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A NAFTA agreement should be reached by the end of this year

By: Dr. Alejandro Díaz-Bautista, Economist (PhD)

The third round of NAFTA began on September 23 in Ottawa, Canada. Officials in Canada, the United States and Mexico view the second round of negotiations as successful.

The third round of negotiations on the modernization of the North American Free Trade Agreement (NAFTA) is taking place in Ottawa, Canada, from September 23 to 27, 2017, where the first results of the meetings will be held.

The second round of talks was successful and significant progress was made in Mexico, as some of the working groups consolidated the proposals in a single text, which will be continued in the next rounds. “Everything indicates that progress is being made and a NAFTA agreement can be reached by the end of this year,” said Dr. Alejandro Díaz-Bautista, an economist, national researcher at Conacyt, as well as a research professor at the Northern Border College (Colef).

The energy sector is going very well, there is a shared vision to boost the energy sector. Negotiating teams reached consensus on the areas of telecommunications, trade facilitation and in relation to small and medium-sized enterprises (SMEs). The agricultural chapter advances in the right direction within the renegotiation of NAFTA.

Officials from the three countries agreed that the meetings were productive and reaffirmed the commitment of the three countries to have an accelerated and comprehensive negotiation with the objective of concluding the renegotiation of NAFTA by the end of this year.

The Canadian Chancellor said she was confident that the trilateral pact would be modernized. “The three countries are committed to this. Canada’s goal is and will be the modernization of NAFTA, because it benefits the Canadian middle class and we hope it will benefit the other countries as well, “said the Chancellor.

From September 1 to 5, when the second round of negotiations took place in Mexico, representatives from Canada’s automotive and auto parts sectors agreed to revise the rules of origin and increase regional content.

Another sensitive issue to which the three countries did not reach agreement is the minimis. The proposal of the United States is to increase the maximum value of goods that can pass free of taxes sent by parcels through customs. The suggestion is to open the franchise from 50 to 800 dollars in all the countries of the region.

Another issue in which some progress was expected was the need to reduce the wage gap in the region. Robert Lighthizer, US trade representative, said labor provisions would be controversial, and the US goal would be to have provisions that would raise wages in Mexico.

In the third round that is taking place in Ottawa, Canada from September 23 to 27, some issues will close in which they already have points of agreement as in the small and medium enterprises and regulatory improvement. Recall that we’re only one month in the new negotiation process, compared to the first NAFTA agreement which took 24 months, that is why we ask the markets for patience.

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