'Don't shoot yourself in the foot': Inside Mexico's
campaign to save NAFTA
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[April 25, 2019]
By Dave Graham
MEXICO CITY (Reuters) - In April 2017, a
group of Mexican executives filed into the Texas governor's mansion in
Austin for a meeting they hoped would help save a trillion-dollar trade
They had a simple pitch for their audience - Republican Governor Greg
Abbott, a handful of business leaders and some party donors: it would be
in Texas' best interest to preserve the North American Free Trade
Abbott was just one of the prominent names on a list of dozens of
American politicians and business executives that Mexico would carefully
compile to help save NAFTA from the relentless attacks of U.S. President
Supplying them with up-to-date information on trade and investment
flows, the Mexicans believed the Americans could persuade policymakers
that scrapping NAFTA would hurt U.S. workers and companies. (Graphic:
Rather than "be good to Mexico," said Juan Gallardo, a prominent Mexican
businessman who helped craft the strategy, the message was "don't shoot
yourself in the foot."
The inside story of Mexico's efforts to stop Trump from killing NAFTA –
and to preserve its essence in a reworked accord – comes from interviews
with more than 20 Mexican and U.S. officials, lawmakers and executives
involved in the process.
After 18 months of talks and concessions by both sides, a deal was
struck. Canada later signed on in what became known as the United
States-Mexico-Canada Agreement (USMCA), which awaits ratification by
lawmakers in the three countries.
But final approval has become more uncertain since Democrats took
control of the House of Representatives from Republicans, a potential
setback to Mexico's best laid plans.
Mexican business and political leaders, including the heads of the
foreign and economy ministries, started scrambling to save the
25-year-old trade deal right after Trump's election in November 2016.
Early on, they decided to avoid public confrontation with Trump, who had
made blaming NAFTA for job losses, particularly in manufacturing, a
centerpiece of his campaign.
"Tit-for-tat wasn't going to work," said Moises Kalach, head of the
international negotiating arm of Mexico's CCE business lobby. "We agreed
not to even get into the ring."
Trump showed no sign of backing off after taking office in January 2017,
telling aides he wanted to withdraw simultaneously from NAFTA and the
Trans-Pacific Partnership (TPP), according to three Mexican business and
When Trump pulled out of TPP that month, Mexican officials feared NAFTA
would be next. In Mexico City, then-foreign minister Luis Videgaray and
his counterpart in the economy ministry, Ildefonso Guajardo, flew to
Washington to sketch out possible concessions for an overhauled trade
Meeting with Trump's economic advisors and his son-in-law Jared Kushner,
they floated stricter content rules for auto manufacturing, tougher
Mexican labor laws and changes to dispute resolution mechanisms, Mexican
Those early concessions would eventually evolve into new rules set out
in the USMCA deal.
"I'm absolutely convinced that if that didn't happen ... NAFTA would
have died in January 2017," Videgaray told Reuters shortly before
While Videgaray dangled concessions, Mexico's private sector rolled out
a lobbying operation underpinned by reams of data supplied by IQOM, a
Mexican trade consultancy.
Headquartered in an old stone townhouse in Mexico City, IQOM collected
data and intelligence to pinpoint U.S. businesses with the most to lose
from a NAFTA repeal. Two top Mexican negotiators of the original NAFTA,
Herminio Blanco and Jaime Zabludovsky, spearheaded the effort.
It was "a permanent, online, computer-based information-gathering
drive," said IQOM partner Zabludovsky. "And a lot of data crunching."
Meanwhile, the CCE hired Washington lobbying firm Akin Gump in the
summer of 2017 to help identify about 250 potential U.S. allies,
Akin Gump and the CCE communicated daily and met regularly. The idea was
to "engage with USMCA stakeholders on both sides of the aisle and in the
Trump administration," an Akin Gump spokesperson said, and build "CCE's
brand and reputation as a trusted partner."
Throughout the process, Mexican negotiators were in close contact with
their Canadian counterparts - even as Mexico also left the door open to
a bilateral deal with the United States.
During negotiations, Mexico's private sector had some 200
representatives in Washington updating its negotiators on how best to
pitch the case to U.S. Trade Representative Robert Lighthizer, according
to sources involved in the process.
