Transcripts For CSPAN Panelists Discuss NAFTA Negotiations 20170816

Center here in washington. This runs about two hours. Mr. Wood good morning. Will you come down and take a seat here . If youre looking for a place, we are willing to sell these place at an inflated price. There are scalpers outside. Do not use them. Just give the money directly to me. Ok. Welcome to the Wilson Center. Thank you for being here. When we talked about doing an event in august, a little voice inside my head said you are crazy, its washington, no one will come. They said maybe the nafta is important enough, maybe our existential questions will attract an audience, and then we came up on bright idea of asking you to gaos chief negotiator to participate. Ken said yes, and this is going to happen. It is extraordinary. And then ken said, no, i can do i cant do it. It was not intentional. But we got a panel for you nonetheless. Let me run through quickly from left to right, as i see it. Fred bergsten, at the Peterson Institute for international economics. Thank you for being here with us. He was great to provide a riposte to some of the mexican perspectives here. That will be very welcome. Francisco de rosenzweig, who previously served at the Mexican Ministry of the economy. Luz maria de la mora, the founder of lmn consulting, and has held multiple posts within the Mexican Government. And my colleague, deputy director, chris wilson, who is known to you for his work on have to wear he was the mexican Economic Affairs and on border affairs. Very nice to see you. Theres been an enormous amount of anticipation. I first page of it says it is here. It is a strange moment, but at this time last year here at the Wilson Center we were holding a series of conversations about, well, under the new administration, how can we improve nafta . We were talking about modernizing nafta on understanding that a different person would be in the white house, because that was what everybody assumed. And we were all saying, the modernization of nafta is desperately needed, and how can we possibly do that . We have this opportunity to do it. There was a nice piece published this morning in canada that says this is a great opportunity to secure north americas competitiveness. This comes with an enormous amount of anxiety, anxiety about whether or not this can be a successful negotiation, anxiety about whether the u. S. Executive branch will stick with it, anxiety about questions of timing and political change. We also see this is an enormously context negotiation, and many in this room has sent over the past few months, how can we possibly get this done in a sixmonth period, which seem to be the preferred time period on the part of the negotiators, especially from the mexican and the american side . The canadians have a different perspective. My colleague im grateful to the Canadian Institute for providing support for us on these issues. The timing question is one of the things that i think we may run up against the question of do we do it fast, or do we do it right . Against do we do it fast or right . There could be a very important choice. Looking forward to discussing that with our panel. We have a very encouraging phenomenon of convergence between the three sides. We go back to january or november of last year. There was an enormous amount of concern of could we ever get to a point where at least we were on the same book, if not on the same page with regards to International Trade negotiations. It seems as though we have got there, which i think is tremendously encouraging. The problems,f challenges and obstacles, many of which are known, but is a number that is unknown. We do not know how things are really going to turn out if these negotiations become public. If we get a great till of by an intimate negotiation. If the certain things are tweeted. If we get a reaction from the u. S. President. Which might throw a reaction from the mexican president. We can say is, now that it is here, now that we are here, we have come a long way in six months come and i think that is a very encouraging part of the story. I am talking of coming a long way. It is worth remembering how far mexico has come since nafta was the agreement. I know this is a story you have heard a million times, but just remind us, before the nafta, was very common in mexico for everyday goods to have price controls on them, for committees to meet on a regular raises to set the prices of basic commodities. It was an economy that was run by staterun enterprises, not open to foreign direct investment. The changes that took place during the 1980s because of the latin american debt crisis are then locked in by the nafta. Those are things which we take for granted these days. It is an extraordinary journey. Another point is to remember their reforms that have taken place in mexico since 2012 are trying to build upon the success of nafta. Now we have the opportunity with nafta renegotiations to lock in some of those reforms again through an international treaty, international negotiation. So without any further ado from me, i would like to ask our panelists to give opening comments, and i will begin with luz, and the floor is yours. I know you have got prepared comments. I want you to start with some of the red lines you see from the mexican and u. S. Point of view. Then we will come to a conversation afterwards about questions of convergence and timing and complexity. Ms. De la mora i would like to thank you for inviting me. Wilson institute, center. And thank you for thinking about me. I know was a mexico scholar a few years ago, and i had a fantastic experience in this place, so it is a pleasure to be back with you. And today, i really feel privileged to be able to be part of this half the discussion. I think the nafta discussion is always welcome, and is very timely given what it represents or a countries in terms of trade, in terms of job creation, integration, also in terms of the place of the regions we represent in the global economy. It is even more timely when we think about the fact that we will see the beginning of a negotiation process that i hope will allow us to move forward towards deeper integration and a better understanding of what north america means for our three countries. Having been part of the mexicanamerican groups that took part of the negotiations thank you for being here with us. We were running around with papers trying to support the negotiators, 25 years ago. I really have to say that i would never ever, ever have expected to see a proposition on the u. S. Side to renegotiate nafta on the proposition to have to address the question of manufacturing jobs lost in the u. S. I would never have expected that it would be the u. S. Side that would have been the source of distrust and questioning of nafta like we have been presented this year. I have to say it still puzzles me to see how to address both questions, the deficits and the job questions through a trade negotiation and through half that. It will be a daunting task for canada and for mexico to sit down with the u. S. When it seems that President Trump views this opportunity as payback time and also has outlined an agenda that is clearly tainted with protectionist and nationalist perspectives. However, as duncan mentioned, i believe that nafta has has yielded amazing results. Nafta has delivered economic results beyond what any one of us expected at that time, beyond the most optimistic expectations. Nafta created a 19 trillion regional market. Every day we tried more than 2. 5 billion. When nafta was negotiated, mexico exports 10 billion a month. Now exports are more than 1. 3 billion every day. In the past 23 years, trade between the three partners went from 290 billion in 1993 to more than 1. 2 trillion last year. 50 of total stock in mexico and more than 200 billion, which to 20 of himclose mexicos gdp. I would like to center my remarks on five quick points. The first one is that in this negotiation process, mexico is not ready to be considered anything else but a u. S. And a canadian trading partner. At the table, mexico and canada are equal partners with equal rights and equal obligations. Because after 22 years of nafta, mexico is the secondlargest u. S. Export market only after candidate. For every dollar the u. S. Sells abroad, 16 cents are bought by mexican consumers. Today the United States trades more in goods and services with mexico and canada than to does with japan, south korea, brazil, russia, india, and china all together. Mexico is also the u. S. second source of imports, only after china. We account for 40 of total imports from north. Production of automobiles and electronics, machinery, and appliances have greatly benefited from production sharing from the three countries, as nafta has enabled firms to reduce costs and become more effective. My second point is that mexico should look for more and not for less now. In the early 1990s, nafta triggered a structural reform in mexico. Since its implementation, nafta has been a force for change and a transformation of mexicos economic structures and institutions. Nafta was a really transformational experience for mexico. It transformed the mexican economy and opened the door to a young democracy, after 70 years of a oneparty rule. Nafta has also been one of mexicos most important engines of Economic Growth, even the relevance that International Trade and Foreign Investment represent for our country. I can tell you that nafta is embedded in mexicos everyday life. Mexico is not ready to reverse the progress we have made in the last 23 years under the nasa. Nafta created a wide consensus in mexico that an open economy is the way to go, that we need more, not less competition and that we want to be global players. What mexico should look for in this negotiation is waste to ways to improve the agreement. There is plenty of room for improvement, and there is plenty of room for full implementation. Just take a quick glance at the history of the european integration, and we will know as long as there is a common leadership and vision, it will lead to regional integration. I can tell you in mexico there is no one single party or leader that think that it could be a good policy option to walk out of the nafta or that mexico should respond to transgressions and trumps aggressions by building a fortress. A recent survey conducted shows that close to 50 of mexicans have a positive opinion of nafta and that trade relationship with the u. S. And only 60 have a negative only 16 have a negative one. In a survey, from march of this year, 73 of mexicans surveyed oppose to getting rid of nafta. This does not mean that nafta has not yielded winners and losers. In mexico, it does mean that the overall the country has gone through a deep transformation that has opened new opportunities in a variety of areas. Mexico today is in a very strong position to push this negotiation for the establishment of 21st century reform. 