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“AMLO’s first year in office could also benefit from a successful conclusion to the Nafta negotiations.  Discussions appear to have taken on a surprising urgency of late, with the US focused on ironing out its differences with Mexico, while apparently freezing Canada out of the talks,” ING analysts note.

Key quotes

“News reports suggest that important advances took place in the critical auto-sector rules of origin, covering minimum national/regional content specifications, and wages in Mexico. Canada will apparently re-join the negotiations once the auto-chapter, which primarily involves concessions from Mexico, is concluded. Lingering challenges regarding the dairy sector could presumably be negotiated in bilateral negotiations between the US and Canada as well.”

“US demands for a (five-year) sunset clause, and changes to dispute resolution mechanisms appear to be the next items on the agenda. Canada is expected to re-join the negotiations for that, while reports that Nafta would be replaced with bilateral agreements between the three countries, a move that Mexico and Canada have previously resisted, seem premature. But an August deadline for completion of the negotiations seems too ambitious, especially considering the tough stance signalled by the US vis-à-vis the sunset clause not too long ago.”  

“Overall, while the recent push confirms our view that an agreement is just a matter of time, an early deal would help to further diminish uncertainties that have hampered investment in Mexico since President Trump was elected, almost two years ago.”