Mexico ready to discuss NAFTA with Trump, eyes non-U.S. TPP

MEXICO CITY (Reuters) - Mexico is willing to discuss the North American Free Trade Agreement (NAFTA) with U.S. President-elect Donald Trump but may seek to circumvent the United States on a broader trans-Pacific deal if necessary, a top official said on Thursday.

Mexico's Economy Minister Ildefonso Guajardo speaks during a news conference at the National Palace in Mexico City, Mexico, June 24, 2016. REUTERS/Henry Romero

Economy Minister Ildefonso Guajardo said Mexico aims to persuade Trump how beneficial NAFTA, which took effect in 1994 between the United States, Mexico and Canada, had been for North America, despite the American’s criticism of the deal.

“We’re ready to talk so we can explain the strategic importance of NAFTA for the region. Here we’re not talking about ... renegotiating it, we’re simply talking about dialogue,” Guajardo said in a telephone interview.

“Today the world is not competing by country, it’s competing by region,” the minister said, echoing comments by Trump himself during a late August visit to Mexico City when he spoke of the need to keep “manufacturing wealth” in North America.

No date has yet been set for talks, but Guajardo said he expected the two sides to find one soon. President Enrique Pena Nieto said he and Trump have agreed to meet, possibly during the transition period before his inauguration on Jan. 20.

Mindful of the fact that Mexico sends four-fifths of its exports to the United States, Pena Nieto’s government has been deeply concerned by the protectionist rhetoric that emanated from the U.S. presidential campaign.

Trump relentlessly attacked NAFTA and condemned the Trans-Pacific Partnership (TPP), a broader deal signed this year between 12 nations on the Pacific Rim that Mexico hoped it could use as a vehicle to update NAFTA and assuage U.S. critics.

The president-elect also angered Mexico by pledging to build a huge border wall to keep out illegal migrants - and make the Mexicans pay for it. He threatened to enforce that plan by taxing remittances sent home by Mexicans in the United States.

If TPP is not the means to modernize NAFTA, Mexico would have to look for other pathways, though any talks on the tri-partite accord would have to include Canada, Guajardo said.

Business leaders south of the border say the U.S. presidential campaign has underlined Mexico’s need to reduce its dependence on the United States and the Mexican government sees TPP as a crucial part of efforts to trade more with Asia.

Guajardo said he expected as many as seven signatories to have ratified TPP by the end of 2016, mentioning Japan, Mexico, New Zealand, Australia, Singapore, Vietnam and Malaysia.

Japan’s lower house approved the deal on Thursday.

If the U.S. Congress does not ratify the deal, Guajardo said consideration should be given to whether the remainder could put into effect without the world’s biggest economy.

“We’ll need to talk with the others to change the limiting clause that meant us having to wait until the United States had completed the approval process,” Guajardo said.

Trump also rattled Pena Nieto’s government with verbal attacks on U.S. companies with factories in Mexico. So far Trump’s campaign has not led to any freeze in investment, Guajardo said.

“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.

Proponents of NAFTA have also criticized business lobbies north and south of the border for failing to mount a strong enough defense of the agreement, and Guajardo said he expected pro-trade voices to gain in strength in coming months.

Mexico and the United States do about half a trillion dollars in trade every year, with the balance of commerce favoring the smaller country by tens of billions of dollars.

Still, Mexico is the United States’ second-biggest foreign goods market after Canada. So far this year, 16 percent of total U.S. goods exports have gone to Mexico, U.S. data show.

In spite of the charged campaign rhetoric, Guajardo said he believed NAFTA could be maintained, and he declined to speculate on whether threats by Trump to levy punitive tariffs of up to 35 percent on Mexican goods would ever become actual policy.

“We can’t anticipate anything because we’d be anticipating something that wouldn’t suit anybody, which is a trade war,” he said.

Editing by Frank Jack Daniel