U.S. businesses fear NAFTA doomed; Mexico warns of consequences

From Reuters - October 10, 2017

MEXICO CITY/WASHINGTON (Reuters) - The most powerful U.S. business lobby accused the Trump administration of making poison pill proposals to sabotage NAFTA on Tuesday, as Mexicos foreign minister said the demise of the regional trade pact would hurt bilateral cooperation.

The process of renegotiating the 23-year-old North American Free Trade Agreement has turned increasingly acrimonious. Mexico accuses U.S. President Donald Trump of spoiling for a protectionist war with proposals aimed at balancing trade.

Mexican Foreign Minister Luis Videgaray said on Tuesday that an end to NAFTA would mark a breaking point in U.S.-Mexican relations and affect bilateral cooperation in other areas.

Mexico is a key partner of the United States in fighting drug trafficking and stemming illegal immigration across the U.S. southern border.

Videgaray spoke after Trump warned again that he would like to scrap the treaty that created one of the worlds biggest trade blocs.

I happen to think that NAFTA will have to be terminated if were going to make it good, Trump said in an interview with Forbes published on Tuesday.

The Mexican peso weakened for the fifth straight session on Tuesday amid the increased tensions, and hit its weakest level against the dollar since early June.

A fourth round of negotiations starting in Washington on Wednesday to modernize NAFTA has been prolonged by two days to Oct. 17, two sources in Mexico said.

Trumps hardline position did not appear to have wide support ahead of the talks, with many U.S. businesses and farmers lining up to back the existing agreement.

Speaking in Mexico City, Thomas Donohue, the U.S. Chamber of Commerces president and chief executive, listed several U.S. proposals that he said would undermine $1 trillion in annual trilateral trade, including a sunset clause to force regular negotiations.

His comments marked the second broadside the chamber has launched against the Trump administrations stance on NAFTA in less than a week. It has argued repeatedly that the trade pact is critical to U.S. industries such as agriculture and manufacturing.

There are several poison pill proposals still on the table that could doom the entire deal, Donohue said at an event hosted by the American Chamber of Commerce of Mexico, where he said the existential threat to NAFTA threatened regional security.


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