MEXICO CITY -- Mexican auto industry officials vigorously defended the North American Free Trade Agreement as critical to U.S. economic competitiveness as they braced for talks between the Mexican government and Donald Trump’s incoming administration over the accord’s future.
At an industry gathering here today, executives from the four major auto industry groups -- representing car and heavy-truck makers, auto parts suppliers and distributors -- said they expected government negotiators to argue before their U.S. counterparts that North America’s three trading partners need to stay integrated as a region to compete globally.
Trump has threatened to exit the 1994 trade treaty or force Mexico to renegotiate parts of it to make it more favorable to U.S. manufacturing.
At an event that was to have focused on touting the Mexican industry’s bright future, the executives were peppered with questions about how a Trump presidency might jeopardize their plans. They insisted that the starting point in any negotiation should be that economic integration in the auto sector has been good for all three nations in the trading bloc.
“Mr. Trump has said that he is going to be the president that promotes jobs, and in order to have jobs you have to be competitive,” said Eduardo Solis, president of the Mexican Automotive Industry Association and one of the original negotiators of NAFTA. “The North American region has to be analyzed vs. the other regions of the world, not Mexico vs. the United States.”
Solis said that he hadn’t heard of any plans by automakers to cut their Mexican investment plans as a result of Trump’s election. He noted that Toyota broke ground on a $1 billion Corolla plant in central Mexico just days after the election.
Guillermo Prieto, president of the Mexican Automobile Distributors Association, said that there is nervousness in the industry over the future of NAFTA but that it’s tempered by the notion that a U.S. exit would have terrible consequences for its own economy. That understanding, he argued, should prevent U.S. officials from overreacting.
All the big auto producing regions of the world have low-cost nations to make their products more competitive on a global stage, said Oscar Albin of the Mexican National Auto Parts Association. For North America, Mexico plays that role to the benefit of the entire region, including the U.S. and Canada.
Albin also said there has been no reduction in investments or demand for Mexican auto parts following Trump’s win.
None of the executives were willing to speculate on what might happen to the Mexican auto industry if the U.S. exited NAFTA, or what specific terms of the accord might be up for renegotiation. All said it was too early to tell.
Among the statistics offered in the industry report today: Mexico is the world’s seventh-biggest producer of autos, behind India, and No. 1 in Latin America; it is the sixth-largest producer of auto parts after South Korea; and auto exports easily outstrip oil and tourism in generating foreign currency for Mexico.