General Electric (GE.N) on Friday praised Mexico as a big part of its future and said the company is “very supportive” of the North American Free Trade Agreement (NAFTA) that U.S President Donald Trump has threatened to ditch.

GE Chief Executive Officer Jeff Immelt said on a visit that Mexico had great potential and was not properly understood. He touted the conglomerate’s Mexican operations and the trade deal binding Mexico, Canada and the United States.

“GE as a company, we’re very supportive of NAFTA,” Immelt told employees at an event to mark the expansion of operations in the northern city of Monterrey. He said the trade accord could be modernized, as Mexico has argued.

Immelt sits on a Trump-appointed manufacturing council that Mexico has targeted for lobbying as Mexico and Canada push U.S. business leaders to defend NAFTA.

The GE boss said trade meant “win-win” opportunities across North America.

“We will continue to work constructively in the context of wanting to see a close relationship between the U.S. and Mexico,” he said, noting that GE’s exports to the rest of the world from Mexico were worth $3 billion.

“We’re optimistic about Mexico, we’re optimistic about what we can do here,” Immelt added, saying Latin America’s no. 2 economy would be a “big part” of GE’s future.

Earlier this month, Immelt urged the Trump administration to avoid protectionist policies, calling on it to level the playing field for U.S. companies with tax reform, revived export financing and improved trade agreements.

Trump touts a “Buy American” policy and has railed against U.S. companies moving operations to Mexico. He has threatened to ditch NAFTA, a lynchpin of the Mexican economy, if he cannot rework it to secure better terms for the United States.

Unlike some U.S. companies, GE has not backed off plans in Mexico, risking broadsides from Trump on Twitter.

Earlier, the Mexican presidency said in a statement that GE had stated an interest in doubling purchases from Mexican suppliers next year. Immelt did not mention this.

Vladimiro de la Mora, CEO for Mexico, said the figure came from an announcement last year and did not mean GE aimed to double purchases between this year and 2018.

On Thursday, GE said it had won a contract to provide plants producing two new gigawatts of power in Mexico and secured a separate $120 million, multi-year service deal.

De la Mora said GE could not yet reveal details of the 2 GW deal, but it was “likely” the value of the total investment in the power plants would exceed $500 million.

Mexico sent a stark message to U.S. President Donald Trump on Thursday, saying an upcoming visit by Mexican officials to China showed Latin America’s second largest economy had other places to export to if he tore up the NAFTA trade deal.

The North American Free Trade Agreement (NAFTA) underpins Mexico’s economy, prompting the government to try and diversify away from the United States, which takes 80 percent of its exports.

Trump indicated in an interview with The Economist published on Thursday that he wanted to get the U.S.-Mexico trade deficit down to about zero. He wants to renegotiate NAFTA to get a better deal for U.S. companies and workers, and has threatened to end the agreement if he does not get his way.

“We will use (the China visit) geopolitically as strategic leverage” said Mexican Economy Minister Ildefonso Guajardo, answering questions on trade at the Mexico Business Forum. “It sends the signal that we have many alternatives.”

Guajardo noted Mexico sends China a fraction of its total exports, and that the two major manufacturing nations tend to compete rather than complement one another on trade.

He also offered a rebuke to China on its trade policy.

“We all know that China is not a free trader, that’s the reality,” he said. But he added that Mexico has had success persuading China to ease trade barriers on some goods and expects it to continue to open up as its economy matures.

The trip to China would be in September, Guajardo said, but he did not provide details.

A Mexican diplomat in Beijing told Reuters he was referring to the China International Fair for Investment & Trade summit in Xiamen. “High-level contact is very frequent,” said the diplomat, who was not authorized to comment.

Guajardo said he was also working on a “radical broadening” of preferred tariffs with Brazil and Argentina to lower the cost of importing grains from the South American nations while giving Mexico better access to their manufacturing markets.

That would make the “worst-case scenario” of the U.S. withdrawing from NAFTA less painful for Mexico and strengthen its negotiating hand, Guajardo said.

