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September 23, 2017

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N. American leaders look East to revamp NAFTA

MEXICO CITY--Mexico's president hosts the leaders of the United States and Canada on Wednesday, with the North American neighbors turning their gaze toward Asia to revitalize their 20-year-old trade bloc.

President Enrique Pena Nieto will welcome U.S. President Barack Obama and Canadian Prime Minister Stephen Harper in the ornate government palace of Mexico State in the city of Toluca, his homeland.

While Mexico's drug violence has stolen the spotlight in past summits, Pena Nieto will likely seek to turn attention to economic matters and the North American Free Trade Agreement (NAFTA), which turned 20 in January.

Once billed as the gathering of the "Three Amigos," the summit comes amid some friction.

Mexico is fuming over Canada's refusal to end visa requirements that make it complicated for Mexicans to visit. Pena Nieto will have a chance to address the issue on Tuesday because Harper will already be in Mexico for the summit.

The Canadian government, meanwhile, is pressing the United States to finally make up its mind about the Keystone XL pipeline, a controversial project that would bring oil from Canada to Texas which has met massive objections from environmentalists.

But the talks will focus on how to improve a trade bloc accounting for around one-third of the world's gross domestic product.

Although NAFTA has led to massive trade between the neighbors, officials concede that gaps remain and that its future potential rests on reaching a trade pact with Asian nations known as the Trans-Pacific Partnership (TPP).

"It is not in the interest of the three countries to reopen the North American Free Trade Agreement," said Mexican Deputy Foreign Minister Sergio Alcocer.

"The negotiations are taking place via the TPP to cover those items that were not included in the agreement 20 years ago," he added.

Plugging Holes

U.S. officials say the TPP could prompt the North American partners to agree on labor and environmental standards that have lacked within NAFTA.

"There's been some criticism in the past around some of the issues that were not addressed in NAFTA," a senior U.S. administration official said on condition of anonymity. "TPP is in part intended to plug those holes."

The U.S. official said the administration hopes to complete the 12-nation TPP deal this year after failing to reach an agreement in 2013.

The TPP project includes the NAFTA nations along with Australia, Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam, making up 40 percent of the global economy.

Experts say that another way to improve NAFTA is to revamp the U.S.-Mexican border because trucks are being held up too long at customs.

"We have to tell the United States and Canada that despite the interest in TPP, we must continue to improve the functioning of NAFTA," said Luis de la Calle, a former Mexican trade official who was involved in NAFTA negotiations.

"We need to build more bridges and lanes, and have customs that open 24 hours a day," de la Calle, founder of the CMM economics consultancy, told AFP.

Experts say the governments need to approve a "pre-clearance" system in which customs agents would be posted on foreign soil to inspect trucks there, allowing them to quickly pass the border.

Mexican Success Story

For Pena Nieto, the summit will be a chance to showcase his sweeping reforms, which have included a historic overhaul of the state-controlled energy sector, garnering major interest among oil companies.

"What we will see is a realignment of forces in North America because of Mexico's enormous success in its reform agenda," said Duncan Wood, director of the Mexico Institute at the Washington-based Wilson Center think tank.

"Mexico will be front and center," he said. "It's the success story at this time."

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