Mexico says called Trump's bluff when he eyed NAFTA exit

Mexican Economy Minister Ildefonso Guajardo attends a news conference in Mexico City, Mexico, May 8, 2017. REUTERS/Edgard Garrido
Mexican Economy Minister Ildefonso Guajardo attends a news conference in Mexico City, Mexico, May 8, 2017. REUTERS/Edgard Garrido
U.S. President Donald Trump in Washington, U.S., May 10, 2017. REUTERS/Kevin Lamarque

By Mitra Taj

MEXICO CITY (Reuters) - Mexico said on Thursday it had called U.S. President Donald Trump's bluff over his suggestion he only decided to stay in the North American Free Trade Agreement as a favor to the leaders of Mexico and Canada after they asked him to renegotiate the deal.

However, Mexico's government said it had sent a very different message to the United States during a crisis over NAFTA's future late last month, when Trump considered starting the six-month process for withdrawing from the accord.

"The message was: if you guys think we're going to start negotiations with the trigger pulled on a U.S. exit in six months, forget about it!" Mexican Economy Minister Ildefonso Guajardo told an audience at the Mexico Business Forum.

"If you do that, just get out already - because there's no way we're negotiating under those conditions," he said.

Guajardo said talk of the United States preparing to leave NAFTA was likely part of a strategy to press Congress to approve Trump's pick for U.S. trade representative.

While Mexico and Canada helped change Trump's mind, so did members of his cabinet, U.S. lawmakers and U.S. producers that would be hurt by a U.S. exit from NAFTA - showing the limits to Trump's unilateral moves, the minister argued.

Guajardo said the plan to trigger a U.S. withdrawal of NAFTA was done "in desperation, which occurs very frequently these days in those parts" - an apparent jab at the way Trump has rolled out some of his key policy proposals.

Mexico's ties with the United States have been strained by Trump's repeated pledge to dump NAFTA if he cannot secure better terms for U.S. workers and industry in a renegotiation.

The rhetoric has encouraged efforts by Mexico to diversify its economy away from dependence on the United States.

Guajardo said Mexico was tightening trade ties with China, deepening deals to get better market access to markets in Brazil and Argentina, making progress on a free trade deal with Jordan and updating an agreement with the European Union.

If the United States did withdraw from NAFTA in a "worst-case scenario," it would not necessarily mean the end of the deal, Guajardo said. Mexico and Canada could opt to make it the framework for their trade relationship, he said.

(Editing by Dave Graham and Paul Tait)

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