{"id":61770,"date":"2018-03-30T06:17:45","date_gmt":"2018-03-30T06:17:45","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=61770"},"modified":"2018-03-30T06:17:45","modified_gmt":"2018-03-30T06:17:45","slug":"might-happen-mexico-nafta-gets-wiped-away","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/world-news\/might-happen-mexico-nafta-gets-wiped-away.html","title":{"rendered":"What Might Happen to Mexico If Nafta Gets Wiped Away"},"content":{"rendered":"

What Might Happen to Mexico If Nafta Gets Wiped Away<\/span><\/strong><\/span><\/h2>\n

Since May 2017, when U.S. President Donald Trump gave notice that he wanted to renegotiate the North American Free Trade Agreement, there have been seven rounds of talks. The longer they go on, the more time Mexicans have to imagine what might happen if Trump ends Nafta altogether.<\/span><\/p>\n

1. How could Nafta end?<\/span><\/p>\n

If Trump decides to pull out of Nafta, he would first have to give six months\u2019 notice to the other signatories, Mexico and Canada. But it\u2019s unclear whether he could do this on his own. Nafta was implemented through congressional legislation in 1993, so U.S. lawmakers could potentially vote to block its repeal. And exporters, importers and trade organizations might file suit. If Trump prevailed, trade between the North American neighbors would likely revert to World Trade Organization rules, which came about in 1995, around the same time as Nafta. Under these, tariffs on U.S. exports to Mexico would average 7 percent; imports from Mexico would average 3.5 percent.<\/span><\/p>\n

2. What would this do to Mexican exports?<\/span><\/p>\n

It wouldn\u2019t be pretty. Mexico\u2019s total exports in 2016 were worth $401.2 billion, with 73.3 percent headed to the U.S. and 7 percent to Canada. Only about half of Mexico\u2019s exports to the U.S. are now covered by Nafta, in part because of all the complicated paperwork. Mexican manufacturing, real estate and retail companies could be hit hardest, Fitch Ratings says. Avocado exports, on the other hand, might be O.K., as U.S. demand has soared and most consumers would be likely to pay the added costs.<\/span><\/p>\n

3. What about imports?<\/span><\/p>\n

Under international trade rules, Mexico would have more freedom to raise tariffs on its imports because its \u201cbound rates\u201d \u2014 the maximum rate a WTO member can impose \u2014 are higher than the \u201cMost Favored Nation\u201d rates the U.S. would impose, since advanced economies have agreed to apply lower rates than developing countries. For example, Mexico could raise its tariff on corn, one of the largest U.S. exports to Mexico, to 37 percent without breaking any rules. The move would help Mexican corn producers, who have long complained of having to compete with heavily subsidized U.S. grains. If Mexico does raise tariffs, the higher costs would, most likely, be passed along to Mexican consumers.<\/span><\/p>\n

4. How many jobs would be lost?<\/span><\/p>\n

It\u2019s hard to say. Millions of jobs are tied directly or indirectly to Nafta. But the end of a free-trade agreement does not mean the end of trade. The greatest job loss could come from U.S. companies shutting down their Mexican factories and moving them to another country, like Ford did last year when it canceled plans to build a car plant in San Luis Potosi, a Mexican town, and built it in China instead. The $1.6 billion investment would have directly employed almost 3,000 people and would have provided indirect jobs to about 10,000 more.<\/span><\/p>\n

5. What would be the impact on Mexico\u2019s economy?<\/span><\/p>\n

Oxford Economics estimates Mexico\u2019s gross domestic product would lose 4 percentage points by 2022 and fall into a technical recession by mid-2019. The Mexican peso could fall to around 23 to 25 per dollar, according to Capital Economics. The firm also estimates the inflation forecast would be revised to 6 percent from 4 percent and the central bank, Banxico, would hike interest rates by about 200 basis points.<\/span><\/p>\n

6. Could Mexico start exporting elsewhere?<\/span><\/p>\n

Yes. Mexico isn\u2019t sitting around waiting for Nafta to be renegotiated. The country has free-trade agreements with dozens of countries and is looking to modernize or expand agreements with other partners. Mexico recently joined 10 other countries, including Australia, Japan and Canada, in signing a successor to the Trans-Pacific Partnership. It also expects soon to finish updating its existing free-trade agreement with the European Union. China is also on Mexico\u2019s sights. Government officials recently toured Shanghai to meet with infrastructure, energy, automotive and mining executives.<\/span><\/p>\n

7. Would the end of Nafta spur new economic development?<\/span><\/p>\n

Not at first, since Mexico does so much of its business with the U.S. It would take many years, decades even, for Mexico to overhaul its trading patterns.<\/span><\/p>\n

8. Would there be any winners?<\/span><\/p>\n

Maybe Mexican farmers. Those cheap U.S. produce exports displaced Mexican producers and eliminated about 5 million jobs. Even though Mexican produce production has grown considerably under Nafta, it\u2019s created more seasonal jobs than permanent ones, hurting overall job creation in the sector. Without Nafta, local producers would presumably stop competing with U.S. products and boost their own production.<\/span><\/p>\n

Source:-https:\/\/www.bloomberg.com\/news\/articles\/2018-03-30\/what-might-happen-to-mexico-if-nafta-gets-wiped-away-quicktake<\/span><\/p>\n

\n\t\t\t
\n\t\t\t <\/div><\/div>\n\t\t