20th century roles are not the way, and reversing those rules are not an option. Positionedeally now. The Structural Reforms touch upon key sectors. Education, telecommunications, energy, and the financial sector. Those reforms have placed mexico in a better position to conjure strongertribute to a and more competitive north america. This set of reforms in addition to our participation allow accident to negotiate new issue areas such as energy, services, ecommerce, or telecommunications. My third point is nafta 2. 0 could become the latest structural reform in mexico that we need. Why do i say this . In mexico, that has made it more nafta has made it more evident that huge disparities and inequalities that have characterized Mexican Development for centuries. For mexico, this is an ideal opportunity to democratize trade, and a nafta 2. 0 will have to lead to a more inclusive economy for more sectors and regions take part in localization. Today more than half of exports are done by six states on the northern border. 60 of total exports are represented by those sectors. Electronics. D and only 45 out of 5 million economic interest in mexico account for half of our total exports. A nafta 2. 0 will lead mexico to create a Better Business environment. Nafta should be the opportunity to reduce red tape for International Trade and also for business in general. My fourth point is that nafta has to stop being a negative term. Nafta has to be rethought, restated, and revalued. Pastore robert considered the north america idea was conceived as a leader of the world economy. Maybe one of the reasons we are renegotiating nafta today is that we never really took the time or the effort to socialize nafta or to explain the value of north america and how it benefits each one of us. Today probably one of our Biggest Challenges is how to restore the north american idea as a truly regional integration scheme where the three countries are better off with it than without it. However, we really need to rethink the nafta, how to reposition nafta, not as a result of a defensive agenda. Nafta and north america urgently need a common vision from the three countries that shows that together we not only add, but multiply gains in a highly globalized and competitive economy. My fifth and last point relates to what weve learned in more than two decades of that stuff. Of nafta. Nafta has offered the region a clear set of rules and disciplines that have created a transparent and predictable business environment. Nafta locked in a mexican model of economic openness, economic liberalization, and competition. Ill also want to underscore that nafta sees this mechanism, which was visionary, the mechanism for state investors, investor state mechanisms. The chapter 20 states this mechanism. And chapter 19 on trade have been without a question one of naftas most important pillars for effective implementation. The region has a lot to lose if the u. S. Walks out of the nafta. When nafta became effective, north america accounted for more than 20 of world trade. Today, we have lost room to the rest of the world. Today nafta represents close to 18 of world trade. The agreement needs to offer the kind of growth that is her heart by the 21st century economy, where global sharing is the name of the game. Mexico has a lot to lose from the u. S. Leaving agreement, mexicos largest export. Representing of mexicos gdp. U. S. Investment represents 40 of mexicos fdi. Jobs, industrial production, services, tourism, and many other activities in the region have a lot to lose if we temper with nafta. The vast majority of businesses realize how important it is for them and have made specific proposals from where to modernize and improve nafta. For many in the u. S. , the lowest possible denomination or expectation of naftas renegotiation is whatever a result it will do no harm. If the u. S. Decides to walk out of the nafta, which we hope it will not happen, it will certainly affect regional value chains, production, trade, investment, jobs, and Economic Growth. However, the agreement will still remain in place for trade between canada and mexico. If the result of this negotiation shows we can overcome this very delegate delicate situation, the three countries will still have to develop a regional strategy to safeguard nafta and north american integration. In 2014, former u. S. And general David Petraeus issued a report that makes the case for north america. They argued that the u. S. Needs to switch vis a vis of nafta from an afterthought to a central priority in u. S. Policy. The question, how do we revitalize nafta in order to strengthen the Competitive Position of the region and integrate those left behind into the benefits of globalization . Nafta countries need to develop a new regional strategy, and such strategy needs to consider a few key elements. The integration of the north American Market is the way to boost the regions competitiveness, job creation, opportunities, and innovation. We need to reconcile integration and security. Since 9 11, that there has been torn between the driving force and the breaking force to build a fortress to guarantee safe and secure borders. Border infrastructure needs to be modernized and more research is needed to be allocated. And a seamless door to door operation should be facilitated. Mexico has a demographic bonus. We have a young population. Our average age is 26. North america increasingly requires qualified Human Resources. A competitive workforce is key to maintaining a dynamic region. So we need to think about the training and development of Human Resources to meet the needs for qualified personnel in areas that did not exist 20 years ago here. I believe north americas integration will be incomplete until we find a way to sort and integrate labor markets. This is something that could take generations given the huge income gap existing between mexico and its two partners to the north. However, there are some steps that can be taken in this regard and are already part of the nafta. The late Robert Pastor in 2013 it was suggested to improve the provisions on professional services in nafta to facilitate and expurgate obtaining visas for professionals, offer them for longer periods, and create an expanded mexicanamerican worker program. I will refer to my remarks, the new rules that will result from a nafta 2. 0 may become the new golden standard of International Trade. In the early 1990s, the disciplines that we negotiated in the nafta became the stateoftheart trade rules in new areas such as trading agriculture, trade in services, investment, and intellectual property. Nafta was the lab where new rules were developed and later set out on the negotiation agenda on the wto. The negotiations that start tomorrow will be closely followed by the rest of the world. Thatules and disciplines we give ourselves in north america will offer a very clear idea of the direction that global trade may take in the future. We have a responsibility. Mexico needs nafta and mexico needs a strong nafta. Mexico will face president ial elections on june 2. We have been able to pass structural results that will yield results in the medium to long term. However, transparency, the rule of law, crime are serious challenges that are acting against mexicos competitiveness. If mexico will continue to a stronger region, we need to find sustainable and longterm solutions. Nafta may have triggered mexicos transition to democracy. Boosting north american integration requires Political Leadership and requires a shared vision. Returning credibility and legitimacy to the process may prove to be the biggest challenge. We need to be up to it. Thank you. That was thank you wonderful. Emphasizing the gains that have been secured after two decades of nafta. I would like to send it to francisco. Mr. De rosenzweig thank you. I want to thank that Wilson Center and the kind invitation to be here. As you all know, after many months of great uncertainty tomorrow. ll start uncertainty. Reat [indiscernible] being cleared the tpp will implemented for the nafta redo, i think there opportunities where we could have common ground. It is important to remember that to way that mexico considers tpp. E nafta was the it is important to remember that nafta was not popular in the United States over the last year. It has been maybe 10 years. I remember when former president obama was running for president , raising mena to issue. Then and wewas back have not done it yet. Be sitting at to the table to renegotiate nafta, issuesve some important to share. We have a border that is over 3000 kilometers. I have some issues where think it is in the best interest of the two countries to try to modernize. Threeare talking about countries. Over the last months, there was discussion if it was to be under an umbrella that would consider three parties. Woulde United States negotiate differently with canada and mexico. For instance, when we talk about security, when we talk about other issues or infrastructure. So, regarding the priorities i both say that if administrations, in this case the United States and mexico is willing to conclude this process by early next year i would say reasons or the Main Elements they should try to consider is the language. There is a lot