[to top of second column]
Mexico's Foreign Minister Luis Videgaray, Canada's Foreign Minister
Chrystia Freeland and Mexico's Economy Minister Ildefonso Guajardo
pose for a picture after delivering a joint message in Mexico City,
Mexico July 25, 2018. REUTERS/Gustavo Graf/File Photo
Each member of Mexico's team also had politicians or executives to target.
Kalach of the CCE said he spoke to 36 U.S. state governors about the value of
Mexican participants often expressed surprise about how little U.S. politicians
knew about the extent of bilateral economic ties. Even in Texas, the state doing
the most trade with Mexico, some officials appeared not to have grasped fully
what a NAFTA termination could cost, Gallardo said.
At the April 2017 meeting in the governor's mansion, the Mexican delegation gave
a detailed breakdown of trade between Mexico and Texas to Abbott and the others,
who included Gerardo Schwebel, executive vice president of the International
Bank of Commerce, and oil tycoon Paul Foster, sources said.
Economic ties were explained "by players, by amounts," Gallardo said. "That was
an eye-opener... no one had ever put that together into one paper."
Abbott eventually sent a letter to Lighthizer defending NAFTA - emphasizing that
Texas exported more than $90 billion of goods to Mexico annually and that nearly
a million jobs depended on free trade with the NAFTA partners.
In a second letter to Lighthizer, Abbott asked the Trump administration to
"reconsider" its demand for a sunset clause that could have killed the new
agreement in five years, a major Mexican concern. In the end, the clause was
John Wittman, a spokesman for Abbott, confirmed the Austin meeting, adding that
the governor had been engaged with various stakeholders and White House
officials throughout NAFTA talks.
Lighthizer's office did not respond to a request for comment.
HELP FROM WALL STREET
High among the list of prospective allies drawn up by Mexico were several top
Wall Street executives, including Jamie Dimon of JPMorgan Chase & Co,
Blackstone's Stephen Schwarzman and KKR's Henry Kravis.
Dimon chairs the Business Roundtable, which, with the U.S. Chamber of Commerce,
was viewed by the Mexicans as a powerful voice in support of NAFTA. The banking
executive proved particularly effective, Mexican and U.S. sources said.
Among others, a source familiar with the situation said, Dimon met with Kushner,
U.S. Treasury Secretary Steven Mnuchin and Gary Cohn, Trump's chief economic
adviser until April 2018.
Calling Mexico a peaceful neighbor, Dimon publicly argued a trade agreement
would help "ensure that the young democracy in Mexico is not hijacked by
populist and anti-American leaders."
Mnuchin held multiple meetings with counterparts, and offered his input to
Lighthizer as he negotiated USMCA, a U.S. Treasury official said. Mnuchin sees
Canada and Mexico as important trading partners, and believes free and fair
trade with them benefits the United States, the official added.
The White House did not respond to requests for comment about the meetings.
Representatives for Cohn, Schwarzman and Kravis declined to comment or did not
reply to requests for one.
Kansas City Southern Chief Executive Officer Pat Ottensmeyer, whose company runs
trains through Mexico, was a staunch advocate for NAFTA in the United States,
and also consulted with top-level Mexican officials.
Between Trump's inauguration and the end of 2018, Kansas City Southern said it
had organized or participated in 65 meetings with lawmakers or regulators, as
well as 76 speeches or conferences in defense of NAFTA.
Ottensmeyer recalled speaking to several cabinet members, including Lighthizer
and current Secretary of State Mike Pompeo, when he was still head of the CIA.
The approach was to "literally talk to anybody and everybody who we thought was
willing to listen and could be influential in the process," Ottensmeyer told
A representative for Pompeo declined to comment.
Within months, Mexico's lobbying efforts began paying dividends: American
politicians and business executives were making a case for NAFTA directly to the
White House, pushing back on Trump's ongoing threats to rip up NAFTA.
"From what I understand," Gallardo said, "Trump never, ever in his wildest
dreams imagined the kind of uproar this was going to create. And that's what
(Reporting by Dave Graham; Additional reporting by Frank Jack Daniel and Anthony
Esposito in Mexico City, Jennifer Hiller in Houston, Richard Cowan in
Washington, David Henry in New York; Editing by Simon Webb, Brian Thevenot and
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