Peña Nieto and Obama seek to reinforce NAFTA trade treaty

The leaders of Mexico, the United States and Canada are expected to meet later on Wednesday in the Mexican city of Toluca for the eighth North American Leaders Summit where they will try to redefine the terms of the 20-year-old NAFTA free-trade treaty and discuss immigration issues.

Mexico’s Enrique Peña Nieto, President Barack Obama and Canadian Prime Minister Stephen Harper are expected to discuss ways to push for broader economic development by extending the North American Free Trade Agreement (NAFTA) to encompass the terms of the Trans-Pacific Partnership, an ambitious trade pact being negotiated among 12 nations, officials have said.

Not the United States nor Mexico or Canada have been fully satisfied with the results of NAFTA and have envisioned the TPP as a logical extension of that agreement. During his first campaign, Obama acknowledged that NAFTA had not helped US workers. After he won the election, he asked his then-counterpart Felipe Calderón in Mexico for a revision of the terms but that was never accomplished.

In hard figures, the country which has reaped more benefits under NAFTA is Mexico. In a joint study undertaken by the Federal Reserve and Yale University, conclusions showed that Mexican exports have risen by 100 percent between 1993 and 2005, while US and Canadian exports only rose by 30 percent each during the same period. Mexico has become the United States’ third-largest trading partner after Canada and China.

But Mexican critics complain that NAFTA has not improved the lives of ordinary citizens as was promised when the trilateral trade pact was signed. The country’s poverty rate stood at 48.8 percent in 2010, up from 47 percent in 1992, according to the National Council for the Evaluation of National Development Policy (Coneval).

At the same time, the United States and Canada still have reservations about fully lifting border restrictions – both US and Canadian authorities require visas from Mexicans who want to enter their countries.

One of the groundbreaking advances included in NAFTA was allowing the free flow of traffic among the three countries, but that clause has not been put into place, even though 70 percent of Mexican goods entering the United States arrive by land transport.

Travel restrictions were supposed to be lifted no later than 2000 but a $50-billion loan the United States gave to Mexico in 1994 to improve its economy to help stop the flow of illegal migration to the north has resulted in sanctions because the Mexican government has not been able to resolve its problems. Still, the United States hopes to speed up talks toward implementing the Trusted Traveler Program for the region although nothing on this issue is expected to come out of the Toluca summit.

Just before the summit, Prime Minister Harper said that he had no plans to lift his country’s controversial visa restrictions for Mexican travelers, The Globe and Mail reported on Tuesday. Mexico has been pressuring Ottawa to lift visa restrictions for Mexicans that have been in place since 2009.

Over the past few weeks, Secretary of State John Kerry and Commerce Secretary Penny Pritzker have pushed for a new direction for NATFA by taking advantage of the ongoing TTP negotiations. The reluctance by many Democrats to touch on the TTP issue in the middle of the mid-term election year doesn’t appear to concern the Obama administration, which does not feel that this could jeopardize the success of the Toluca summit.

NAFTA has also improved Mexico’s competiveness with China when it comes to exports. In 2010, The Economist reported that even though Chinese exports were cheaper than those coming from Mexico, they were still higher after duties were paid.

This will be the second visit made by Obama since Peña Nieto took office in December 2012. Since their last meeting in May, Peña Nieto has embarked on a series of ambitious reforms, including an initiative to open the country’s energy sector to private investment. Washington is hoping that US companies will be able to take advantage of the new investment opportunities once the reform is approved, but the discussion during this round of talks isn’t expected to focus on changes to Mexico’s energy sector.