of language that we can utilize. Tradeven though negotiations do not move as quick as technology and eecommerce, it was in the late agreement that has been negotiated for tpp. Ofgree that the first wave negotiations, i thought we were in the middle of the second one with tpp. Sadly, it seems like tpp is not moving anywhere, at least with the u. S. But mexico is trying to push hard to communicate. But also the u. S. Is sadly losing leadership in trade negotiations because the pacific newance is working with zealand, astoria, singapore, and canada as trade partners. So, considering that the u. S. Is our most important trading partner, for mexico it is important to have a strong u. S. Economy performance, but also to have a u. S. That has economic integration with mexico and canada. Having said that, i will say that where the administration for mexico may see an opportunity is smes. They do not participate as a part of International Trade. One of the main priorities should be to introduce them. Or bring them on board and introduce them. The second is ecommerce. Nafta did not consider any provisions for that back then, the internet did not exist. We are talking about ip are ipr issues. The other opportunities to reflect and incorporate all the energy reforms, labor, education. Many things have happened in mexico since the last 25 years. Mexico is no longer that country that was afraid to negotiate with the u. S. Third countries. We believe we have a strong trading team of negotiators. I think we have a great and solid minister. I do believe that is the three countries are able to focal eyes the efforts in the few issues where we might not have that convergence, we will be able to deliver by the end of the year, early next year. Wages is not an issue that should be considered even as a possibility to negotiate. In the case of mexico, we have at least two or three labor reforms. We have improved our labor work over the last few years. The latest one was in 2012, and there is one on the way. So wages i think should be out of any kind of discussions. Redline and abe a dealbreaker, no . Second, the issue related to trade deficit, i would say this is a kind of strange issue because this is like the way that trade was seen like 30 or 40 years ago. I remember when i used to be a senior official at the Mexican Government that i was trying to explain to a very important person. I wasnt able to explain it in the appropriate way, so i said it is the new narrative, ok . At the end, i think the deficit, as long as we dont talk about trade management, is something we can see what is the u. S. Proposal, but we are not able to consider any trade management in any way. The other issues, most of these difficult objectives that were were somehowsdr with the message that they want to bring the canadian and mexican to the u. S. They want to increase from 50 in mexico to 800. They also want to increase the original content in the u. S. In order to revert the deficit. Finally, the chapter 19, i think that is something that is very important for the canadians as most of you realize, but i think that there are many provisions that tpp could also be considered in order to robust disputerobust settlement and consider the raisedall parties have over the last couple years. When nafta was negotiated, this was the best approach that was possible to negotiate back then. Maybe there are some new provisions or elements that can be added to nafta 2. 0. Thank you. Get anow maybe we can mexican to our two panelists. Mr. Bergsten im not sure it is a reaction to them. You asked me to present a u. S. Point of view. It is obviously a u. S. Point of view. It certainly is not the administrations point of view, and you will see i have a few nasty things to say about the administrations point of view. I want to recognize my u. S. Colleague who was the chief u. S. Negotiator of nafta, the honorable carl hill, who is our ustr at the time. If only we were so lucky now. Carla is here, and we are graced by her appearance. I want to suggest three basic points about the upcoming negotiations. I start by sharing the view about the benefits of nafta, how much has been gained, and the positive opportunities that exist. It is true that there lies ahead a real opportunity to strengthen north america competitiveness, improve the performance of all of our economies, improve our ability to compete in a very tough world of competition, so im not going to repeat or dwell on any of that. I endorse all that has been said. Some of you know we have published a great deal on it. The Pearson Institute laid out indepth analysis of many of the topics being introduced. What i want to do is suggest three areas that need to be focused on very intensely as these negotiations proceed. The first is failure is an option. We dont like to say that. We dont like to think about it, but it is true. The president proudly told us just four months ago he had decided to withdraw. He got talked out of it by a combination of the leaders of other countries and Many Americans who dislike the idea of withdrawing, but he has been very close to it. He said upon agreed to negotiate, i have the right to pull out if i dont get what i want. So failure is an option. That means it is critically important for the other countries in the negotiation and here we focus obviously on mexico to keep foremost in everybodys mind how costly that would be to the United States. Why do i say failure is an option . Basically because the United States under the Current Administration goes into the negotiation with two very false premises on which they based their approach. The first, said memorably by trump in the election, is that nafta was the greatest disaster ever negotiated. That, of course, is patently false, and correct, based on no analysis including by them that has ever been presented by anybody at any time. It is a false premise. We have to be clear that the world knows that. Secondly, as francisco said, the explicit negotiating objective right at the top of the ustr submission of a month ago is to use a negotiation to reduce the u. S. Trade deficit. As francisco said, that is rather strange. It has never been, nor can it be, intellectually the focus of a trade agreement. Trade imbalances are macro problems. You have to respond in macro ways. Trade policy, explicitly trade agreements, are not a feasible way to reduce trade imbalances, in particular addressing bilateral trade imbalances is totally impossible, because if you did succeed somehow in reducing it, the imbalance would just shift elsewhere. In the case of nafta, this mexico is not a surplus country like you could argue with germany or japan or korea, but is a deficit country itself. The United States is asking a deficit country. Like you could argue with china or germany or japan or korea. It is a deficit country itself. So the United States is asking a deficit country to further increase its deficit to reduce our deficit, which is even bigger. In short, it just doesnt pass the smell test in practical terms, even if you dont believe the conceptual underpinning. The point is the u. S. Goes into the negotiation with two false, essentially absurd, premises. That, to put it mildly, makes for a tough negotiation. But it does mean again echoing the president s mindset as best we can ascertain it that if he is not satisfied that his absurd premises are somehow satisfied and met to his satisfaction, he will pull out. That is why i say failure is an option. Why it is so critical for everybody around the world certainly everybody in the United States but particularly the negotiation partners, especially mexico, to just keep reminding people gently, politely, diplomatically, but forcefully and clearly, that if the u. S. Were to withdraw, the cost to the United States would be huge. We know that the tariff increases from the abolition of nafta would be twice as high. But since mexico has not bound its tariffs in the wto, mexico could actually go up five times as much as the United States. I dont think it would be untoward for mexico to keep that reminder in the minds of the u. S. Negotiators and officials as the negotiation proceeds. Of course, there are all sorts of other nasty things that could be done if nafta fails. The fact that the u. S. Would be a big loser itself from the failure has got to be a big deterrent to the failure is that point is kept clearly in mind. Secondly, what could be a possible way to reconcile these goesses in which the u. S. In . Is there some way to satisfy, at least in some sense, the u. S. Objective without doing violence to sensible principles in economics, trade policies, relations between the countries, and north american competitiveness as a whole . Any trade negotiation has to be based on the principle of reciprocity. It is essential in political and economic terms. Reciprocity does have two meanings. There is level reciprocity and what we call marginal reciprocity. Marginal reciprocity tends to be the normal mo of trade negotiations. That means we each reduce our barriers by similar percentages, so each cut tariffs by whatever it may be, and that is marginal reciprocity. However, there is a concept which the trump people have said they want to pursue, which is level reciprocity. That means if one party starts with higher barriers, then that party is expected to cut more to get down to an equivalent level at the end of the day. Marginal reciprocity has been the typical m. O. , but one could argue for level reciprocity. I think a country could respectably go home and say, we got a reciprocal deal on that basis. In the case of the nafta renegotiation, there is a practical possibility. Tariffs are basically zero. So there is no wiggle room there. It is conceivable that following good trade and economic apples and pursuing its own National Interest which of course is based on getting cheaper imports and more competitive inputs for your industry mexico could conceivably reduce some of its nontariff barriers, that would move us towards level reciprocity, which the Trump Administration could claim as a great victory and say we got a good