Patience may be wearing thin on both sides of the U.S.-Mexico border as a kick-off to NAFTA negotiations are awaited. Mexico’s Economy Minister Ildefonso Guajardo has cited the lack of a U.S. Trade Representative appointment as a reason for delays, Bloomberg reports. He has previously cited end-January 2018 as a likely date for a new agreement if talks can be started by the end of July. Theoretically, should the USTR be needed in place before the 90 day notice period is triggered and should a pre-recess kick-off be desired then a decision by the Senate on Robert Lighthizer’s appointment is needed by May 2.

President Donald Trump meanwhile appeared to strike a more hawkish tone, at the signing of the “Buy American, Hire American” executive order, saying “we’re going to make some very big changes or we are going to get rid of NAFTA for once and for all”. He also referred to the Trade Promotion Authority negotiating timetable requirements as “ridiculous”.

That is a long way from bypassing the TPA requirements – which is possible but would not allow a latter “up-down” vote on the revised NAFTA. The risk there is that short-term expediency would be traded off against the risk of a deal being unpicked by Congress at a later stage.

A continued delay runs the risk that the NAFTA negotiations get tied up with Mexican elections due July 1 2018 and the U.S. midterm elections scheduled for November 6 2018. Mexico may also want to start talks as soon as possible to avoid an accelerating surplus with the U.S., which is seasonal. Panjiva analysis shows that the U.S. trade deficit (ie goods imports less exports) vs. Mexico excluding energy tends to peak in October and November each year.

Chart shows U.S. trade deficit (based on goods imports and exports) with Mexico excluding the balance of energy imports and exports (based on HS 27 chapter products)   Source: Panjiva