Mexico President-Elect to Gut the Trade Team That Renegotiated Nafta

(Bloomberg) -- President-elect Andres Manuel Lopez Obrador plans to let go of three quarters of the Mexican team that negotiates trade agreements, including the just-announced deal with the U.S. and Canada, in a push to cut government spending, according to five people familiar with the plans.

Lopez Obrador’s transition team has told the current government that he plans to eliminate 40 to 45 negotiating jobs out of about 60 at the Economy Ministry, said the people, who asked not to be named before the plans are public. While it was long expected that top political appointees like Minister Ildefonso Guajardo and deputy minister Juan Carlos Baker would depart, there were hopes that many career negotiators would stay, the people said.

Guajardo has urged the incoming administration to reconsider, arguing that the jobs are essential for future negotiations and that their elimination could put at risk implementation of deals already concluded, including the U.S.-Mexico-Canada Agreement, two of the people said. The decision comes as Mexico also prepares to implement a trade agreement with 10 Pacific nations, an updated accord with the European Union and is negotiating with Argentina and Brazil to reduce dependence on the U.S. as a market for the country’s exports.

The cuts at the Economy Ministry are part of broad-based layoffs and salary reductions planned by Lopez Obrador, who says that the federal government is too big and inefficient. The central bank is said to be losing dozens of workers, with about 200 employees informing the bank that they’re either taking early retirement or quitting altogether since Lopez Obrador’s election on July 1, according to a person with knowledge of the matter.

The press office of the economy ministry declined to comment when contacted by Bloomberg News. Luz Maria de la Mora, Lopez Obrador’s pick to lead the under ministry for trade, also declined to comment on conversations between the transition team and the current administration. She’s in the process of evaluating the ministry’s operations and hasn’t made any decisions on staffing, she said.

Thirty of the trade negotiators said to be leaving had contracts that were set to end with the outgoing administration next month and were added for the U.S. negotiation, according to the people. So while there were hopes that they would be extended after the successful renegotiation of the North American Free Trade Agreement, it shouldn’t surprise anyone if they’re not kept on, De la Mora said.

The trade unit will have the people needed to do its job, she said.

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