A Post-NAFTA Plan B For Trump Era? Mexico Must Get Serious
MEXICO CITY — Mexico's President Enrique Peña Nieto recently told a gathering of CEOs at the Asia-Pacific Economic Cooperation (APEC) summit that his country sees no need to renegotiate the North American Free Trade Agreement (NAFTA) with the United States. Instead, it merely should be "modernized" or updated. That, he stated, would mean adding areas not included in the treaty originally, like labor and environmental issues.
Peña Nieto's words are not easy to understand. Firstly, NAFTA already included issues like labor and the environment. In fact, to ensure fair competition and economic growth without significant environmental harm or work exploitation, the signatories — Canada, Mexico and the United States — added the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC) to the main NAFTA accord.
Secondly, it is very hard to simply update a trade treaty of NAFTA's scope without effectively renegotiating it, or at least opening the door to its renegotiation.
Thirdly, what does "modernizing" the treaty mean? In keeping with the theory of economic integration, once a free-trade zone is established, what follows is setting up a customs union complemented by a common market, which is then followed by monetary union, then fiscal unification, which means total economic union — and some would say economic union must precede political union.
So, what does President Peña Nieto consider to be viable new proposals for NAFTA? Should it be updated with a customs union, then a North American common market? Does he think the incoming U.S. president, Donald Trump and his hawkish administration will take a positive view of this "modernization," without a more comprehensive renegotiation?
And if this modernization does not involve anything within the theory of integration, what does it mean?
Peña Nieto's declarations seem improvised and impoverished in every sense. At the very moment that our country faces a critical scenario, the president uses a high-profile international gathering to start flippantly toss out senseless phrases. The signal this sends to investors, markets and businessmen everywhere is potentially quite harmful to Mexico's interests.
The Trump presidency is a colossal challenge for Mexico. Optimism and good vibes will not save us from the crisis that could erupt if Trump carries out his electoral promises.The Mexican government really must take what is happening and what could happen very seriously. A good start would be to ensure that in issues of crucial importance to the country, the head of the executive branch should not, under any circumstance, talk for the sake of talking.