Mexico Backtracks, Willing to Talk NAFTA with Trump

Pressed on the border wall this week, she replied, “We fully intend to stay and start working with a transition team to talk about our vision of our bilateral relationship and our vision of North American region”. “Here we’re not talking about … renegotiating it, we’re simply talking about dialogue”.

On Wednesday evening, Pena Nieto announced he had spoken with Trump and agreed to a meeting before the president-elect’s inauguration on January 20, 2017.

Mexico said yesterday it will not pay for a border wall after Donald Trump’s surprise USA presidential election win and local authorities held off announcing any emergency financial measures to support the peso after the currency hit record lows overnight.

“While policy direction from the Trump administration is not yet clear, any changes that materially disrupt trade or financial flows would be credit negative for Mexico“, said Jaime Reusche, senior sovereign analyst at Moody’s.

He based much of his campaign on pulling the USA out of NAFTA, the free-trade agreement signed with Canada and Mexico in 1994, as well as building a wall along the Mexican border. He threatened to enforce that plan by taxing remittances sent home by Mexicans in the United States.

The plan for the United Kingdom to join Nafta was originally put forward by US Senator Newt Gingrich, who is believed to be the frontrunner in the race to become President-elect Donald Trump’s secretary of state.

Mr Trump has also unnerved markets by vowing to renegotiate the North American Free Trade Agreement (Nafta).

“I’m scared”, said Alfredo Puig, a currency trader at Vector in Monterrey, Mexico. They had planned a briefing on Thursday at Japan’s embassy, where they would discuss “why this deal is important”.

The Nafta, which was signed when Bill Clinton was USA president, created one of the world’s largest free trade zones meant to benefit small businesses by reducing tariffs on most products and to lower bureaucracy to facilitate buying and selling overseas.

Mexico’s currency appeared to track Trump’s rising and falling fortunes throughout the campaign and it fell sharply Tuesday night. “Trump has been very aggressive”, said the expert.

“There haven’t been any effects so far because I think the economic players are waiting to see how campaign rhetoric translates into public policy”, he said. “If you’re a BMW supplier in the southern US, you’re probably supplying a BMW plant in Mexico”.

Two-way trade in goods between Mexico and the United States totaled $531 billion in 2015.

Mexico and Canada fear losing access to the U.S. market, on which they heavily depend.

And that would hit the economies of both countries, given that so far this year, 16 percent of USA exports have gone to Mexico.

If Trump increases tariffs on Mexican imports into the U.S., it could hurt growth for the Latin American country’s economy.

“It’s too early to express practical concerns, but we will have to be vigilant in telling the auto industry integration story in Washington”, said Volpe.