(Reuters) – The end of the North American Free Trade Agreement (NAFTA) would be negative for Mexico, but would create a short-lived downturn, the country’s outgoing central bank chief said on Saturday.
In a question-and-answer session in Washington on the sidelines of the International Monetary Fund/World Bank meetings, Mexican Central Bank Governor Agustin Carstens said the downturn in the country’s economy would be “short term,” after which the Mexican economy would again become competitive.
“I hope that NAFTA prevails, but if not, I think we will be resilient, look for other markets and see what the environment is to export to the U.S.,” Carstens said.
Were the United States, Mexico and Canada unable to come to an agreement on NAFTA, Carstens said his country is prepared to again negotiate under World Trade Organization policies, “in the very worst scenario.”
“The central scenario is still that we will reach an agreement and that we will move forward,” he said.
The central banker also criticized the approach set forth by U.S. President Donald Trump during his presidential campaign that he would seek greater inflows to the United States from trading partners such as Mexico with which it has a deficit.
“I think the approach (of the Trump administration) is wrong,” Carstens said, likening the U.S. trade relationship with Mexico to a customer and a butcher. “I think that the administration should look to operate in a multi-country world and it doesn’t make sense to focus on your bilateral relationships.”
Carstens announced last year that he would leave the Bank of Mexico and will take over as general manager at the International Bank of Settlements later this year.
Reporting by Dion Rabouin, editing by G Crosse