Exchange rate and stock exchange would have if TLCAN breaks
Exchange rate and stock exchange would have if TLCAN breaks, In recent statements by entre preneurs it is assured that there is a chance of completing TLCAN.
Economists explained that if the agreement is broken, the Mexican economy will suffer two major shocks:
The minor would manifest itself in a slight temporary and partial brake on exports, The greatest impact would be on the psychological impact on financial markets, which would trigger the price of the dollar, economists estimate.
For Gabriel Casillas, chief economist of Banorte IXE, “The key is the degree of interconnection of economies and the possibility of carrying out international trade with WTO rules.” “With them, tariffs on the most-favoured-nation agreements are low, on average.”
However, I believe that the impact of the news could be significant in the exchange rate and the stock exchange, but very short term, he emphasized Excelsior.
Parity “could reach 20 pesos per dollar and the CPI of the stock exchange would fall from 5 to 8 percent. But they would return to normal soon, “he said.”
Carlos Capistrán, economist for Mexico Bofa Merrill Lynch, considered that the two major shocks would be “lower external demand and high risk premia, which would have a negative impact on the economy and the price of assets.”
Not so much
Fernando Ruíz Huarte, director of the Mexican Foreign Trade Council, stated instead that the economic impact would not be as great as it would return to WTO rules.
In these rules the average tariff ranges from 3 to 4.5 percent for manufactures and 90 percent of what Mexico exports are this type of merchandise.
On the other hand, we should assess the psychological impact and measure the probability that the dollar will be triggered, he warned.
“It is too early to say that we can have a rupture, which has disturbed the agricultural issue.”
Ricardo Ramírez Hernández, the first Mexican judge of the WTO Appellate Body, warned that “any attempt to weaken the TLCAN dispute settlement mechanism between Member States (chapter XX) should be unacceptable in negotiating, and by “The opposite should be strengthened.”
Ramírez also suggested improving chapter XIX, for example, in the referee settlement scheme. He explained that it is of no use to have a series of commitments if there is no mechanism that can enforce them.