Mexico not a NAFTA ‘back door’ for Chinese goods -economy minister

Mexican Economy Secretary
Ildefonso Guajardo said on Tuesday that the North American Free
Trade Agreement’s rules of origin can be improved but denied
that Mexico was a “back door” for Chinese goods to enter the
United States.

Speaking in a live interview on CNBC, Guajardo also said he
believed there were grounds to believe that NAFTA can be
renegotiated to benefit the United States, Canada and Mexico.

He said, however, that “Plan B” for Mexico would be to
revert to World Trade Organization tariff rates for exports to
the United States such as the 2.5 percent tariff for passenger

“Obviously, (it is) a little bit more expensive, but it’s
not the end of the world,” he added.

He said that the Chinese content of cars traded between
North American countries was very low, about 3 percent, largely
using parts that are no longer produced in the region, such as
flat panel display screens and other electronic items.

“This idea that Mexico is being used as a back door for
Chinese imports into the U.S. is not the right one,” he said.

Under the current NAFTA agreement, motor vehicles must have
62.5 percent North American content, a figure that U.S. Commerce
Secretary Wilbur Ross has said is too low and allows for too
much content from other regions to benefit from NAFTA
tariff-free status.

Guajardo warned that raising the bar too high on North
American content could make the region less competitive.

“We can make an effort to strengthen that, no question about
it. But if you go too far, you may be shooting yourself in the
foot, because you’re losing competitiveness,” he said.

Negotiations to modernize the 23-year-old NAFTA trade deal
are expected to start after Aug. 16, at the conclusion of a U.S.
government consultation period with lawmakers, industries and
the public.

Guajardo also said that he and Ross were close to announcing
an agreement on sugar trade between the two
(Reporting by David Lawder Editing by W Simon)

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