deal, and therefore back off some of its more extreme views. That, i think, might be a way out if the negotiators can find the specific barriers that would be susceptible to reduction. Our two mexican speakers have noted that since nafta was originated, mexico has conducted a number of reforms in key sector. Nergy some of those i think probably are susceptible to reduction of nontariff measures at the border which would not be at political cost to the Mexican Government or future mexican politicians, but would help serve the objectives of reducing disparities between the two countries, and by the by, could be argued might have a positive effect in reducing the u. S. Trade deficit. It certainly would expand u. S. Trade exports, and therefore would be a good thing. Maybe there are some ways, wiggle room within otherwise possibly not so convergent goals in order to achieve a successful outcome. The other point is to send we everybody that what happens in the nafta negotiations will be very importantly affected by what is happening in other trade negotiations pursued both by the nafta partners and the rest of the world, as well. Luz maria reminded us that the rest of the world is watching the nafta negotiation to see possible models and guidelines to the future, but the converse is also true. The nafta negotiators have to be watching what is going on in the rest of the world. For example, the u. S. Is about to launch in negotiation with korea. It is not called a renegotiation, but de facto, some of the things the u. S. Is seeking would amount to a renegotiation. Someinly would amount to key changes. Case in point is the currency chapter. The United States will have high on his priority list in the korean renegotiation a currency chapter because, if you read the last several treasury semiannual reports on Foreign Exchange and currency regulation and all that, you will find that korea is the number one country in the crosshairs of the u. S. Treasury in the past administration and this administration in respect to the risk of currency manipulation. They have not been labeled a manipulator, but that issue will be very high on the u. S. Agenda in the korea talks. Therefore, and the nafta talks the administration is going to want a currency chapter or provision. Not because it views canada or mexico as a currency manipulator, but rather as a precedent that they could be applied in korea add in a revised tpp at some point down the road with other past and potentially future manipulators, because the currency issue is very important economically and is a huge local issue in the political issue in the congress that has to be satisfied if any of these things are going to make it to the congress eventually and into fruition. That is just one example. There will be other issue areas where what goes on elsewhere, like in the ongoing china talks, will affect what goes on in nafta both in terms of its specifics and in terms of its overall policy approach. However, it is not only what the u. S. Is doing elsewhere that counts. It is what canada and mexico are doing elsewhere that counts, and in a big way. I want to tip my hat to mexico as perhaps now the world leader in negotiating trade liberalizing agreements with other countries. I think mexico a couple of years as you maychile, know, in terms of having more ftas than anyone else. Mexico is the leader and opening of its markets, diversifying its trade, building its network of business and trade contacts around the world, and is continuing to negotiate now with several other countries. Korea, several others. Why is that important for nafta . It goes back to my first point. If the nafta talks were to fail, not only with the u. S. Face an increase in mexicos barriers against it, but would face sharply increased degrees of preference for other countries in the mexican market against the United States because of all of mexicos other agreements. The u. S. Would take a double loss. The fact that mexico has been wise enough to do all these other deals and more deals, would add to that result. My final unsolicited advice to my friends in mexico is keep it up. Keep doing all those other deals. The japanese have this wonderful term, foreign pressure on a country to do the right things that it ought to do anyway. Well, that is mexicos fta visavis the United States. Mexico and canada should work with japan and others to keep the tpp alive. Do a tpp 11. Thats more on the United States. Now you have mexico korea free trade. All these things that would adversely affect the United States. Couple of a concept a competitiveled liberalization. That as countries liberalized towards each other, they generate huge incentives for other countries to emulate or join the party or otherwise protect themselves against having new preferences disadvantage them. That applies here. People generally thought of it as the u. S. Putting pressure on areas around the world, but it goes the other way as well. With the tpp, with the Pacific Alliance, with those bilateral being negotiated, keep all that going because that inevitably has a very important effect on thinking in the United States, hopefully in the white house, certainly in the business communities and labor community, about what happens if we dont maintain and strengthen the trade agreements we have. A few thoughts. The best outcome, obviously, is a traditional trade type negotiation that will strengthen the mexican economy, which happened from the original nafta. If the United States and trump really want to strengthen the u. S. Trade balance toward mexico, there is only one obvious way to do it. Strengthen the mexican economy. If it grows faster, able import more. It has a stronger peso, the u. S. Will be more priced competitively. That is the way to achieve the objectives. Not monkeying around with wolves of origins and various minutia. Its to go to the big stuff, which is a proven success in the past and hopefully could be together. Thank you, fred. Last but not least, i want to turn to chris, in part to fill in any gaps but give your perspective on where you see these talks going. Thanks to everyone for the great presentations. I will try to keep it simple and i want to take a simpler view of mexican strategy heading into negotiations. Some of the words we have heard to describe it are strange, flawed, maybe conflicting. If you look at the u. S. Of objectives, you have on the one hand, a series of objectives that are trade liberalizing, trade expanding and on the other hand, you have a series of objectives that are protectionist, perhaps. How does the mexican strategy and how to the mexican interest run into that conflicted u. S. Perspective right now . The starting point for me is a simple one. Mexico sends 80 of its exports to the United States and depends on Market Access to the United States in a very specific way. Trade is pretty balanced that as a proportion of the economy that depends on trade and a bilateral trading relationship, mexico depends more. That means when mexico started to hear during the campaign, candidate when the workingd, that its mexicowas at risk, to think seriously about how it would manage the prospect and the threats to withdraw from nafta. In a sense, the Trump Administration has been pretty consistent in the language they put forward. They will seek to renegotiate. Early on it was a little different, but early on, we had that language. The basic response and we are starting to hear it from mexico in terms of strategy is that mexico had a concern that just in economic negotiation and trade negotiation, mexico may not have the leverage it needs to get to an acceptable outcome, to maintain Market Access to the United States. Things like a need to have a comprehensive dialogue and a discussion about the future of the entire relationship. Weve heard explicitly what they mean by that which is to say mexico feels it offers the United States quite a bit in terms of security cooperation, ensuring theres never a terrorist attack crossing the Mexican Border and has done an awful lot in terms of dealing with Central Americans moving into the United States. In 2015, mexico deported more Central American migrants than the United States did, about 5050 in terms of the effort being done. Mexicos issues in that area are complex, but you Better Believe there is a strong reason mexico is doing that and its because interest and. S. Has asked for mexicos assistance with that issue. Mexico says we will put everything on the table so we can get to an outcome that is acceptable. This represents a decompartmentalization. We have heard for decades, seeing that it was an important and complex relationship across a broad number of u. S. Agencies, its probably not surpassed by agencies represented anywhere because there are so many diverse agencies in mexico. We compartmentalized those to make sure a conflict on one front around Security Operations and Drug Trafficking so it would not get in the way of important relationships further down the line. Mexico is saying this is such a top tier National Interest that we are going to do away with it. Necessaryling to if that process that has insured the relationship as a whole would move forward despite small conflicts which are natural and always going to occur in a complex relationship. That is where mexico is at in terms of how to deal with this at a very basic level. This comes through mexico stating clearly that Market Access is a fundamental redline. That can mean Different Things across different areas but the fundamental redline is Market Access. If you can deal with it by doing that, it might be something you can tackle. Youe are other areas where conflict basedal on this principle of a redline being Market Access. Rules of origin would be another. I think its fairly clear that they would be talking about strengthening regional content requirement. We heard early on talk of putting u. S. Content requirement and that would clearly be trade restrictive and crossing a redline. A thing level in the Auto Industry could be understood to be trade restricting because of the current supply chains that exist that