While relations with the U.S. are at a “critical moment,” Mexico’s ambassador said turbulence today can result in an even stronger partnership tomorrow — if handled correctly.
The North American Free Trade Agreement has been a major point of contention in bilateral ties. Thornier issues are expected to crop up during the fourth round of talks, which started Wednesday.
“The possibility for having a major setback in the relationship, if not derailment, is there. I would not be intellectually honest if I didn’t say that there is a chance that this could pretty much go bad,” Ambassador Geronomino Gutierrez Fernandez said during a visit to Atlanta last week.
This is the first major disagreement among the three NAFTA partners, and it’s not 1993 anymore, Mr. Gutierrez said. Unlike last time, the partners now have divergent goals.
“If we overcome this difference, which I think we will, I think we will have a much more mature relationship and one that is actually stronger,” he said at a World Affairs Council of Atlanta dinner held at the Federal Reserve Bank of Atlanta.
President Donald Trump has shown a near “obsession” with the $64 billion U.S. trade deficit with Mexico, a view the ambassador said is misguided and incomplete.
“If we want to balance trade, let’s try to do it by innovating our trade rather than diminishing it. Let’s go bolder than we did 25 years ago. That’s the right way to go,” Mr. Gutierrez said. He added that new opportunities in Mexico’s energy sector, among others, could help tip the scales.
The real danger is disrupting mutually beneficial supply chains that have been established over time, Mr. Gutierrez said. Those have helped North America become more competitive with other regions like Asia, a fact that shouldn’t be taken for granted.
“(NAFTA)’s much more about what we’re producing among ourselves to export to the world,” he said. According to some calculations, U.S. content makes up 40 percent of each Mexican export product.
NAFTA negotiations have been relatively smooth sailing so far, but that should change this week with the U.S. set to propose tougher rules of origin for manufactured goods.
The U.S. could seek to raise to 85 percent existing rules that require 62.5 percent of components be sourced from North America to qualify for duty-free status. Some reports have indicated that the U.S. could go so far as to seek a 50 percent U.S. content requirement.
Mr. Gutierrez conceded that NAFTA would benefit from smart updates that address changes in the global economy, but he reiterated Mexico’s stance that reinstating tariffs or other measures that undermine the essence of the free-trade agreement would be non-starters.
He didn’t, however, question the validity of Mr. Trump’s concerns about the impacts of the agreement on American workers, noting that Mexico faces the same questions.
“Those are legitimate concerns. Most every government has them. Let’s talk about the right tools to address them, but let’s not shoot ourselves in the foot,” the ambassador said.
While Mr. Gutierrez made clear that he and the Mexican government respect Mr. Trump and take him seriously, the president’s rhetoric hasn’t always set the most harmonious tone.
As a candidate, Mr. Trump called NAFTA the “worst deal ever made,” and even after his election he has persisted in calling for a wall on the Mexican border. The president has talked flippantly about scrapping NAFTA and has repeatedly published tweets questioning whether the deal can be preserved.
In Mexico, Mr. Trump has also emboldened NAFTA skeptics who want the government of President Enrique Pena Nieto to take a harder line against the U.S. This struggle is shaping up to be a key campaign issue in Mexico’s 2018 elections. Distrust of the U.S. is at a peak, according to opinion polls.
On the U.S. side, though, Mr. Gutierrez has seen a newfound fervor among those who support the U.S.-Mexico relationship.
“What keeps me going is the fact that something has in fact changed in the United States this time around,” he said, noting that supporters are speaking out like never before.
Still, the ambassador admitted that Mexico suffers from an “image problem” in the U.S., partly due to media reports that focus heavily on drug violence, organized crime and immigration. Mexico, he said, hasn’t made good enough use of its “soft power” assets like its cultural heritage and family ties.
“We need to spend more resources in every sense of the word — human, financial and otherwise — to try to present a better view of Mexico in the United States,” he said.
The government’s plan on that front is to improve public diplomacy, engage more deeply with Congress, focus more on sub-national ties with cities and states and use its 50 consulates around the U.S. more strategically.
Asked for a view of encouraging trends back home, Mr. Gutierrez said he’s most excited about the younger generation driving the country forward by holding government accountable and seizing new educational opportunities in engineering and technology.∂