Canadian official on NAFTA renegotiation: 'Mexico is in a terrible, terrible position. We are not.'
By Zero Hedge
Thursday, Jan 26, 2017
|As reported yesterday, Mexico is not at all looking forward to starting the process of renegotiating NAFTA with Donald Trump, explicitly warning the US that "there are very clear red lines that must be drawn from the start." What these lines are will be explained by Economy Minister Ildefonso Guajardo and Foreign Affairs Secretary Luis Videgaray who are both meeting with US officials in Washington on Wednesday and Thursday, setting the stage with next week's visit from Mexico President Enrique Pena Nieto.
Only, Enrique Pena Nieto may not even come, because according to an AP report late on Wednesday, the Mexican President is rethinking his scheduled meeting with President Trump next week. Peña Nieto may scrap the planned Jan. 31 huddle because of Trump’s executive order authorizing the construction of a wall along the U.S.-Mexico border, AP added. The AP confirmed with a Mexican official in Mexico City that Peña Nieto is “considering” cancelling the rendezvous.
And while subsequently Bloomberg reported that Nieto will visit the US as planned after all, the fury in Mexico is palpable and the Mexico News Daily reported that Trump’s border wall order sparked fierce backlash among Mexican lawmakers. The National Action Party’s Margareta Zavala called Trump’s order “an offense to Mexico” ahead of Peña Nieto’s trip. Jorge Castaneda, who served as secretary under former Mexican President Vicente Fox, also blasted the measure Wednesday. “This is an insult to those Mexican officials, to the president of Mexico and to all Mexicans,” he said, referencing two Mexican officials who met Trump administration staff on Wednesday.
“It’s a way of making them negotiate under threat, under insults, and it should lead Peña Nieto to cancel his trip next week,” Castaneda added during a television interview. [Note: He has now canceled - prh, ed.] "Peña [Nieto] is a weak president in a weak country at a weak moment, but he has to find a way to get some official backbone.”
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But while Mexico's anger at the US is understandable, maybe the US' southern neighbor should be just as angry at the country that border the US to the north: the third member of NAFTA, Canada.
Canada will focus on preserving its U.S. trade ties during talks to renegotiate NAFTA and may not be able to help Mexico avoid being targeted by the Trump administration, Canadian government sources say.
"We love our Mexican friends. But our national interests come first and the friendship comes second," a source said on the sidelines of a cabinet retreat in Calgary, Alberta. "The two are not mutually exclusive," the source added.
In other words, when it comes to preserving NAFTA, it's important, but what is more important is being on good enough terms with Trump to be able to cobble together a bilateral treaty should NAFTA fail.
As Reuters reports, the comments are some of the starkest yet by Canadian officials, "who are increasingly convinced Mexico will suffer the most damage from changes to the North American Free Trade Agreement."
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Of course, the reason why both Mexico and Canada are on edge, and why their superficial friendship is about to collapse, is because on Sunday Trump said he planned talks soon to begin renegotiating NAFTA, under which Canada and Mexico send most of their exports to the United States. The Canadian sources stress Ottawa has not taken any final decision on how to approach the NAFTA talks, since Trump's opening stance is largely unknown.
For now the government's official stance is to dismiss the idea that Canada will formally abandon Mexico. Foreign Minister Chrystia Freeland said on Tuesday that Canada supported NAFTA as a trilateral agreement and noted that Trudeau had talked to Mexican President Enrique Pena Nieto over the weekend.
That said, Reuters' government sources note Mexico and Canada would appear to have little in common. Trump is unhappy about the large U.S. deficit with Mexico and has promised to punish firms with manufacturing bases there. "Our negotiating positions are totally different. Mexico is being hung out of an skyscraper window by its feet," said a second government source."Mexico is in a terrible, terrible position. We are not," said another Canadian person involved on the trade file.
Bilateral trade is critical for Canada, which sends 75 percent of its exports to the United States. Statistics Canada data for 2015 show two-way trade in goods with the United States totaled C$760 billion ($580 billion) compared to just C$26 billion with Mexico. Canada has a "very special status" and is unlikely to be hit hard by changes to NAFTA, the head of a business advisory council to Trump said on Monday.
And the punchline: Derek Burney, a former Canadian ambassador to Washington, told CTV News on Monday that Canada should distance itself from Mexico on NAFTA. "We have security agreements, both continental and multi-lateral -- Mexico does not. Mexico has a huge border problem with the United States in terms of immigration and drugs -- Canada does not," he said.
Officials familiar with diplomatic contacts between Mexico and Canada say there has been no talk of creating a joint front against the United States over NAFTA on the grounds that such a move would raise tensions and be counterproductive.
And that - by dividing and conquering his counterparts who are too afraid to unite against him - is how Trump's "negotiating victory" is assured before the negotiations have even begun.
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