rely on a certain percentage coming through the regional production chain. Another thing would be eliminating the nafta safeguard exclusion. Right now, within nafta, there are limitations on how the safeguards could be used to prevent a sort of flood of imports from impacting negatively a u. S. Industry. That would be another where where mexico taking the position that what the United States is opposing is locking Market Access. Eliminating chapter 19, the ability to challenge the mystic rulings on antidumping, to create a panel to review them and these last two, the elimination of the safeguard exclusion or chapter 19 is less a direct limitation on Market Access than this would be the fear, that it would be giving the United States more flexibility to express its protectionist and policies. In that sense, limiting Market Access. If mexico feels Market Access is being threatened, they are heading down the road of things being more restrictive rather than more free, its going to seek to use its leverage both within the negotiations, the fact that mexico can if we did call back on wto rules nafta has greater flex ability to raise tariffs and its leverage within the economic sphere, within the trade sphere. Mexico may feel the need to go beyond that and include the rest of the u. S. Mexico relationship in the environment around the negotiations. That could work out just fine given everything they have there, but it is a risky gambit because the reason we compartmentalized was to prevent the u. S. Mexico relationship being tanked by single issue. Couldking the issues, you enter into a spiral of escalation were multiple issues are put on the table and we could all end up losing quite a bit, not just in the economic sphere but in terms of benefits the United States gets out of its relationship with mexico and we have to be clear as we enter into these negotiations. Mexico so far has responded to some tough rhetoric coming out of the united dates very mildly, very diplomatically, very carefully. The intention has been to maintain dialogue, to maintain the possibility of a discussion based on a win win loss of the, but the point i want to make is very simple. As mexico enters into election season, i would say at the end of this year or beginning of next year is when that serves to really ramp up, the willingness of the ruling party, including the president himself to accept that, to take the diplomatic line in responding to this rhetoric will be declining quite it. The political need, the domestic political need to respond in tough terms in nationalistic terms will increase quite a bit, so that is a place we need to watch during the process of negotiations for a turning point where we could enter a more dangerous time and i think we just have to be more realistic. The likelihood of reaching an agreement by the end of the year and having all this being settled is very small because its a complex negotiation. Each side, just as we heard from our mexican colleagues today, seeking improvements to the agreement, naturally and correctly, that includes negotiating complex tasks and hopefully being innovative with the agreement. That will take time to do to the extent you can take tpp and move from complex topics that are out there that will need to be tackled. I think i have resented a somewhat grim picture of the risks that might be out there in terms of a clash between objectives and interest, but i want to close out saying that despite all of that, im rather optimistic we can reach a moderate update to the agreement thats acceptable to each side and i want to quickly say why despite everything i just said i believe that. Its because u. S. , mexican and canadian interests are fundamentally quite well aligned. At a real level, a real economic level, our interests are quite well aligned and that does filter into the politics of the situation. We have a massive trading than anship with more acrossn dollars of trade year, andica each that means by definition that there are thousands of companies that depend on trade with our nafta partners and there are 10 million jobs in the United States that depend on trade with canada and mexico. You have to hold in this huge Stakeholder Group that depends on nafta that has over the years come to depend deeper and deeper on nafta that are there pushing in the process through all sorts of different vehicles to war to keep the United States on track toward a successful renegotiation. Its also a deep relationship that has developed, especially since nafta was put in place that has bound together our competitiveness and made it rather than compete against one another, a much more correct way to understand it is that we compete together as a block on the global stage, production sharing across the region. We have a huge level within north america, huge level of supply Chain Integration and a Regional Manufacturing plot form in which goods move back and forth during the course of production. That means half of u. S. Mexico trade is an input that will feed industry on the other side of the border. We each send over 100 billion worth of inputs to factories and producers on the other side of the border. That means the producers at those plans depend on the supply chains and there would be a huge disruption if that was broken up. And of course it also means that if the United States were to impose import taxes were border taxes of any sort on mexico or canada, they are indirectly doing that to our exporters. We send 100 billion exports to we send 100 billion of inputs to mexico each year. You Better Believe those imports are coming back to the United States. If we tax them, it doesnt matter which direction we are moving. You are imposing a break on that system and it just means this is a negotiation to an existing trade agreement. Its not getting rid of the tpp which was potential future economic activity. This is potentially, if we are talking about protectionist measures, cutting into the paycheck, cutting into the Business Model of companies that are already out there. It is difficult to dial that back without having significant reactions and without the risk and clashes i see coming, we will have to find a way to a reasonable outcome. Thank you very much. Four excellent presentations here. I would like to pick up on two points. One is on the timing of these negotiations. I tried to provoke you at the beginning, so im going to persist and hopefully you will come with some ideas about how important that timing is. Chris mentioned the point about integrated production and there was a lovely quote the other day from a mexican where he talked about the fact that in north america, we might think if this was eggs being cooked that there are yolks and there are whites. Theyve all been mixed together and you cant separate them anymore. I think this is a nice way of thinking about it try to run separate scrambled eggs and you will he how difficult its going to be. If we were to make a pitch to the administration to impress upon them how difficult it would be to disengage from this integrated production platform. I would like to ask our audience for questions. I know there are a lot of you have been waiting patiently. I know fred has to take a call that has been pushed off, fantastic. Who would like to lead us off . Theres a question there. Thank you very much. Im a former worker for the cec in montreal. The Side Agreements for labor and the environment seem to have been orphaned in the last 25 years, yet the United States desires to integrate them into a new nafta. I would like to ask the panelists how they think this will happen and in what form. Thank you very much. Theres one here and one over there. Laura dodson from the canada institute. I know you dont speak on behalf of the mexican negotiators, but everyone at the table has the negotiating in the past. What i am thinking about is what else is happening in the world is the linkage between nafta and the tpp. The countries have negotiated part of an agreement that the u. S. Wanted and canada wanted as well. You are going into the negotiations and u. S. Negotiators have wanted a lot of stuff out of the tpp. Are you going to give them those concessions at the outset . Are you going to hold some of those things in reserve . The japanese say we want to do tpp 11 in november. Enchilada, the big to thatdo you take table . And the third question to end this first round. Dana marshall with transnational strategy group. Thank you for this interesting discussion. I wanted to see if i could draw the panel out on an issue that i think would be interesting and that is the impact of north american integration on making the three countries more competitive with respect to the challenge from china. We are aware of the political economics of that and its changing all the time depending on many factors but thats an issue candidate trump himself discussed when he was in mexico during the campaign. It struck me, im wondering why he said that or if that something on his mind or in the mind of some of his advisers and im wondering if we could analyze that a little further . Before we turn to our panelists, ambassador hills has already been recognized. I would like to point out two here. Adors flanking her if we could use you as our advance guard, we would get a lot done. Who would like to lead off with responses . The political timing is evidently not the best. We are in an administration that has done a lot in terms of what it can deliver and it delivers a lot in terms of political movements it has to do in terms of opening the economy in key sectors. Energy is one of the most important factors and its a great opportunity if we want to see it in a positive way in the nafta. Why is it the worst political time . Right now, we are thinking about elections and the end of the administration that has very little Political Capital to act whatever comes and obviously, we dont know what the negotiation may yield. We know the negotiation starts tomorrow and we know when the negotiation starts but its difficult to predict when a negotiation will end. In the 1990s, we started in 1990 and