“If NAFTA disappears, I can export cars (to the United States) paying 2.5 percent tariffs. If they want to export yellow corn to me, I can raise tariffs to inaccessible levels,” Guajardo said. “But to make that strategy credible, I have to broaden our agreements with Brazil and Argentina.”

Representatives of Mexico’s government and private sector are in Brazil this week to close new supply deals of corn, soy and rice, members of the delegation said Thursday.

Still, Mexico has found it hard to wean itself off trade with its northern neighbor. It has tried to deepen commercial links with China for years, but the scrapping of a Chinese high-speed train contract in 2014 soured relations.

The diplomat said Mexico was not sending top-level officials to “China’s Belt and Road Initiative” meeting in Beijing this weekend. Bilateral meetings between senior Mexican officials and their Chinese counterparts were planned throughout the year.

Guajardo said that the U.S. trade deficit was not a measure of the strength of its economy or trade relationship. But he said it might be possible to shrink the U.S. deficit with Mexico if more North American products were made with materials from within the region without hurting competitiveness.

Erecting tariffs, however, was “out of the question,” Guajardo said. “The precondition to negotiating NAFTA is that we can’t go back to the past,” he added.

MEXICO CITY/OTTAWA (Reuters) – From launching a data-mining drive aiming to find supply-chain pressure points to sending officials to mobilize allies in key U.S. states, Mexico and Canada are bolstering their defenses of a regional trade pact President Donald Trump vows to rewrite.

Trump has blamed the North American Free Trade Agreement (NAFTA) for the loss of millions of manufacturing jobs and has threatened to tear it up if he fails to get a better deal.

Fearing the massive disruptions a U.S. pullout could cause, the United States’ neighbors and two biggest export markets have focused on sectors most exposed to a breakdown in free trade and with the political clout to influence Washington.

That encompasses many of the states that swept Trump to power in November and senior politicians such as Vice President Mike Pence, a former Indiana governor or Wisconsin representative and House Speaker Paul Ryan.

Prominent CEOs on Trump’s business councils are also key targets, according to people familiar with the lobbying push.

Mexico, for example, has picked out the governors of Texas, Arizona and Indiana as potential allies.

Decision makers in Michigan, North Carolina, Minnesota, Illinois, Tennessee, Wisconsin, Ohio, Florida, Pennsylvania, Nebraska, California and New Mexico are also on Mexico’s priority list, according to people involved in talks.

Mexican and U.S. officials and executives have had “hundreds” of meetings since Trump took office, said Moises Kalach, foreign trade chief of the Mexican private sector team leading the defense of NAFTA. (Graphic:tmsnrt.rs/2oYClp2)

Canada has drawn up a list of 11 U.S. states, largely overlapping with Mexico’s targets, that stand to lose the most if the trade pact enacted in 1994 unravels.

To identify potential allies among U.S. companies and industries, Mexican business lobby Consejo Coordinador Empresarial (CCE) recruited IQOM, a consultancy led by former NAFTA negotiators Herminio Blanco and Jaime Zabludovsky.

In one case, the analysis found that in Indiana, one type of engine made up about a fifth of the state’s $5 billion exports to Mexico. Kalach’s team identified one local supplier of the product and put it touch with its main Mexican client.

“We said: talk to the governor, talk to the members of congress, talk to your ex-governor, Vice President Pence, and explain that if this goes wrong, the company is done,” Kalach said. He declined to reveal the name of the company and Reuters could not immediately verify its identity.

Trump rattled the two nations last week when his administration said he was considering an executive order to withdraw from the trade pact, which has been in force since 1994. He later said he would try to renegotiate the deal first and Kalach said the lobbying effort deserved much credit for Trump’s u-turn.

“There was huge mobilization,” he said. “I can tell you the phone did not stop ringing in (Commerce Secretary Wilbur) Ross’s office. It did not stop ringing in (National Economic Council Director) Gary Cohn’s office, in the office of (White House Chief of Staff Reince) Priebus. The visits to the White House from pro-NAFTA allies did not stop all afternoon.”

