Trade Deal Raises Cautious Optimism Along U.S.-Mexico Border

Published: Monday, August 27, 2018 - 7:22pm
Murphy Woodhouse/KJZZ News
The Hermosillo Ford plant is one of the largest employers in the city. A preliminary trade deal between Mexico and the United States would increase the portion of components that must come from North American manufacturers.

The announcement of a preliminary U.S.-Mexico trade deal today came as welcome news for business officials on both sides of the border.

Though the details of the deal are still being released, Glenn Hamer of the Arizona Chamber of Commerce and Industry was upbeat.

“There was a real threat that the entire agreement — NAFTA — would just simply cease to exist,” he said.

Canada is not a party to the deal, but Hamer is hopeful that any final agreement will be between the three original NAFTA countries. Mexico is Arizona’s most important trading partner.

The agreement would require a larger portion of vehicle manufacturing to occur in North America for companies to avoid tariffs. Proposed protections for specialty crop growers in the U.S. were not included, a move welcomed by southern Arizona’s massive produce import industry.

“Southeastern growers could say they are being harmed by imports, and they could seek protection from the government,” said Guillermo Valencia, chair of the Greater Nogales Port Authority. Every year, billions of dollars of produce imports pass through the port, and the industry is the largest private employer in Nogales, Arizona.

At a press conference at the Mexican Embassy on Monday, Mexico’s Economy Minister Ildefonso Guajardo laid out more of the specifics on automobile manufacturing, which had been a contentious issue during negotiations. Beyond the higher requirements for North American inputs, between 40 and 45 percent of vehicle manufacturing will have to occur in plants where workers make $16 per hour or more. That basically excludes Mexico.

The Trump administration had also been pushing for a so-called “sunset clause,” which would have meant the deal would automatically expire every five years unless extended by all countries. That proposal has been replaced by less onerous reviews every six years.

That, and the prospect of having any kind of deal on the horizon, is a big relief for Valencia.

“There was a lot of doubt planted in people’s heads, and a lot of rhetoric going back forth. That hasn’t been good,” he said. “That’s held up a lot of the investment”

That may very well change soon, according to Valencia.

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