Mexico prepares its defense of NAFTA

By Laurence Iliff, Crain News Service

MEXICO CITY — Mexican auto industry officials are lining up their arguments to defend the North American Free Trade Agreement (NAFTA) against President-elect Donald Trump's campaign promise to renegotiate the pact or throw it out altogether.

The officials, armed with data and economic studies, have boiled their arguments down to a simple message: The U.S. is much better off with the 1994 trade deal than without it. In an era of global competition, they claim, Mexico complements the U.S. and Canada more than it competes with them.

Although nervous about eventual talks between Mexico and the Trump administration, the industry leaders say they have a winning argument since the pact has woven trilateral ties that cannot be torn apart without major damage to the North American auto industry.

That warning may appeal to Mr. Trump's instincts as a businessman who knows his way around the world, and as a newly minted politician who wants to deliver on his promise to protect American manufacturing jobs.

“Mr. Trump has said that he is going to be the president (who) promotes jobs, and in order to have jobs you have to be competitive,” Eduardo Solis, president of the Mexican Automotive Industry Association, said recently at an auto industry gathering.

“The North American region has to be analyzed vs. the other regions of the world, not Mexico vs. the United States,” he added.

Mr. Solis, a former government trade negotiator, warned against assuming the worst-case scenario from Mr. Trump.

“The relationship is so strong among the industries in the three countries,” he said. “We have to use that as a starting point and not what happens if the United States leaves NAFTA.”

At a conference in Mexico City, industry leaders representing auto makers, truck makers, suppliers and retailers in Mexico defended NAFTA as essential to the U.S. economy.

Oscar Albin, president of Mexico's National Auto Parts Manufacturing Association, said all auto-producing regions of the world rely on low-wage countries. Mexico has a strong argument to take to Mr. Trump: that the U.S. would be left behind without Mexico since Asian and European auto producers aren't going to give up their low-wage production bases in Mexico and around the world.

“For the United States and Canada to be able to produce competitive automobiles, and to continue exporting them and consuming them internally, they have us. We are mutually necessary,” Mr. Albin said. “I think that in the end we are going to be able to make that understood.”

Messrs. Solis and Albin said that no auto makers or parts producers have changed their investment or production plans as a result of Mr. Trump's winning the White House.

One industry leader, who asked not to be named because of the sensitivity of the subject, said Mr. Trump's recent deal with Carrier Corp. was telling. The air conditioning and heating company agreed to keep some 800 to 1,000 workers at an Indiana plant rather than send that work to Monterrey, Mexico.

On the surface, this person said, the story sounds like Mr. Trump's stopping Carrier in its tracks. In fact, Carrier will still be moving hundreds of jobs to Mexico from that plant and another one, showing some give and take in the negotiations and offering hope to industry officials that manufacturing investments in Mexico won't be choked off.

Laurence Iliff is a reporter with Automotive News, a Detroit-based sister publication of Tire Business.