Among those calling the White House and other senior administration officials were U.S. Chamber of Commerce chief Tom Donohue, officials from the Business Roundtable and CEOs from both lobbies, according to people familiar with the discussions.

PRIME TARGET

Mexico has been the prime target of NAFTA critics, who blame it for lost manufacturing jobs and widening U.S. trade deficits. Canada had managed to keep a lower profile, concentrating on seeking U.S. allies in case of an open conflict.

That changed in late April when the Trump administration attacked Ottawa over support for dairy farmers and slapped preliminary duties on softwood lumber imports.

Despite an apparently weaker position – Canada and Mexico jointly absorb about a third of U.S. exports, but rely on U.S. demand for three quarters of their own – the two have managed to even up the odds in the past by exploiting certain weak spots.

When Washington clashed with Ottawa in 2013 over meat-labeling rules, Canada retaliated by targeting exports from the states of key U.S. legislators. A similar policy is again under consideration.

Mexico is taking a leaf out of a 2011 trucking dispute to identify U.S. interests that are most exposed, such as $2.3 billion of yellow corn exports.

Mexico is also targeting members of Trump advisory bodies, the Strategic and Policy Forum and the Manufacturing Council, led by Blackstone Group LP’s Stephen Schwarzman and Dow Chemical Co boss Andrew Liveris respectively.

Senior Trump administration officials and Republican lawmakers in charge of trade, agriculture and finance committees also feature among top lobbying targets.

Canada has spread the task of lobbying the United States among ministries, official say, and is particularly keen to avoid disruption to the highly-integrated auto industry.

A core component of Mexico’s strategy is to argue the three nations have a common interest in fending off Asian competition and exploring scope to source more content regionally.

The defenders of NAFTA also say that it supports millions of jobs in the United States, and point out that U.S. trade shortfalls with Canada and Mexico have declined over the past decade even as the deficit with China continued to climb.

Part of IQOM’s mission is to identify sectors where NAFTA rules of origin could be modified to increase regional content.

For example, U.S., Canadian and Mexican officials are debating how the NAFTA region can reduce auto parts imports from China, Japan, South Korea or Germany, Mexican officials say.

“The key thing is to see how we can get a win-win on the products most used in our countries, and to develop common manufacturing platforms that allow us just to buy between ourselves the biggest amount of inputs we need,” said Luis Aguirre, vice-president of Mexican industry group Concamin.

Some two dozen major aerospace and defense companies now have significant manufacturing operations in Mexico, and more than half of these are U.S.-based corporations. One has to wonder that when they decided on these long-term investments—in most cases, a decade or more ago—whether any of them contemplated the prospect of a U.S. President winning an election with promises to make it unsustainable for American manufacturers to build products in Mexico.

That is exactly what came to pass with the election of President Donald Trump, who, as his 100th day in office passed on Saturday, still had not delivered on his pledge to introduce a 20 percent tariff on manufactured goods imported into the U.S. from Mexico. The controversial tariff is partly intended to deter U.S. firms from setting up shop south of the Rio Grande and partly to find a way to compel the Mexican government to finance the construction of a wall along the entire length of the 2,000-mile border between the two countries.

In recent weeks, there has been little mention of the 20 percent tariff, but just this week Trump threatened to unilaterally pull the U.S. out of the North American Free Trade Agreement with Mexico and Canada. Within hours he backed down, indicating that he is willing to renegotiate NAFTA instead, only to then repeat the threat if the leaders of the U.S.’s neighboring countries refuse to agree to his terms.

So how concerned should U.S. aerospace and defense industries be that the business case for their Mexican operations could soon evaporate? The U.S. Aerospace Industries Association (AIA) has yet to take a definitive position on the threat of tariffs and the Trump Administration’s shifting trade policies.

