Mexico open to 5 year NAFTA reviews, but not ‘sunset clause’

“We are going with a counter-proposal: Let’s put more force into evaluations, but let’s not establish an automatic phase-out mechanism,” Mexico’s economy secretary, Ildefonso Guajardo said. (Photo by WTO. Courtesy of Admedia Communication via World Trade Organization/Flickr, CC BY-SA 2.0)

MEXICO CITY—Mexico said Wednesday it is open to a thorough evaluation of the North American Free Trade Agreement every five years, but not the kind of “sunset clause” the United States is reportedly seeking.

The comment came as delegations from Mexico, the U.S. and Canada were in Mexico City engaging in the fifth round of talks on renegotiating NAFTA.

The administration of U.S. President Donald Trump reportedly proposed allowing the treaty to lapse after five years until all countries decided to renew it. But Mexico’s economy secretary, Ildefonso Guajardo, says his country opposes any “sudden death” clause.

“We are going with a counter-proposal: Let’s put more force into evaluations, but let’s not establish an automatic phase-out mechanism,” Guajardo said. “Let’s establish a commitment that every five years we will evaluate what is happening, an analysis, what effects the agreement is having. And based on those results, each country can decide what to do in the future.”

None of the three countries’ trade representatives or economy secretaries will directly participate in the latest talks. The round is to formally open Friday and run through Tuesday, but the U.S Trade Representative’s office said Wednesday that 30 groups of lower-level negotiators already have been meeting in Mexico City this week.

Talks involving upper-level officials were held this month at the Asia-Pacific APEC meetings in Vietnam.

The negotiations have stalled over tough American demands, including changes to the dispute-resolution process and higher U.S. content for automobiles.

Guajardo said it would be very hard to meet the U.S. demand that North American content for automobiles be raised from the current 62.5 per cent to 85 per cent.

“That is very rigid for an automotive industry that has to compete globally,” Guajardo said of the 85-per cent proposal. “It is illogical to say that in three years you are going to go from whatever the percentage is today to what you want it to be tomorrow. This transition has to be technically logical.”

Guajardo also suggested the Trump administration should think about the possible effects of the NAFTA talks on Mexico’s presidential election next July 1, for which leftist Andres Manuel Lopez Obrador is ahead in the polls.

“There certainly has to be a reflection on the possible effects of any change (in NAFTA) on our elections,” Guajardo said, according to a transcript of an interview provided by his office.