ended up in august 12 of 1992 and i remember the handshake. After that, it became a process of approval. Negotiating takes a long time, even though we are not starting from scratch. But the risk for mexico is even though we want to get this process done as quick as possible and i know the Mexican Government is working very hard to get this done, we need certainty. We need to get a positive result even though as fred said, failure is an option. It is true that we are going to start a process of elections at the end of this year and probably elections are due in june of next year. We have no idea who is going to be the next president. We have no idea whos going to tought election so it is happen. Hat is going to but clearly it may end up being actual negotiation takes place and its not finished and it takes place in the middle of an election which is not only for president , its for congress. So we have a big if there. Theres uncertainty in terms of what may happen. Recent negotiation between mexico and the u. S. Took several months to be worked out. So we dont know. Its something we will need to Pay Attention but as i said in my remarks, i have to underscore that in mexico, theres no Political Party that questions mexicos membership into nafta. It may be that they want to come up with new issues or new areas or they do not completely agree with the way the negotiation has been directed but i dont think mexicos new president , whoever that is, will question the fact we have to be in the process. In terms of the Side Agreements come i think its true. Labor and Environmental Issues have evolved a lot in the past 25 years. I think thats one benchmark to see where these negotiations may take place. It will look into tpp because francisco negotiated the tpp into mexico but there are new ways to deal with these issues and i think they are valid. They are a valid concern for our economies and they are valid disciplines that happened in the most recent negotiations, however, i do think we need to find ways of establishing at least a common denominator. I wonder how the u. S. Is going to negotiate the environmental part if the Trump Administration decided to leave the Paris Declaration which has to do with Carbon Emissions and that really affects production, so i dont know how thats going to take place in the agreement but at the end of the day, we need to find ways to have disciplines that will help the competitiveness of the region. In terms of nafta and tpp, i just want to say i dont think what we negotiated will be concessions that will just be taken from one agreement to another. Even though we have already drafted them and worked on them, we have tried figuring out which, tpp had its own balance at the time. Tpp 12 is what resulted. We may be at a better situation right now because we know exactly what we are talking about. We have been able to figure out what many of these disciplines mean and what do we want to achieve with them . I dont think the concessions mexico made at the table will necessarily be identical or will be transferred from tpp to nafta. I think they will need to be part of the whole package and in terms of competitiveness, i think that nafta 2. 0 gives a new opportunity to increase competitiveness through the energy markets. I think the liberalization of the Energy Sector in mexico and the Energy Trends canada brings to the table and the u. S. Brings to the table and the mexican economy has as a result of the reform could be the most important boost for the region. If nafta can lock in those reforms, i think if we really think theres some factors that could boost competitiveness in the region, it could be having the integration of the entergy markets. Host thank you. Francisco. Thanks. I want to apologize for not reading you in my initial remarks. Initialing you in my remarks. Hello. Im sorry. I apologize again. I think regarding the first question, its important to keep in mind its the first time that an agreement is in place. Mexico is doing the same with europe and even though it is clear that u. S. Will follow, why shouldnt why are we talking about Market Access . If we are willing to negotiate the 21st century agreement, we should be talking about other agreements rather than what has worked over the years. No . So, regarding if we are going to be able to deliver by early 2018, i guess it depends on the strategy each country will follow because if you start from scratch and put on the table chapters that somehow the wording or language in place over the last 23 years, i think its going to be quite hard to deliver by then. If you consider some of the language the u. S. Used to impose tpp, usually the u. S. Follows in the following negotiations, it seems we would be able to move or speed up the process. In the case of mexico, we will precedents. Wn Pacific Alliance. What is important to remember is the Pacific Alliance is the sole initiative right after nafta and its important for mexico to bear in mind. If we are able to get some languages from the president in canada as the minister said a few days ago, i think we will be able to speed up the process and the areas where we may have a different point of view, but it depends on the strategy. As far as ive heard, theres an informal information that the u. S. Will table the tax for different chapters. I dont know if this is confirmed, but if that is the case, we will have a better understanding about if nafta will have a future or not. As fred said, its a possibility that failure is an option and it is an option for the u. S. Because for mexico, nafta has worked and we dont feel uncomfortable about it. So of course, it will depend on the outcome. Or the mood of some persons. Talking about said agreements and provisions, i will say in the case of mexico, we will put on the agreement both disciplines. I think it has changed and evolved since the screen is were negotiated, but it is true even though we are able to deliver by january, we dont have any certainty the coming administration in mexico or in the u. S. Could consider to renegotiate the agreement they may reach because its important to remember in the u. S. , i dont know if it is common practice but in mexico, and it happened to korea and panama, its important to negotiate what agreement was reached. In mexico, we will have elections on july 2, 2018. Not even the left party has challenged the benefits of nafta. We need to consider we will have a new administration in a year plus. Just to conclude, regarding the tpp concessions, luz maria expressed it very clear the concessions that were made should not be the starting point. That was the outcome of a tough and long process of negotiation in the case of mexico over five years. In the u. S. , a little longer, so its a good reference to theider as something mexican goverment is willing to day1. The table the main difference between tpp and nafta 2. 0 is Market Access. We have dutyfree and the rule of origin is completely different. One question i have is how is it possible to manage an agreement that may not follow or comply even though its a convenient one for north america . I understand if it follows the previous precedents the u. S. Has negotiated, i believe it would be reasonable to think tpp and nafta to pursue a higher level of ambition. Confusedlittle bit in place 015 will be until july 2018 unless it is submitted a request and theres no motion against, so if it is the original base to continue, what will happen if by any reason there are issues that even though it might be of interest or agreement, parties may not comply directly by participating in the agreement . On that last point, which is a very good one, the administration, with ruminations has been careful to avoid at least appearing to violate the objectives laid out in tpp 2015. Now it is a matter of judgment and some of us made it for on those judgments as to what they are proposing actually carries out those objectives, but so far they have tried to avoid any implication they are violating congressional mandates. They have obviously gone beyond them and congress did not they go try to reduce the trade deficit through your trade agreements. Congress did not say that. If the agreement were to blow up over that mistaken premise, then i think they would have trouble. But remember, whatever they negotiate in the talks coming up, they have to take to the congress. At the end of the day, the president proposes and the congress disposes. The trade agreement, even more than other areas, the negotiators have to always be looking over their shoulders, what will congress approved, etc. A fascinating episode was the one i mentioned four months ago where President Trump said im going to withdraw from nafta and got all of this pushback. A lot of the pushback came from congress. Senator cornyn from texas says nafta is us, and as someone said on the panel, its an integral part of Economic Life of texas, not to mention other parts of the country. If you did jeopardize the agreement, you would be doing so at your peril with congress. Then, when they get into specific discussions for ratification if the deal is successfully negotiated, they will have to demonstrate their case point by point where they went along with the dictates of the congress. I mentioned the currency issue. That is a sometimes controversial one because the Congress Said in tpa 15, you shall not permit trade partners undermine the field by allowing trade manipulation. Even though it came late in the day, they negotiated a Side Agreement and there was a lot of controversy whether it went far enough. I think they will conform to congressional dictates, though if it blew up, there would be hell to pay. The only other comment i want to make is on the third question, which was very good, about having a somewhat different objective of using the negotiation to strengthen north american competitiveness toward china. I agree with the implication that it should be the objective of the exercise and there would be many ways specified by the by by furtherat integrating the economy, strengthening the supply chain, etc. Companies wouldnt do