“We are working through a number of positions on trade, trade agreements, tax provisions and tariffs with respect to their impact on the free flow of goods and people,” commented AIA communications director Dan Stohr. “As with most—if not all—policy discussions, the devil is in the detail. How would such tariffs be implemented? Against what goods? Are there alternative sources for parts and components coming from tariffed nations? It’s hard to say without concrete details on what the proposals would actually do.”

The planned 20 percent tariff on imports from Mexico no longer features among the policy position statements on the White House website. In its place is a more generic commitment to “trade deals that work for all Americans.”

But experts working closely with the aerospace and defense manufacturing sector in Mexico have acknowledged that the lack of clarity over the threat of tariffs is unsettling leading companies. “I don’t think anyone is viewing this as just political rhetoric,” said Doug Donahue, business development vice president at the Entrada Group, which helps companies to establish and run manufacturing facilities in Mexico.

Donahue told AIN that, as significant as Mexico now is in the aviation supply chain, he does not feel the value of cross-border trade conducted in the sector would justify specifically targeting the industry with the proposed tariff. “But the industry could still be hit if the tariffs cover general manufacturing. We don’t yet know whether [Trump] will do this in an industry-specific way,” he said.

Mexico’s peso currency tumbled in value against the U.S. dollar in the immediate aftermath of Trump’s November 2016 election victory. According to Donahue, the fall in the peso effectively compensated for the potential 20 percent tariff in lowering the price of goods produced in Mexico. He argued that the trend now could have a destabilizing effect if the tariff doesn’t get implemented.

“Companies are worried and concerned by the generally deteriorating relationship between the U.S. and Mexico,” Donahue told AIN. “What businesses hate most is a lack of predictability, so for now they can’t take decisions on possible investments [in Mexico]. The real issue [for American industry] isn’t the U.S. versus Mexico; it’s automation versus the U.S. The trade deficit numbers quoted by the Trump Administration to justify tariffs only take account of goods, not services. The U.S. exports about $40 billion worth of services to Mexico.”

Some industry observers have argued that it would be far too costly for aerospace firms to now move manufacturing back to the U.S. And, even if they did, Donahue questions whether they would find enough suitably qualified employees to do work such as wire harness manufacturing. “A lot of this work is very labor intensive,” said Donahue. “If you can’t find enough labor or automate it, the cost to the consumer [i.e. airlines] will have to go up.”

Donahue warned that the American aerospace sector’s European and Japanese rivals are not waiting for the political uncertainty to clear in Washington, D.C. They are pressing ahead with investments in Mexico, and he argued that U.S. firms could “lose a foothold” and competitive advantage in a price-sensitive market if their position is undermined by costly tariffs.

Major aerospace and defense firms with manufacturing facilities in Mexico include Honeywell, Goodrich, Gulfstream, Textron, Rockwell Collins, Lockheed Martin, Northrop Grumman, Safran, Fokker, Triumph, GE, Bombardier and Meggitt.

WASHINGTON: President Donald Trump expressed optimism on Thursday the United States, Canada and Mexico can successfully renegotiate a trade accord he deems unfair to American interests but vowed to scrap the 23-year-old pact if a “fair deal for all” cannot be reached.

Trump, in a meeting with Argentine president Mauricio Macri, said Thursday he had planned to terminate Nafta, but decided to hold off after speaking to the leaders of Mexico and Canada to see if deal can be made.

“Rather than terminating Nafta, which would be a pretty big shock to the system, we will renegotiate,” Trump told reporters in the Oval Office. “If I’m unable to make a fair deal for the United States … I will terminate Nafta.”

Trump’s comments came a day after the White House decided against taking immediate steps to withdraw from the North American Free Trade Agreement, a pact Trump has long condemned.

Instead of pursuing a termination order considered by some advisers, the White House said Trump told Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau by telephone that the United States would seek to quickly begin renegotiating the pact.

Earlier on Thursday, Trump wrote on Twitter he had received calls from Pena Nieto and Trudeau.

“Relationships are good-deal very possible!” Trump wrote.

