The US is showing a stronger willingness to speed up negotiations on the textile and apparel chapter of the North American Free Trade Agreement (NAFTA) as looming Mexican presidential elections could scupper talks to upend the 23-year accord, a top textiles negotiator has told just-style.
His comments came ahead of reports yesterday (21 March) that Trump is willing to drop his demand that 50% of cars made in Mexico or Canada contain US parts – a major sticking point dragging the negotiations.
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“I noticed a change of heart and a willingness to advance the negotiations,” says Jose Cohen, president of Mexican textile industry association Canaintex, who represented the textiles and apparel industry in the seventh negotiating round in late February.
Mexico holds presidential elections in July, an event that could further derail the crucial talks as a new Mexican president may not agree with any gains made so far, observers say.
Cohen, however, says the US and Mexican positions remain fairly similar, though he expects more progress when US, Canadian and Mexican officials meet in early April.
During the fifth negotiating round, Mexico agreed to Trump’s demand that the free trade agreement be negotiated every five years in exchange for the Tariff Preference Level (TPL) to source key raw materials remaining in place.
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By GlobalDataFor Mexico, the provision is crucial because it bolsters its competitiveness with US buyers at a time when its exports continue to lose share to Vietnam, China and Central America.
“There has been very little advance in the US posture to eliminate the TPL and other [raw material importing] flexibilities,” Cohen says. The TPL’s removal would make life especially hard for Mexican importers of sewing thread, viscose blends, cotton technical fibres, technical yarns and rigid filament yarns brought mainly from India and Korea but also sometimes from China and other parts of Asia.
“We have a 20-year supply chain that has been able to incorporate things you can’t find in the NAFTA region through the TPL,” adds Cohen, owner of the 2,000-strong Baby Creysi brand and maquila exporting Levi’s products north of the border. He notes the TPL has helped boost investment flows between both countries.
Mexico is pledging to improve customs enforcement or work with the US to strike a new and stronger bilateral customs deal to maintain the TPL, Cohen reveals.
“If we can come up with a stronger customs agreement that could open up space for other negotiation compromises. Mexico and the US suffer from the same triangulation, illegal commerce practices and sub-valuation problems, so if we can come up with a stronger customs agreement to address this I think we can make progress in the next round.”
A rising tide of Asian merchandise cargoes are increasingly arriving at Long Beach port in California, going to Mexico and then returning to the US as NAFTA-labelled goods, deepening already huge cross-border losses from illegal or contraband goods.
Time running very short on NAFTA