it unless it strengthen their competitiveness and that would ipso facto improve the position of the north american economy. But that would require a totally different mindset from the u. S. Administration. The mindset of the u. S. Administration is canada and mexico are adversaries, that is a zerosum game defined by trade deficits. That if i run a trade deficit with you, that means the trade is unfair. That is the way they have defined the issue. Im talking about at the very top levels. The president at some around him as well. If you define the issue as a negotiation with adversaries, you are in an opposite mindset from what you suggested and what i would endorse ought to be the mindset of an update to nafta, namely improving the joint competitiveness of the region. Its a fundamental mindset question, not maneuvering around the margins. Its very basic and lets you and i keep working on them to change it. Nobody said anything about the environment. Im not an expert in that exact topic, i think theres a willingness to engage in the conversation and look at the environmental part of the into the actual text of the agreement. We should look to tpp for precedents for exactly how you can do that and what it would look like and subject pieces of that to dispute resolution. Dispute resolution will be part of the negotiation and those things you have to look at together because they will be negotiated sidebyside. We have heard this explicitly from the canadian side that there will be a challenge in terms of bringing climate into the environmental agreement. The way it was stated by the foreign minister is that it would be difficult to imagine an environmental chapter this day and age that does not reference climate and thats actually in tpa, theres a rejection of that notion. This is a place we could see potential conflict. Its one example of many of how these things become much more complicated than you think they might be at the outset. In general, we hit upon it but theres some very strong tension between speed in the negotiations and the timing issue and the tpp importation of language issue. It is the only way to move very quickly, to use tpp as a strong template. If you look at the objectives from the u. S. And mexico, most of the topics are topics that were dealt with in the Trans Pacific hardship negotiation. Theres a lot to work with few are willing to do it, but you have to look at who is under the pressure. Mexico is probably on the top. The United States second. We have midterm elections next year and canada is probably third. There will be games that are played in terms of the negotiation and willingness to stretch them out to those who want to finish quicker if they really want to do that, they will have to give up a bit more faster and im not sure anyone is really willing to do that. Thats why i think the most likely outcome is the timing falls apart very quickly and thats quickly realized by all the negotiators that it not going to be concluded by late this year or early next year. In that case, theres no advantage to conceding to concessions you already made and your strategy should be to start the starting point in the negotiation, which means your renegotiating this topics along the way. Thats a much more likely outcome. All of this leads to interacting with u. S. Congress because it is very likely even after negotiation takes place that there is a statutory time where there would be action on the trade agreement. Its very Unlikely Congress would vote on an updated nafta until after the elections. We need to think pretty seriously nafta is an incredibly controversial topic and as we go through a mid term election process, it will become i credibly partisan process as well. I dont know the answer. We dont know what the agreement will look like, but we have to take seriously the possibility that just like some of these other big issues congress has tried to tackle Like Health Care in recent months, this is something that there could be a lot of work put into and it could go kaput when it hits u. S. Congress. I think we should take it seriously. Chris has been a real downer today. I have to say. [laughter] its the weather, im sure. Just to be clear, if it goes kaput, the current nafta stays in place. Unless donald trump decides to withdraw. Right. Your premise is he succeeds in negotiations, sends it to congress for ratification, Congress Wont do it. You may be right, but in that case, the current nafta stays in place until and unless something happens to change it. Just so everyone is clear, it doesnt mean the end of nafta. Number of hands go up. We can begin over there. Thank you. Can we dig a little deeper into mexican politics . At the moment, the candidate leading in the polls is a populist nationalist. He happens to be from the left rather than from the right. He opposes and says hes going to undo the recent reforms you have talked about that were made possible by nafta and to be blunt, hes a bit of an opportunist. If he sees an opportunity to use nafta for his benefit, isnt the likely . And even if he wins, is he going to have a congress that is going to be with him . Your congress has to approve this deal the same as the american congress. Right behind you. Berkeley research group. I want to pick up on the last exchange between fred and chris. Think about 2019 and other negotiations underway. Nobody mentioned brexit. The u. K. Would lose free trade with mexico and canada when they leave. Both countries have free straight which extends the u. K. At the moment. What does the u. K. Do . U. K. Has expressed a willingness to negotiate bilateral with the United States and with canada and mexico. Why would they do that . Doesnt it make more sense to think beyond nafta and get the u. K. Into a north atlantic fair and free trade if you want to call it that . Start thinking about that now, because if these delays take place, which i agree are certainly possible and maybe even likely, we will end up at the end of 2018 with the current nafta in place and an opportunity to galvanized the whole thing by bringing the u. K. In with a generous transition period. We are old enough to remember when nafta meant north Atlantic Free trade agreement. That was a proposal back in the 1970s and 1980s. The term got coopted by the hemisphere. Hi, i from the Wilson Center. Am you talked a lot about making nafta modernized for the 21st century and watching other trade agreements are on the world. My question is about gender in International Trade and incorporating it into trade agreements. The canadian government came out saying they want to incorporate gender into Free Trade Agreements like they did with canada and july when they renegotiated with canada and chile when they renegotiated. Whats your opinion on integrating gender into nafta or Free Trade Agreements and whether you think its on the radar of mexico and the u. S. . Very quickly, it is in the mexican statement of objectives. Do you want to ask a question . The question is on labor and the role its going to play if you are counting votes at the end of the process. The number one being president and vote number two being congress and they do not always mesh. The unions in the United States may play a much bigger role. How do you see negotiating through that if you have an eye on passing it at the end of the line . Would you like to kick off this round . On the last question, i think the reason you need to have a forceful labor provision in the renegotiated nafta is exactly what you said to make the whole agreement possible in congress at the end of the day. I dont know how much those provisions will accomplish for the goals of the Labor Movement or american workers, but theres strong insistence that i think its from both sides of the aisle to put that in. I dont think this administration is particularly devoted to that topic themselves, but if they are going to get it through congress, you have to put in there and i think you are right to flag that and the negotiating partners probably understand that as well. Thank you. Regarding the first question, i guess there is a political agenda and how will it influence the process. Im not certain if mexico is in a hurry. I think the Mexican Institution has a strong interest to conclude nafta 2. 0 during the Current Administration but it doesnt seem to be a must. If the conditions require are not ones that can be met in terms of the mexican administration, maybe they wont push hard enough to get a deal . You may remember its a negotiation. There are other issues mexico is willing to push forward. You also hear the responses from canada and in particular the u. S. Regarding brexit, its a great idea. Its something that one year ago or early 2016, when i used to be a public servant, this was an idea mentioned by our secretary. The problem we have is first, england cannot negotiate until brexit happens, so we are talking about two years. Having said that, there are already informal talks between mexico and england and i understand that the same with some other trading partners. It will be a great approach to have nafta plus england. Maybe north america is somehow too heavy as a block to negotiate something. Mexico wanted to join the ttip trading partnership. We were the sole one that had anything in place since 2001. So it is a good idea and an ambition we should look for over the years but maybe its going to take longer than we would like. Regarding the gender Free Trade Agreement provisions, it is something we should and must include and it is one of the issues that should include 21st century trade agreements. Regarding labor federations labor provisions, it is important to remember that mexico is no longer a country with a labor framework from 25 years ago, so my guess is the outcome we got during ttip was a positive one. We dont know what other provisions the u. S. May want to submit to canada and mexico, so we will take a look. At the end, its about reaching balance and its about the mexican and canadian parliament. In the case of mexico, we are able to reach an agreement during the Current Administration i think theres a