Tag: Fitch Group

Fitch Ratings weighed in on Tuesday. "Ultimately, if negotiations fail and NAFTA ends, it is likely to be politics that is responsible, as each government has infused the talks with homespun political considerations that are largely defensive and intended for domestic audiences," said James McCormack, Global Head of Sovereign Ratings at Fitch. "I think if NAFTA does fail it underscores the vulnerability of all free trade agreements conducted under the chaos of floating exchange rates. Today, one dollar will get you 18.78 pesos. Over the last 10 years, the Mexican peso has weakened as much as against the dollar as the Pakistani rupee, a small frontier market. Leaving aside the questions of whether these objectives make economic sense and, if so, whether a trade agreement might realistically achieve them, the U.S. position assumes the economic outcomes of a deal are easily measurable and characterizes the negotiating process as well as any resulting agreement as zero-sum propositions, Fitch analysts wrote in their report titled "Domestic Politics the Biggest Threat to NAFTA." It would be impossible using the U.S. benchmarks alone -- a reduced trade deficit with Mexico and more U.S. manufacturing jobs -- for the Canadians and Mexicans to claim victory in negotiating a better deal for their constituents. One consequent tactic Canada and Mexico might consider is to go "all in" at some point in the negotiations, threatening to walk away unless a more balanced deal can be reached that would allow for a "win-win" outcome, the Fitch report says. Sanders called it a disastrous trade agreement. Sanders also spoke out about NAFTA in 1993, saying what AMLO has said, that it only benefits the "ruling elite" and is a "disaster for working people."