The Mexican government is warning it will walk away from the renegotiation of the North American free-trade agreement if President Donald Trump follows through on his threat to trigger a withdrawal from the pact as a way of pressuring Mexico and Canada into concessions.
Mexico's Foreign Minister Luis Videgaray delivered this stark message Wednesday in Washington. He and other senior Mexican officials flew to the U.S. capital to caution the Trump administration that the U.S. President has to back off his charged rhetoric if he hopes to reach a deal to overhaul the continental trade agreement.
The escalating tension comes just two days before the second round of NAFTA talks opens in Mexico City and follows a week-long barrage of anti-NAFTA attacks from Mr. Trump. The President has publicly threatened to start the process of pulling the United States out of the agreement to gain leverage over his negotiating partners. Under NAFTA's Article 2205, any of the three countries can quit the deal after six months' notice.
Asked if Mexico would stay at the negotiating table should Mr. Trump trigger 2205, Mr. Videgaray was unequivocal.
"No," he told reporters outside the State Department following an hour-long meeting with his American counterpart, Rex Tillerson. "The negotiation already has a process. It is a renegotiation that we take very seriously, it is a constructive renegotiation. It would not be the right route or a viable route to terminate the treaty just when we are in a renegotiation process."
Mr. Videgaray, Economy Minister Ildefonso Guajardo and Juan Carlos Baker, Mexico's top official for foreign trade, rushed to Washington to push back against the increasingly frequent threats from Mr. Trump.
In addition to Mr. Tillerson, they also made their case to Jared Kushner, Mr. Trump's son-in-law and adviser, as well as U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross at a White House meeting Wednesday morning.
A source with knowledge of the discussions said Mexico's message to Mr. Trump's lieutenants is that they have to get the President to stop tweeting about NAFTA or otherwise inflaming the situation. The more threats Mr. Trump issues, the harder it will be for Mexico to offer him anything at the negotiating table for fear of a backlash from the Mexican public, the source said.
In addition to his threats of withdrawal, Mr. Trump has also suggested he would use NAFTA talks as leverage to force Mexico to pay for his promised wall on the border – something the Mexican government has said it will never do.
The three countries are renegotiating NAFTA at the behest of Mr. Trump, who blames the pact for moving jobs out of the United States. Talks began earlier this month in Washington.
Canada and Mexico have publicly rejected some of the U.S. demands, including adding a requirement that cars and trucks manufactured in the NAFTA zone contain a specific amount of U.S. content and that arbitration panels that settle trade disputes be done away with. In comments this week, the President has labelled his negotiating partners "very difficult."
The talks themselves, however, are still in their opening stages. The United States has not yet put all its proposals on the table, and some crucial details – such as the exact content rules Washington is seeking for autos – are not expected until the third round of discussions in Canada later next month.
Luz Maria de la Mora, a Mexico City-based business consultant and former trade official in the Mexican government, said the object for Mexico is keeping the focus on the talks themselves. This should be possible for now because the negotiation process is still early enough that no one is at the point of making concessions and hashing out disagreements, she contended. "We are trying to keep our minds well set on the technical negotiations," Ms. de la Mora said in an interview. "The intention of [Wednesday's] meeting is to say: 'We are negotiating at the negotiating table, we are not negotiating via Twitter or via the media.'"
Canada, for its part, has been treating the President's attacks as mere bluster. Earlier this week, Prime Minister Justin Trudeau dismissed Mr. Trump's latest remarks as "nothing new."
Mr. Trump's latest comments do not appear to have moved markets or dampened investment in Mexico, suggesting that business leaders are increasingly shrugging them off, said Brett House, Bank of Nova Scotia's deputy chief economist. "There is a danger of crying wolf too many times, which is that the other sides no longer take the crying seriously," he said.
Mr. House pointed to the fact that much of Mr. Trump's supporter base lives in states that depend on trade with Canada and Mexico, as well as the fact that the deal has support in Congress, among governors and in the American business community. "These will limit the extent to which something cataclysmic will happen," he said.
In the event of a NAFTA withdrawal, for instance, Congress would have to pass legislation repealing various aspects of the trade deal – such as the preferential tariff treatment for Canadian and Mexican goods. By refusing to do this, legislators could push Mr. Trump to back down if he triggered Article 2205, Mr. House said.