MEXICO CITY – Mexican automakers will be shielded from potential US tariffs under a side letter to the revised North American Free Trade Agreement (NAFTA), Mexico’s economy secretary said on Thursday.
“The NAFTA negotiations guarantee free trade. There aren’t any kind of quantitative restrictions ... or quotas. There are no changes in the rules of origin,” Ildefonso Guajardo said during a forum in Mexico City organized by The Economist.
On Aug. 27, Mexico and the United States announced a bilateral trade agreement that Canada, which is now negotiating with the Trump administration in Washington, would be able to join.
Guajardo said that to protect Mexico’s dynamic auto industry, which employs around 1 million people, a side letter was secured guaranteeing that US tariffs of up to 30 percent, repeatedly threatened by President Donald Trump, would not be imposed on Mexican exports.
The secretary expressed confidence that the negotiations between Mexico City and Washington would allow NAFTA to continue as a trilateral trade agreement.
“Relaunching” the trade pact, which took effect on Jan. 1, 1994, was necessary because society and the economy have changed, Guajardo said.
The 2016 election of Trump highlighted the “deep structural challenges” faced by people who do not see benefits from globalization or free trade, Guajardo said.
Trilateral trade under NAFTA is worth more than $1 trillion a year.