How does the Mexican foreign minister respond to the end of the FTA?

The negotiations on the North American Free Trade Agreement have now entered a crucial stage. Mexican Foreign Minister Luis Videgaray pointed out on 15th that even if the FTA is terminated, the trade between Mexico and the United States will not end.

He also said that the idea of adding a sunset clause to the FTA, which will automatically expire after five years, was totally unnecessary.

the north American free trade agreement (NAFTA) came into effect in 1994, with the parties of the United States, Canada and Mexico, aiming at facilitating cross-border trade of small enterprises. Donald Trump has repeatedly criticized the North American Free Trade Agreement (NAFTA) for losing American manufacturing jobs to Mexico since he ran for the US presidency. In August this year, the United States, Mexico and Canada began to renegotiate this agreement, and serious differences emerged in the negotiations, making the future of the North American Free Trade Area, which has connected the economies of the United States, Canada and Mexico for 23 years, uncertain.

Mexican Foreign Minister Videgaray said that at this stage, about half of the trade between Mexico and the United States has not started through the North American Free Trade Agreement. "If the negotiations don't go smoothly, it won't be the end of the trade between Mexico and the United States … it won't fall into the abyss at once".

He said that once the North American Free Trade Agreement is terminated, the tariffs set by the WTO will play a role.

Videgaray also said that Mexico will raise import tariffs on American products, and apples exported from Arizona will be subject to a 5% tariff.

He warned that once Trump started the 18-day countdown to tear up the North American Free Trade Agreement, Mexico would directly withdraw from the relevant negotiations.

This is not the first time that Mexico has shown a tough attitude on revisiting NAFTA. At the end of February and the end of March this year, Videgaray made similar remarks about "quitting".

On the 5th of this month, the second round of talks on the North American Free Trade Agreement ended. The representatives of the United States, Mexico and Canada still have not made substantial progress on key thorny issues such as labor rights and trade deficit, leaving many doubts in the negotiations. The third round of negotiations is scheduled to be held in Ottawa, Canada, from 23rd to 27th.

Wilbur Ross, US Secretary of Commerce, said on 14th that the US intends to add a five-year sunset clause to NAFTA. In other words, if it is not updated, this FTA will automatically terminate after five years.

According to Ross, when the North American Free Trade Agreement came into effect in 1994, the US side was "too optimistic" about the growth it could bring to American export trade and employment, but later found that the reality was far from the expectation. The "sunset clause" is to add a "regular and systematic re-examination mechanism" to NAFTA.

In this regard, Videgaray said that the "sunset clause" is completely unnecessary, because the parties to the agreement can withdraw at any time and the relevant re-negotiation process has started. Moreover, negotiators in Mexico and Canada have not received a formal discussion plan on the "sunset clause".

In order to reduce its dependence on American trade, Mexico is actively expanding its trade with the European Union, Brazil, Israel, Singapore, Australia and New Zealand.