA

‘MOST FAVORED NATION’:A clause under WTO rules would set the average tariff on Mexican exports to the US at 3.5 percent, about half of the average tariff on US exports

Reuters, MEXICO CITY

Mexico on Wednesday made a pitch to US President Donald Trump to uphold the North American Free Trade Agreement (NAFTA), arguing that unwinding economic integration would hurt both nations, damaging US exports, risking US jobs and hitting consumers north of the border.

Responding to a March 31 executive order by Trump for a review of the US trade deficit, Mexico said its trade surplus with the US was misunderstood and that the real hit to US manufacturing jobs came with China’s accession to the WTO in 2001.

The US’ trade deficit with Mexico of US$63.2 billion last year also reflected a weak peso after it was battered by uncertainty over the future of bilateral trade relations, a document published by the Mexican embassy in Washington said.

“The increasing integration of our economies makes Mexico critically important to the US economy, not only as an export market, but also as a partner in production,” wrote Kenneth Smith, director of the embassy’s trade and NAFTA office.

Mexico was responding to the US Department of Commerce’s request for public input as it prepares a report to Trump on the US’ US$500 billion annual trade deficit. The report and public comments are to be sent to Trump next month.

Mexico said that without NAFTA, the average tariff on Mexican exports to the US would be 3.5 percent, or about half the average tariff on US exports to Mexico, because of the “most favored nation” clause that would apply under WTO rules.

US-Mexico trade relations have been strained by Trump’s repeated vow to scrap NAFTA if he cannot secure better terms for US workers and industry.

Trump has cited the US trade deficit with Mexico as proof that the US was the loser in the relationship, saying that Americans would be better off if the two nations did not trade at all.

However, Mexico said 75 percent of its exports to the US are inputs in US production processes and that the US has an US$8 billion surplus in services.

“Workers on both sides of the border work together in the production of goods to successfully compete in global markets,” Smith said.

The US energy industry also relies on exports to Mexico, which is now the biggest export market for US refined oil products and natural gas, Smith said.

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