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Mexico to bear brunt of U.S. NAFTA exit: report

Xinhua,January 16, 2018 Adjust font size:

MEXICO CITY, Jan. 15 (Xinhua) -- Mexico would bear the brunt of economic consequences, should the United States decide to withdraw from the North American Free Trade Agreement (NAFTA), according to a report released on Monday.

The tripartite trade deal between Mexico, the United States and Canada is currently being renegotiated, but "a unilateral U.S. exit from NAFTA is a real possibility," the report by Oxford Economics, a consultancy, said.

Though U.S. President Donald Trump has complained the deal unfairly benefits Mexico to the detriment of American industry, the report finds "a withdrawal from NAFTA would not significantly reduce the U.S. trade deficit."

Researchers at Oxford Economics predicted no NAFTA deal would wipe half a percentage point off U.S. GDP growth in 2019 if Trump pulls the trigger to exit next year.

Mexico's GDP would also take a hit, said the report, titled "The cost of leaving NAFTA."

With no beneficial trade terms with its biggest trade partner, "Mexico's GDP would be 2 percent smaller" by the end of 2022, said the economic forecaster.

Real GDP growth in 2019 would dip in all three countries, by 0.5 percentage points in the United States and Canada, and by 0.9 percentage points in Mexico.

The Mexican peso, which has waxed and waned on NAFTA news since the 1994 deal was reopened to negotiation in August, could see an 8-percent depreciation in 2019, raising inflation even further, the report said.

The sixth round of negotiations are to be held from Jan. 23 to 28 in Canada. Enditem