In Mexico City, Mexican Foreign Minister Luis Videgaray said Wednesday’s call, initiated by Pena Nieto and lasting about 20 minutes, focused exclusively on the looming talks over Nafta’s “renegotiation and modernisation.” Videgaray said Trump wanted to see the talks accelerated.

“I believe that all the conditions to reach a good negotiation exist, that will suit Mexico … and that is also good for the region, for both Canada and the United States,” Videgaray told local broadcaster Televisa, adding that relations between the United States and Mexico have experienced “enormous progress” during Trump’s presidency.

Trump has criticised multinational trade agreements as unfair to the United States and made pulling out of the 12-nation Trans-Pacific Partnership, negotiated by his Democratic predecessor Barack Obama, one of his first major acts after becoming president in January.

In Ottawa, a Canadian source familiar with the matter said Trudeau urged Trump not to withdraw from Nafta, saying such action would be counterproductive.

Trump repeatedly has threatened to pull out of Nafta, which erased most tariffs between the three neighbours, if he cannot renegotiate better terms for the United States, which went from running a small goods trade surplus with Mexico in the early 1990s to a US$63bil deficit in 2016.

Mexico, Canada and the United States form one of the world’s biggest trading blocs, and trade disruptions among them could cause havoc in the automotive, agricultural, energy and other sectors.

‘Conceptual flaws’

US Commerce Secretary Wilbur Ross told CNBC on Thursday that numerous “conceptual flaws” in the treaty needed to be addressed. Ross said Chinese goods dumped in Mexico are making their way into the United States.

“The rules of origin in Nafta need some tightening,” Ross said. “Rules of origin are what let material outside of Nafta to come in and benefit from all the taxes and tariff reductions within Nafta.”

“It was a silly idea to let a lot of outside stuff in. The whole idea of a trade deal is to build a fence around participants inside and give them an advantage over the outside,” Ross added. “So there’s a conceptual flaw in that, one of many conceptual flaws in Nafta.”

The Mexican and Canadian currencies maintained their rebound early on Thursday after Trump’s latest comments. The US dollar dropped 0.3% against its Canadian counterpart and about 0.5% against the peso.

Trump’s scorn toward international trade deals, part of his nationalist political message, appeals to Americans who feel such pacts have cost Americans jobs, and he has said businesses that choose to move plants outside the country would pay a price.

On Wednesday, the White House said Trump had spoken with Mexican and Canadian counterparts and agreed not to immediately move to terminate Nafta. The announcement came hours after White House officials disclosed that Trump and his advisers had been considering an executive order to withdraw the United States from Nafta, but there was a split among his top advisers over whether to take the step.

“The leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries,” the White House said in a statement.

Trump long has accused Mexico of luring away American factories and jobs with cheap labour and other advantages enabled by Nafta. On Tuesday, Trump said he did not fear a trade war with Canada even as he complained about Canadian trade practices.

His administration on Monday moved to impose tariffs on imported Canadian lumber that mostly feeds US homebuilding, noting trade authorities have consistently sided with Ottawa in the long-standing dispute.
Read more at http://www.thestar.com.my/business/business-news/2017/04/28/trump-says-will-renegotiate-nafta-deal-with-canada-and-mexico/#7rL0YaVeIvvKhjGF.99

Mexican annual inflation rose more than expected in early April to hit its fastest pace in nearly 8 years, which could bode for further interest rate hikes from the central bank.

Inflation for the year through mid-April was 5.62 percent MXCPHI=ECI, the national statistics institute said on Monday.
The figure was the highest since June 2009, and above expectations of economists polled by Reuters for 5.58 percent.
Mexico’s central bank governor Agustin Carstens last week signaled on that the bank’s cycle of monetary tightening might not be over.
The Banco de Mexico has raised the benchmark interest rate to 6.50 percent, its highest since 2009, with a string of 50-basis point hikes followed by a smaller increase, 25 points, in its last board meeting in late March.
The core price index MXCPIC=ECI, which strips out some volatile food and energy prices, rose 4.76 percent in the 12-month period to mid-April, above the 4.61 percent forecast in a Reuters poll. The rate is at its highest since August 2009.
A deep slump in the peso last year has pressured inflation, but a recent rally in the currency could help contain pressures.
In the first half of April, consumer prices fell 0.15 percent MXCPIF=ECI as summer electricity subsidies kicked in, while the core price index MXCPIH=ECI climbed 0.26 percent.
A separate report from the statistics institute showed the pace of economic growth in February slipped to its slowest since last August.