space to try to approve it and if not, we will see what they may say. Hes clearly the front runner because he has been campaigning for the last 18 years and hes the only official candidate we have today. The other parties do not have official candidates yet, so that is something we need to consider. It is really a tossup. We have no idea who may be the next president and what may be the result of the next election. I would not discard anybody. Its going to be a highly competitive election next year. Any president that comes in office in december of 2018 will have an extremely, extremely difficult reform because any constitutional reform and that requires two thirds approval of senate, then it requires approval of each one of 32 local congress of each one. Im not saying it is impossible but it is not an easy task to reform. I would say in the near future, those reforms are there to stay even though they have costs and even though they are not quite popular, especially education i would say. But we need to give time for those reforms to yield results. Those reforms will take between two and three generations to yield the results we need to see. Im not even that pessimistic in terms of whoever is elected president will be tampering with nafta. We in mexico had our globalization crisis in the 1980s when we decided to shift to exportfrom import promotion. I think the 1980s was the defining moment for mexico and since then, we may have tampered a little bit with some of our tariffs and we have played with some protectionist measures and very specific sectors and doing things we should not doing but nobody says anything so unless somebody comes and starts a case and we come back to our good behavior, but in general, our policy is a trade liberalization policy and an open policy. We know we depend on International Trade, International Capital flows, so we are not going to be playing with that. No one in the political platform will do that even if they said something that would question mexicos role in trade. I dont see any policy that would reverse that. Brexit in the u. K. Could join nafta. That is something that could be discussed, but we would have to have a shared vision. The north american region with the have to negotiate with a thirdparty. In terms of gender, i think the gender provision is part of the mexican objectives for nafta. It the least issues of how to build an inclusive trade agenda that responds to the vast majority of people. We know that in trade, as in any public policy, there are losers and winners. So we need to find ways to offer that kind of support or adjustment to those who may not be taking advantage of globalization and we need to find ways to open opportunities to those who may not have been able to take part in globalization. I think it is more raising the bar and finding discipline and direct policy intervention that may help to include more firms and having a better Playing Field for men and women in International Trade for Rural Communities or those who have lost their jobs as a result of technology. I think it is part of a vision of an inclusive trade agenda which i think is legitimate but having an inclusive trade agenda does not mean or should not be interpreted or does not translate into a protectionist agenda. Both are compatible, its just a matter of putting them at the table and finding ways of creating this solidarity among north american countries and communities. In the past, i had the opportunity to work with an ambassador in mexico on it issues of gender. Secretary of state hillary o improveigned an mou t conditions for women owned businesses and women in north america, so i think there are already cases where we have tried to bring in because we think it is the best way to create that trade, to promote that Economic Growth we need and to bring diversity to the table. I think this is something that was touched on in tpp and there were several examples recently that have taken place. How do we create these new disciplines and direct interventions . How do we have a more Cohesive Society in north america . This may be a good way of addressing those issues and bringing credibility to nafta and north america integration. With respect to labor, labor may be a very difficult issue at the table. As wasant to take labor posted a few weeks and months ago by some of the Trump Administration officials, apparently, mexico is like the bad guy in the arena because we have lower labor costs. Wages in mexico are lower than the u. S. Thats a fact. The fact that exists doesnt mean we have an unfair trade advantage. Obviously, thats not the ideal. We in mexico have to work hard to close that gap, but that requires many other things in addition to labor opportunities. That requires education, innovation, improvements in productivity to raise wages. My concern with respect to labor is the u. S. Comes up with a proposal that tries to intervene in minimum wages and labor markets which cannot be solved through a trade negotiation. That may end up creating a very difficult way of finding a solution to the nafta negotiation. I know labor is an important question but we have to be careful of not Offering Solutions that may actually end up getting us nowhere. Can i add one point . I think the notion of adding the United Kingdom to nafta is a terrible idea. The reason is brexit is a terrible idea. Its terrible for the u. K. , its terrible for europe, its bad for the United States. I am in the minority admittedly, but i think its going to be reversed because when the brits really realize what they are getting themselves into, they are going to reverse course. I think it would be a huge error to feed the brexit mentality by holding out this hope of a Free Trade Agreement with the United States, a Free Trade Agreement with nafta, all of these goodies that sound wonderful conceptually until you start trying to do it. We talk of the congressional difficulties of master difficulties of nafta itself. Now you add the fifth biggest economy in the world with all sorts of problems that dont appear on the surface of a special relationship at all. It would be hell to pay. If youre going to add the u. K. , why not the Pacific Alliance . If youre going to add other countries, fine, but there are other countries that might the ahead of the u. K. In the queue, so lets talk about them too. Then what are you in . To chance of using nafta further integrate north america would become even more impossible. It would become an unmanageable task in terms of negotiations. Lets keep that one on the shelf until or unless the evil day comes. Lets not reward bad behavior. Exactly. I just have a couple of things to add. In terms of the mexican political process, the one extra i want to add on top of it is that the tone in the u. S. Mexico relationship matters quite a bit. That is to say that we can have a highly adversarial tone if there is an environment of conflict that is going on. You Better Believe that if he should become president , he will use that. What happened in terms of his polling numbers right after the u. S. Election shows hes the candidate best positioned to take advantage of an environment of conflict between the two countries, wrapped himself in the flag and take up the nationalist banner. If the environment is such that it is appetizing, he can do that and if he wins the election and that is the environment of a new presidency, then we should be concerned about the future of the u. S. Mexico relationship because we might have two people on each side that are willing to take advantage of the opportunities in terms of domestic politics at the expense of the relationship between the two countries, so tone matters quite a bit. If on the other end of we have a cooperative relationship , a functioning nafta renegotiation, even if it is still underway, but something toward a reasonable outcome, the incentives are much lower to engage with that type of rhetoric. Whoever becomes the next president will be responsible for the mexican economy over the next six years. You need nafta if you dont want to have a big problem in terms of the mexican economy. Its a big risk for any candidate, but there may be situations where theres an environment that promotes that anyway. It north americau. K. Reminds me a couple of years ago, having ttip negotiations with europe, there was a push, there was some interest in having canada and mexico join. Canada was already in the process of negotiations with the eu and mexico stated its interest in making it a comprehensive regional approach. It was too tough to conceive of taking that on from the u. S. Perspective. I think we are at a much more complex moment and the willingness to find the appetite to take on that additional level of complexity when what we are trying to do is do no harm, trying to keep the boat afloat, there are people trying to do more than that in this moment, but that it is the primary objective of most interest right now. Adding complexity to that is just hard. I would like to recognize to questions that came in from twitter. He asked about what would happen to these as if nafta fails . Kelly anderson wrote nafta provides opportunity to bolster north american opportunities for innovation. What is mexicos approach . Something we will have to come back with. Thats an issue we hope to deal with at a later event. Let me thank our fabulous panelists for being here today. Really appreciate it. [applause] [chatter] announcer in the afternoon, members of the largest farms made a statement that nafta. 1 15 p. M. Day at eastern on cspan two. Cspans washington journal, live every day with news and policy issues that affect you. Today, discussing President Trumps reactions to events in charlottesville. Then, mike dobbs talks about the historic parallels between the north korea and the 1962 cuban missile crisis. Then discussing the white area in resistance. Join the discussion. Next, reporters and congressional staffers talk about the current relationship between government officials and the press. We will talk to congressional reporters and communications advisers. This is about two hours