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US companies already recognize that they have won from Nafta, Mexico’s Guajardo told the conference. Over the first few months of Trump’s presidency, they’ve lobbied more for the deal than during all of the previous 20 years, he said. Furthermore, Trump’s claims that the US is a loser and Mexico a winner puts Guajardo in an impossible position to start talks. “You can’t sit down to a negotiation while you’re in the dock as being the only winner,” he said. Trump often brings up the US’s bulging trade deficit as evidence of the damage Nafta has done. But a trade deficit in itself isn’t necessarily bad ; it can be a sign of a strong economy as well as a weak one. Guajardo pointed out that to properly assess the trade balance, “what would need to be analyzed would be the current-account balance, which also includes services.” But even if you frame the debate in terms of trade of goods, he noted, many of the products the US imports from Mexico, such as cars, are made up of components that the US first exported to Mexico. In other words, by raising tariffs on imports, the US would shoot itself in the foot, by hurting the manufacturers who made those components. Mexico has been trying to explain these concepts to the Trump administration, including in an 11-page document it submitted to the US Department of Commerce earlier this month. It reads like a beginner’s economics textbook, full of quotations from economic studies and graphics. The real definition of “unfair trade,” said Videgaray, is “violating the rules or is going against the principles of a market economy.” Nafta already has provisions to fight that. Trump has repeatedly blamed Nafta for shuttered factories throughout the US. But the bigger culprit is technology, not trade.
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