HIDALGO, Mexico – Like most people who don’t drive an electric vehicle regularly, Mauricio Gonzalez has to check and see if the engine is even running. When he confirms that it is, the SUV made by Chinese manufacturer JAC Motors is flying.

“I think it’s a very nice car. It’s very powerful, and I think it’s very comfortable, also.”

But what Gonzalez is really excited about is that this SUV was assembled in the central Mexican state of Hidalgo. Gonzalez is the state’s undersecretary for economic development. His job is to attract companies here, and the plant where these SUVs are made already employs 200 people.

“Their priority is to create, more or less, 1,000 jobs,” he said.

JAC is one of three companies owned by the Chinese government with a presence in Mexico. Just last month, JAC started selling its SUVs here. They’re working in partnership with a Mexican company called Giant Motors.

Giant was started 10 years ago by a group of Mexican investors. They’ve also partnered with Chinese company FAW Trucks to make commercial vehicles. Giant Motors CEO Elias Masri said that for now, his company’s long-term plan doesn’t even include American consumers.

“The main issue is to make a Mexican product. And our main goal today is Mexico and Latin America,” Masri said.

“Mexico has a lot of other options,” said Kristen Dziczek, an analyst with the Center for Automotive Research in Ann Arbor, Michigan.

“Mexico has free trade with over half the market for new vehicles in the world, and they can very easily shift to being a non-NAFTA export,” she said.

Without a doubt, Dziczek said, Mexico is closely linked to the U.S. She estimates that about two-thirds of U.S. investment in Mexico comes from the automotive sector. But what’s already here won’t just evaporate if the North American Free Trade Agreement disappears.

“Right now, they’re making one in five vehicles for non-NAFTA export, and we see that rising in just three or four years to one in three.”

One possible new partner for Mexico is China. Dziczek said that with Mexico’s established ecosystem of carmakers and part suppliers, it’s a good place for Chinese companies to get a toe-hold as they seek to expand outside of China. Although it should be noted that Chinese presence in Mexico is not new, said Enrique Dussel Peters, the director of Center of Chinese-Mexican Studies at the National Autonomous University of Mexico.

“Well, China is Mexico’s second largest trading partner since 2003,” he said.

But, historically, Mexico has competed with China to export to the U.S. and elsewhere. And Dussel said that in 2016, Mexico’s import-export relationship with China was 13 to 1.

“So we are importing massively from China and exporting very little.”

Mexico could benefit more, Dussel said, but at least for now it lacks the government, business and academic infrastructure to fully exploit that relationship. “And so if we do not make our homework, we will not be able to sell tequila, no? Hah. Less aside other more sophisticated goods.”

Back inside the JAC Motors SUV, Gonzalez celebrates the Chinese investment in the state of Hidalgo. But he doesn’t want companies to come exclusively from one place, whether it’s the U.S. or China.

“That’s why we’re looking forward to promote the state of Hidalgo in Asia, in particular, also in Europe,” he said.

As it turns out, most people betting on whether automotive investments will become a long-term strategy from China are being cautious.

Polish President Andrzej Duda on Saturday starts an official visit to Mexico.

Along comes a score of Polish companies interested in increasing their footprint in Latin America. The five-day mission will include a Polish-Mexican Business Forum and meetings with local companies in Mexico City.
Poland eyes the country as an emerging regional power which may soon join the group of the world’s biggest economies.
Mexico now ranks 11th in the world in GDP-based standings and is expected to become the world’s fifth biggest economy by mid-21st century. The mission to the country is led by the Polish Agency for Investment and Trade (PAIH).
“This is a very important, historic visit to Mexico by our president and we are taking advantage of it to bring the Mexican market closer to Polish companies willing to expand their business overseas,” PAIH vice president Krzysztof Senger told our reporter Michał Owczarek.

