According to a recent assessment by Moody’s Investors Service, the latest elements discussed by the US Trade Representative (USTR) could increase trade flows within North America and points to a limited loss of competitiveness for Mexico compared to what was initially feared.
Environmental and labor provisions costs may be offset by the requirement for a greater percentage of components to be produced with the region which could ultimately increase production sites in Mexico given its cost advantage. The agency noted that the outlined objectives do not point to disruptive changes to the core of NAFTA and the ultimate situation may benefit Mexico’s credit rating and debt risk position which could invite additional foreign investment and assist long-term growth.
The renegotiation talks between the three North American countries are scheduled to begin on August 16, 2017.