Fitch Ratings believes US will stay in NAFTA

MEXICO CITY - The Fitch Ratings agency said on Wednesday that it believed the US would remain within the North American Free Trade Agreement (NAFTA), due to the severe damages certain states would face if it withdrew.

An exit from NAFTA would reduce economic growth, job creation and the tax income of states with smaller populations and greater economic diversity, said the director of Fitch Ratings, Michael D'Arcy.

A Fitch Ratings statement said that American states across the country could be severely affected. It explained that Texas, Arizona, New Mexico and Michigan were most likely to suffer economic losses, due to a tight trading relationship with Mexico.

It added that those states would also be in the firing line if Mexico were to slap tariffs on American products.

The agency said that, while it was paying more attention to the relationship between the US and Mexico, it noted that there had also been an important deterioration in the commercial relationship between the US and Canada.

It added that this downturn meant that Mexican and Canadian consumers and companies may seek to obtain the same goods and services in the future from the likes of China, Europe and South America.

Canada, the US and Mexico have been modernizing NAFTA since August 16, at the demand of President Donald Trump, who feels the agreement has hurt the American economy.

After seven rounds of talks, only six chapters out of around 30 have been finalized. Discussions have become bogged down by certain sensitive topics, such as the US attempt to significantly tighten rules of origin for the automotive industry.

The technical teams from the three countries have been meeting in Washington since Monday, instead of holding an official round of talks, to try and finalize a deal more quickly.