Mexico’s top trade negotiator said he was heartened by a retreat from more protectionist rhetoric in the U.S. and that talks to redo the North American Free Trade Agreement may conclude as soon as January.

Economy Minister Ildefonso Guajardo said the January date would depend on the administration of President Donald Trump notifying Congress in time for negotiations to begin by the end of July.

“The U.S. has to trigger the mechanism,” Guajardo said in an interview with Bloomberg TV’s Erik Schatzker in Buenos Aires. “What I keep hearing is that after Congress comes back from recess, they will be able to be notified by the end of April.” In that case talks can start by the end of July, followed by “six months of negotiations, and then we send it to the legislative branch for them to approve it.”

Investors have shed their doomsday outlook on Mexico in recent weeks after White House officials repeatedly said that both Mexico and the U.S. stand to benefit from a renegotiation of Nafta. The peso has rebounded from a record low in January and is now the best performer of all currencies tracked by Bloomberg, and companies that had put investments on hold as then-candidate Trump railed against Nafta are racing back into the country.

“It will be in the best interest of both countries involved to make this process very efficient,” Guajardo said, noting that Mexico has presidential elections in mid-2018 and the U.S. has a midterm vote in November of next year.

Still, Guajardo warned that even minor changes may be difficult to negotiate. On one of those changes, raising the average percentage of auto inputs that must be made in the North American region to 70 percent from 62.5 percent seems reasonable, Guajardo said on the sidelines of the World Economic Forum’s Latin America meeting in Buenos Aires. However, pushing it to 95 percent would be extreme and hurt the region’s competitiveness.

“Mexico will be willing to buy more from the U.S.,” Guajardo said. “We can make an additional effort as long as you have the supply process already in place to be able to supply in Mexico at a competitive cost.”

The Trump administration has softened its rhetoric notably from January, when then President-elect Trump tweeted that he’ll slap heavy taxes on businesses that move jobs to Mexico. Since then, U.S. Treasury Secretary Steven Mnuchin has said redoing Nafta could spell a win-win for both sides. Commerce Secretary Wilbur Ross said he anticipates a sensible deal, and Peter Navarro, who leads the White House National Trade Council, said he wants Canada, Mexico and the U.S. to become a global manufacturing powerhouse.

Some of Trump’s early stumbles, such as the collapse of the health-care bill and court orders against two attempts at a travel ban have also underscored how hard it is to make any drastic changes in Washington.

For example, House Speaker Paul Ryan has been pushing to replace corporate income tax with a tax on businesses’ domestic sales and imports, exempting exports. The border adjustment tax proposal raised alarm bells among importers in the U.S., as well as government officials in Mexico as they feared it would reduce shipments north of the border. But support for the measure has waned in Washington.

That border tax may run the risk of violating principles of the World Trade Organization, and Mexico reserves the right to file a complaint against it, Guajardo said in the interview. In addition, if the U.S. reduces its corporate tax rate, the nation would have to rethink its own tax policy to keep being attractive for foreign investment.

A March 22 draft proposal to rework Nafta signed by acting U.S. Trade Representative Stephen Vaughn states that the U.S. will seek to give preference to domestic companies for government procurement while finding opportunities for U.S. companies to bid in Mexico and Canada procurement markets. While noting that the White House has backed away from the letter, Guajardo said that if the U.S. wants access to Mexico’s public purchases, it will have to give Mexico access to its own public purchases.

Trump must issue a formal 90-day notice of his intent to Congress to revisit Nafta, but the administration so far has been vague about what the U.S. will seek from Mexico and Canada in the talks. Ross said March 10 that the White House would give its notice to Congress within weeks, but it has yet to happen. Mexico has been lobbying for a swift renegotiation that could be concluded before the mid-2018 presidential elections.