(Repeats to widen distribution)
By Dave Graham and David Ljunggren
MEXICO CITY/OTTAWA May 4 From launching a
data-mining drive aiming to find supply-chain pressure points to
sending officials to mobilize allies in key U.S. states, Mexico
and Canada are bolstering their defenses of a regional trade
pact President Donald Trump vows to rewrite.
Trump has blamed the North American Free Trade Agreement
(NAFTA) for the loss of millions of manufacturing jobs and has
threatened to tear it up if he fails to get a better deal.
Fearing the massive disruptions a U.S. pullout could cause,
the United States' neighbors and two biggest export markets have
focused on sectors most exposed to a breakdown in free trade and
with the political clout to influence Washington.
That encompasses many of the states that swept Trump to
power in November and senior politicians such as Vice President
Mike Pence, a former Indiana governor or Wisconsin
representative and House Speaker Paul Ryan.
Prominent CEOs on Trump's business councils are also key
targets, according to people familiar with the lobbying push.
Mexico, for example, has picked out the governors of Texas,
Arizona and Indiana as potential allies.
Decision makers in Michigan, North Carolina, Minnesota,
Illinois, Tennessee, Wisconsin, Ohio, Florida, Pennsylvania,
Nebraska, California and New Mexico are also on Mexico's
priority list, according to people involved in talks.
Mexican and U.S. officials and executives have had
"hundreds" of meetings since Trump took office, said Moises
Kalach, head of the Mexican private sector team leading the
defense of NAFTA. (Graphic:tmsnrt.rs/2oYClp2)
Canada has drawn up a list of 11 U.S. states, largely
overlapping with Mexico's targets, that stand to lose the most
if the trade pact enacted in 1994 unravels.
To identify potential allies among U.S. companies and
industries, Mexican business lobby Consejo Coordinador
Empresarial (CCE) recruited IQOM, a consultancy led by former
NAFTA negotiators Herminio Blanco and Jaime Zabludovsky.
In one case, the analysis found that in Indiana, one type of
engine made up about a fifth of the state's $5 billion exports
to Mexico. Kalach's team identified one local supplier of the
product and put it touch with its main Mexican client.
"We said: talk to the governor, talk to the members of
congress, talk to your ex-governor, Vice President Pence, and
explain that if this goes wrong, the company is done," Kalach
said. He declined to reveal the name of the company and Reuters
could not immediately verify its identity.
Trump rattled the two nations last week when his
administration said he was considering an executive order to
withdraw from the trade pact, which has been in force since
1994. He later said he would try to renegotiate the deal first
and Kalach said the lobbying effort deserved much credit for
"There was huge mobilization," he said. "I can tell you the
phone did not stop ringing in (Commerce Secretary Wilbur) Ross's
office. It did not stop ringing in (National Economic Council
Director) Gary Cohn's office, in the office of (White House
Chief of Staff Reince) Priebus. The visits to the White House
from pro-NAFTA allies did not stop all afternoon."
Among those calling the White House and other senior
administration officials were U.S. Chamber of Commerce chief Tom
Donohue, officials from the Business Roundtable and CEOs from
both lobbies, according to people familiar with the discussions.
Mexico has been the prime target of NAFTA critics, who blame
it for lost manufacturing jobs and widening U.S. trade deficits.
Canada had managed to keep a lower profile, concentrating on
seeking U.S. allies in case of an open conflict.
That changed in late April when the Trump administration
attacked Ottawa over support for dairy farmers and slapped
preliminary duties on softwood lumber imports.
Despite an apparently weaker position - Canada and Mexico
jointly absorb about a third of U.S. exports, but rely on U.S.
demand for three quarters of their own - the two have managed to
even up the odds in the past by exploiting certain weak spots.
When Washington clashed with Ottawa in 2013 over
meat-labeling rules, Canada retaliated by targeting exports from
the states of key U.S. legislators. A similar policy is again
Mexico is taking a leaf out of a 2011 trucking dispute to
identify U.S. interests that are most exposed, such as $2.3
billion of yellow corn exports.
Mexico is also targeting members of Trump advisory bodies,
the Strategic and Policy Forum and the Manufacturing Council,
led by Blackstone Group LP's Stephen Schwarzman and Dow
Chemical Co boss Andrew Liveris respectively.
Senior Trump administration officials and Republican
lawmakers in charge of trade, agriculture and finance committees
also feature among top lobbying targets.
Canada has spread the task of lobbying the United States
among ministries, official say, and is particularly keen to
avoid disruption to the highly-integrated auto industry.
A core component of Mexico's strategy is to argue the three
nations have a common interest in fending off Asian competition
and exploring scope to source more content regionally.
The defenders of NAFTA also say that it supports millions of
jobs in the United States, and point out that U.S. trade
shortfalls with Canada and Mexico have declined over the past
decade even as the deficit with China continued to climb.
Part of IQOM's mission is to identify sectors where NAFTA
rules of origin could be modified to increase regional content.
For example, U.S., Canadian and Mexican officials are
debating how the NAFTA region can reduce auto parts imports from
China, Japan, South Korea or Germany, Mexican officials say.
"The key thing is to see how we can get a win-win on the
products most used in our countries, and to develop common
manufacturing platforms that allow us just to buy between
ourselves the biggest amount of inputs we need," said Luis
Aguirre, vice-president of Mexican industry group Concamin.
(Additional reporting by Michael O'Boyle Alexandra Alper, Ana
Isabel Martinez, Ginger Gibson and Adriana Barrera; Editing by