The ‘Superior Equilibrium’: Mexico’s Vision of a EU-NAFTA Agreement
Mexico’s Foreign Minister Jose Antonio Meade sparked discussion when he announced on March 22nd that Mexico envisions a trade deal that ties the European Union (EU) to the North American Free Trade Agreement (NAFTA). Meade proposed that an agreement that binds the states of NAFTA to the EU would combine the world’s two largest free trade areas and would importantly leverage the economic power of the NAFTA nations.
Mexico already has a free trade agreement with the EU and Canada and the United States (US) are each negotiating their own trade deal with the Union. Notwithstanding, Meade contending that having each nation in a separate bilateral agreement would deny the NAFTA states the opportunity of “take full advantage of the economies of scale and scope that have resulted from NAFTA”. Meade stressed that Mexico would be very willing to participate in EU-NAFTA negotiations if these were made regional rather than bilateral from the onset.
As promised by President Obama in his State of the Union speech, the US and the EU are presently negotiating the terms of a trade deal aimed at expanding economic relations. The proposed treaty seeks to lower tariffs, ease regulatory barriers and expand access in investment, services and public procurement. Representatives of the Union have stated that deal with the US is likely to add 86 billion euros ($111.7 billion) a year to the Common European Market.
Canada has also commenced negotiations for a trade deal. Canadian Prime Minister Stephan Harper suggested on March 14th that “significant” progress had been made, but that some important issues still need to be addressed. Harper has also suggested that Canada seeks to finalize its agreement with the Union before the US does so.
In parallel, EU representatives have been meeting with Mexico’s Economic Minister Ildefonso Guajardo and President Enrique Pena Nieto to update the Mexico-EU free trade agreement that took effect in 2000.
In light of the bilateral negotiations between the EU and each of the NAFTA states presently underway, Meade stated that “it probably is the case that one can start by having the three bilateral agreements, but I think the region would benefit if at some point we keep in mind that a superior equilibrium can be reached if the negotiations were North America toward Europe rather than bilaterally each one of us with them”.