Will China be a Factor in the Upcoming NAFTA Negotiations?

Anchored container ships and with other vessels sit offshore near the ports of Los Angeles and Long Beach December 2, 2012. REUTERS/Jonathan Alcorn

Beijing is incentivizing Mexico City and others in Latin American to rethink their traditional trading relationships.

In the recently released document by the U.S. Trade Representative (USTR), the Trump administration’s NAFTA renegotiation goals are not as lofty as the 2016 campaign rhetoric would suggest. Beyond reducing the trade deficit with Mexico, the U.S. wants to eliminate NAFTA’s Chapter 19, which installs a separate arbitration process for resolving disputes over anti-dumping and countervailing duties. However, much of the U.S. negotiating position borrows heavily from the Trans-Pacific Partnership (TPP) agreement. Given that Mexico and Canada have already agreed to the TPP, most of the goals should be achievable by their governments.

There will still be some tension points in the upcoming negotiations, for sure. But Mexico has a growing, diversifying economy, and has clearly arrived as an international trading partner. The United States will probably always be its number one trade partner, but Mexico’s engagement with China and other large markets (TPP 11, a free trade agreement with the EU, the Pacific Alliance) give it more flexibility and more leverage in dealing with the United States in renewed trade negotiations. If they don’t know this already, U.S. negotiators are about to find out.

Bill Bray served as a naval intelligence officer for twenty-eight years before retiring in 2016. Currently, he is a managing director in Ankura Consulting Group’s geopolitical risk practice. He concurrently serves as Research Director and head of Asia analysis.

Miyako Yerick is lead Latin America analyst and a senior associate in Ankura Consulting Group’s geopolitical risk practice. She is a 2012 graduate of Columbia University and a 2014 graduate of the University of Texas’s LBJ School for Public Affairs.

Image: Reuters