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World Mexico’s chief NAFTA negotiator promises no change in position in new government

Jesus Seade Kuri will be chief negotiator for the North American free-trade agreement in the government of Mexican president-elect Andres Manuel Lopez Obrador. Mr. Seade told The Globe and Mail that there will be no change in Mexico’s approach to the negotiations under the new government, and he hopes to see the talks conclude swiftly.

Mr. Seade has a doctorate in economics from Oxford University with a specialty in taxation models, and was most recently a professor and the vice-president for global affairs at the Chinese University of Hong Kong in Shenzhen. He has worked in Asia for the past decade, and had a long career in international trade and diplomatic issues, acting as Mexico’s chief negotiator for the creation of the World Trade Organization, and then serving as a founding deputy director there; he was also a senior adviser on fiscal affairs at the International Monetary Fund. He is part of a prominent circle of market-oriented but left-leaning economists centred at a prestigious university called the Colegio de Mexico, and is close to several of those who have been top advisers to Mr. Lopez Obrador on this and his two previous presidential runs.

Related: Leftist candidate Lopez Obrador is victor in Mexican presidential vote

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Mr. Seade spoke with The Globe from Acapulco, the city in which he is registered to vote, shortly before casting his ballot for Mr. Lopez Obrador. This interview has been edited for clarity.

Q. Mr. Lopez Obrador has been critical of NAFTA as a bad deal for Mexico in the past and said he didn’t want to see a new deal signed until after the election. What can Canada expect from his government with regard to the trade pact?

A. It’s really very simple – the reality is that Lopez Obrador wants to change certain things, with regard to impunity, crime, and he wants to change corruption, which is a huge problem. More relevant to economic issues, he wants to change the emphasis on poverty and income distribution. But trade is not the instrument to do that – trade is not the way.

Q. So nothing changes with regard to trade policy?

We support 100 per cent the positions that [current Economy Secretary Ildefonso] Guajardo and the present government have been stressing as important. On the big issues – Guajardo might have done slightly more than we would have hoped on rules of origin but we will probably go along with it so as to have a united front. Everything else he has been saying, about what is a no-go for Mexico, we totally agree. We are not coming up with new demands. The notion that there may be setbacks [with a new government in Mexico] is completely not the case

Q. Your work as an economist emphasizes the value of free trade – but are you confident that view is shared by the government you’re joining? Mr. Lopez Obrador has been very critical of NAFTA in the past.

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A. When I came into the team I began to discuss with the different people involved and everyone agreed 100 per cent. Then I had the opportunity to discuss with Lopez Obrador himself and he was completely in agreement in what I was saying. I said “Are you okay with the things I have in mind?” He said “Yes, absolutely.”

Q. What is your concern about the rules-of-origin provision?

A. The one proposal that I think is bad in many senses – that is negative for policy making because it is distortional and creates very negative pressure – is to have higher wage provision for one sector than for the rest of the country – such as for cars. You have an incentive to have a large amount of people’s salaries above a certain level – that’s completely managed trade of the kind that Mexico has been very proud to have left behind. And now all of a sudden we are under pressure to have managed trade again – that is something I don’t like as an economist.

As a principle, I think it is a risk: Why not do the same for restaurant employees, for example? But we want an agreement, so we are not going to counter or oppose that. We have no quarrel with what Guajardo has said and we are not going to bring extra things. I don’t have a single item that we would like to propose.

Q. And what if U.S. President Trump were to invoke Chapter 22 and trigger withdrawal from the treaty, as he has threatened on occasion to do?

A. We are not going to accept things that will be negative for Mexico. If the threat of withdrawal is the excuse [the United States uses to try to impose terms] then I think we should not agree to dissolve NAFTA. It will be an agreement from which one party pulls out and the other two stay in place. Among other things, that would make it simpler for the U.S. to come back in under a future administration. We cannot force them to stay in; if they decide to go out, we will try to continue to have the best possible relationship with them through normal trade links.

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And I hope the new team will begin to develop richer trade relations with the rest of the world. The fact that the U.S. government is so introspective shows the danger built in when you have 85 per cent of your foreign trade with a neighbour. We want to continue to have the richest possible relationship with the U.S., but it’s only wise or appropriate to develop that relationship with other countries.

Canada is an essential one – it’s such a big economy, with so much in common with us, and we already have the most exemplar treaty around.

Q. The current Mexican negotiations are being conducted by trade-talk veterans, many of whom were around when NAFTA was first hashed out 24 years ago, and they have deep relationships in Washington. Do you think coming in with new people may be more difficult, especially in the event of a crisis?

A. I’m not saying that everybody will be new – there’s a new chief negotiator, but I hope to work with many of the people that are there now. The negotiations will continue to be led by Guajardo and his team between now and the end of November – I will just come in and represent [Mr. Lopez Obrador, who will be sworn in Dec. 1.] I very much hope the NAFTA negotiations will finish by then – I see no reason why they should not.

Q. Many members of Mexico’s political and business elite have made clear they believe Mr. Lopez Obrador will be a disaster for the country. You are part of a small group of well-educated, high-powered figures who endorse him. Why does he have your support?

A. First, it would be more surprising if everyone thought the same way. I really believe the animosity is the result of propaganda. He wants to cut privilege – privilege doesn’t mean the right to own a firm – that’s not privilege, that’s the product of hard work. He’s talking about unfair benefits. It’s like Warren Buffett saying a few years ago that he pays less tax than his secretary. In Mexico, it’s 10 times worse: There’s a lot of evasion and special exemptions – a lot of holes. Taxes are much lower for those with larger fortunes – he wants to reform that. Lots of people have come to believe he’s the devil, but I really don’t think so. He says, “I want to help the poor, I am very worried about income equality.” But he is very, even excessively, concerned about the creation of debt and having a balanced budget. And his record as mayor of Mexico City – it was a very prudent and successful administration, he did not drain the coffers.

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This country urgently needs to mend its inequality of income distribution. Mexico today has a bipolar distribution system, with 10 per cent of the population having very significant wealth or extremely significant improvement in their level of wealth, while the bottom 70 per cent are increasingly poor. The middle class has collapsed – Mexico no longer has a middle class. It is absolutely a priority to mend that. Lopez Obrador has made this a priority for the past 15 years, and I think he is the man for Mexico now.

Andres Manuel Lopez Obrador decisively won Mexico’s presidency, setting the stage for the most left-wing government in decades at a time of tense relations with the Trump administration. Reuters
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