Estrategia y competitividad
Is the fifth negotiation round of NAFTA the end of the Treaty?
20 noviembre Por: Dr. Werner G.C. Voigt and Dr. Juan Carlos Botello
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Tomorrow, November 17, the fifth negotiation round of NAFTA begins in Mexico City and instead of having great advances in the trade agreement, it seems that in general it has been a great waste of time since the USA continues in the same position always and worse, every day that passes tries to propose more severe conditions. For example, the authors consider that a liver hook for Mexico would be the approval of the 5-year NAFTA with option to renew for another similar period and so on. That would be too serious for the political and economic situation of the country since Mexico would live in a period of constant uncertainty every time the agreement has to be renewed. Remember that a year ago Trump won the US elections and from that moment began an era of restlessness and unrest for our country in the economic, political and social are not yet over since the president of the USA has been responsible for to warn everyone that we have taken advantage of the good faith of their country and that it is time to restore the greatness that it had through the establishment of new commercial rules because, if that were not enough, the proposal of validity of the agreement that Trump proposes is a time bomb. What would happen to the peso-dollar exchange rate? How would it affect the fluctuation of the agreement if the operating conditions of the treaty were not so favorable for the US every five years of operation? How would the financial markets react in such a volatile scenario? Are companies prepared to face this scenario?

Another big issue to discuss is related to the proposal of the USA to raise to 85% the regional content of the automotive sector where the neighboring country wants 50% of its components. That is unacceptable, but it must be remembered that the tax package that benefits both companies and citizens has been approved in the US House of Representatives, which implies that companies have a tax benefit since the income tax would be reduced. 35 to 20% and this has therefore the probable permanence of many US companies in their territory to continue operating with two big incentives: a cut to the income tax and the opportunity to provide large quantities of components to the automotive sector. In that sense, the authors can assume that the plan is underway for the United States!.