NAFTA Development – U.S. and Mexico Plan Ministerial Session Thursday in DC…


Apparently our CTH suspicions were correct; this is interesting.  Canadian Foreign Minister Chrystia Freeland is scheduled to leave Canada on Tuesday for a meeting of ASEAN foreign ministers in Singapore…. Meanwhile U.S. Trade Representative Robert Lighthizer and a high-level Mexican team -consisting of both incoming AMLO and exiting Nieto delegations- will be meeting again to determine the details of a bilateral trade deal.

Mexican Economy Minster Ildefonso Guajardo is from the outgoing Pena Nieto administration and was part of the crew supporting the Canadian position; ie. the plan to continue exploiting the NAFTA loophole.  However, Mexican president-elect Andres Manuel Lopez Obrador (AMLO) has selected Jesus Seade as his lead person for trade negotiations and appears more willing to engage in a bilateral trade deal with the U.S.

AMLO’s Jesus Seade, Minister Ildefonso Guajardo and Ambassador Robert Lighthizer are meeting again this Thursday to put the outline of a deal together; while Canada is sidelined from the discussion.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association in Canada, said: “I wouldn’t be surprised if the Americans and the Mexicans came to some resolution on that piece (autos) and then the Americans flip it back to Canada and say ‘Take it or leave it’.”  That is exactly what CTH anticipated was going to happen.

Remember, with Canada joining the Trans Pacific Partnership (TPP), the issues of the NAFTA fatal flaw expand exponentially.  The Association of Southeast Asian Nations (ASEAN) would now be able to exploit partner Canada as a gateway into the U.S. market. POTUS Trump is having nothing to do with that nonsense.

In the big picture AMLO wants to advance the Mexican manufacturing base; expand the aggregate economic base; and also stop the corporate exploitation of the Mexican farm worker. In these objectives U.S. President Trump is more than willing to be a partner with President Lopez Obrador. Heck, President Trump would actually love to assist AMLO on that agenda; it is mutually beneficial.

Diametrically, Justin from Canada has doubled-down on the retention of the fatal flaw and does not want an expanded domestic manufacturing base. The enviro-nuts of his base just will not support it and a carbon tax looms on the horizon.

As a consequence, Canada is loggerheads with the United States because Canada is demanding to retain their NAFTA access to the U.S. market, and simultaneously retain their ability to broker imported Chinese/ASEAN goods.

This means a trade deal with Mexico is possible; and a trade deal with Canada is almost impossible. So the U.S. has focused on negotiations with Mexico for terms of an ‘agreement in principle’, at an “unprecedented speed.” In this regard, according to U.S.T.R. Lighthizer, the U.S. and Mexico are very close to coming to that agreement. The U.S. team and Mexican team met last Thursday in Washington DC, and are now scheduled to meet this Thursday – again in DC.

(Reuters) […] There will be “technical meetings probably until Wednesday and a ministerial meeting on Thursday,” a Mexican source close to the talks told Reuters on Monday. A second Mexican source close to the talks also said a ministerial meeting was planned for Thursday. (link)

If the U.S. and Mexico come to an agreement, two key issues are resolved which puts even more leverage and pressure on Canada: First, the biggest downside concern for the U.S. agriculture sector would be belayed.  Second, depending on the terms, the Mexican economy, financial and stock market would stabilize.

In this scenario Canada becomes increasingly isolated, and unfortunately, with the Canadian idiotic carbon tax scheme fast approaching, manufacturing companies will be heading to the exits.

The terms are unknown and the strategy is still tenuous, however the U.S. and Mexico appear to be closing in on an agreement. Together the U.S. and Mexico likely then present a take-it-or-leave-it opportunity for Canada to join; either way, NAFTA is essentially dead and Canada really doesn’t have options.

Justin from Canada and Princess Rainbow Sparkles Freeland have really screwed up in this process.  They have allowed themselves to be blinded by pure political anti-Trumpism while pragmatic business and economic interests of the U.S. and Mexico have moved forward.

If things go as they appear to be heading…. Politically, President Trump explains why NAFTA is dead; the U.S. and Mexico immediately unveil the framework of the joint bilateral trade agreement; AMLO and Trump have political cover, a partnership is immediate; and U.S./Mexican business interests move forward with changes to Mexican manufacturing/assembly as way-points.  The Mexican NAFTA back-door closes over an agreed upon period of time.

Smart play.

P.S. … put this in the ‘out there’, but possible because Trump file:  We might see an announcement this Friday about an agreement in principle between the U.S. a

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