Pending NAFTA 2.0
|The countdown is on for a new NAFTA treaty before the Mexican general elections on July 1 and the US mid-term elections on November 6. The deadline is set at early-May (180 days before the elections) for the US administration to submit the text to the current Congress. Otherwise, negotiations are expected to last until 2019, with the risk that the next Mexican administration and US Congress somewhat reshuffle the cards.
Meanwhile, the US-Mexico trade link still stays the course. Mexico’s nominal exports to the US have performed well in recent months (+8.4% y/y in the 12 months period to February 2018) against the backdrop of dynamic industrial production and consumption in the US. In addition, Mexico’s exporting manufacturing firms such as automakers may have accelerated their activities in anticipation of potential trade restrictions. Mexico’s nominal imports from the US have climbed by the same extent as exports, driven by the strong pace of intermediate good imports that are incorporated in the value chain within the NAFTA market.
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