2nd round of NAFTA talks opens in Mexico City

By MARK STEVENSON Markets Associated Press

A second round of NAFTA renegotiations began Friday with officials expressing optimism despite President Donald Trump's suggestions he could withdraw the United States from the 23-year-old trade pact.

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Mexico has also said it won't stay at the table if it doesn't get a fair shake or if Washington triggers an exit clause, and the uncertainty has raised fears among businesspeople on both sides of the border that billions of dollars in trade and investment could be threatened.

Delegations from the United States, Mexico and Canada gathered at a Mexico City hotel for discussions on the North American Free Trade Agreement that Mexico's Economy Department said would focus on issues such as rules-of-origin, electronic commerce, the environment and anti-corruption measures.

"There are conditions to negotiate, despite some statements," said Gerardo Gutierrez Candiani, head of Mexico's special economic zones agency.

On Wednesday, Trump said: "We've got to change this deal, and hopefully we can renegotiate it, but if we can't we'll terminate it and we'll start all over again with a real deal."

Mexican Foreign Relations Secretary Luis Videgaray responded to that by saying, "if the result of the negotiations isn't beneficial for Mexico, of course, Mexico won't stay."

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Among other things, Washington wants local-content rules tightened to avoid imports largely made in third countries from being considered "made in North America" just because they were assembled in Mexico.

Gutierrez Candiani said other issues on the table include labor standards and dispute resolution mechanisms. The United States also opposes the current system of private arbitration panels.

Gutierrez Candiani acknowledged that "they are not agile enough, and mechanisms have to be sought that are more agile, more reliable."

The current agreement allows binational panels of private experts to decide differences, making it harder for one nation to unilaterally impose tariffs on another.

The United States wants to eliminate those panels, but Canada and Mexico fear that would allow it to throw its greater weight around and impose tariffs on imports that allegedly harm local producers or are being "dumped," or sold below their real price.

Talk of more such tariffs drew concern from a newly formed alliance of U.S. and Canadian fruit and vegetable companies.

In a letter to the U.S. government Wednesday, the Produce Coalition for NAFTA said "the result will be more tariffs on fruits and vegetables ... what is more, this provision will be used against U.S. growers."

U.S. companies now frequently grow produce in Mexico in the winter or contract it from Mexican companies.

Mexico's Economy Department said the five days of talks will be conducted in 25 working groups with an expected wrap-up date of Tuesday. The first round of talks took place in Washington in mid-August, and several more rounds are expected.