The first round of negotiations regarding the North American Free Trade Agreement (NAFTA) between Canada, Mexico and the United States started on August 16, 2017. The discussions are not over yet; the next round (the sixth) is scheduled to start on December 11, 2017, and it is unclear if the parties will reach an acceptable agreement.

I can remember the huge optimism around free market and trade liberalization when I was at Law School in the mid-nineties. The triumph of economic and political liberalism in most of the world seemed secured.

However, security concerns, inequality, distrust in the traditional political elites and fear of “others”, have caused some countries to take steps in unexpected directions. I do not see a revolutionary change, but we are seeing scenarios that were unthinkable five years ago.

One victim of the change og the tide has been NAFTA.

Readers should know that the implications of NAFTA in Mexico were huge, far beyond trade. For Mexicans, it was assuming a different role in the world. Needless to say, NAFTA deepened an already fundamental relation between Mexico and the US (the relation with Canada is important, but far from the relevance of the relation with the United States). As the well-known Mexican historian Lorenzo Mayer explains:

NAFTA was one of the most important symbolic moments in the Mexico-US relations since the formal alliance between the two countries in World War II. The agreement highlighted the failure of the development model known as Mexican economic nationalism, became a personal triumph for President Carlos Salinas and a collective triumph for the then ruling group in Mexico. After NAFTA, the state policies that were in place in Mexico, from the Mexican Revolution to the policy toward Central America in the eighties, were forgotten. Instead, Mexico adopted an administrative policy that may be called a new “special relationship” with the only Superpower of the end of the 20^th Century[1].

NAFTA had profound effects in the regulation of IP rights in Mexico. Large parts of the Mexican statutes regarding trademarks, patents, vegetal varieties and copyright were direct consequence of NAFTA. Now that that the survival of NAFTA is compromised, one may ask if the end of the trade agreement would impact the Mexican IP legislation.

Making predictions is a risky activity, but I think I can make a few reasonable guesses:

1. The United States, Canada and Mexico will continue being neighbors and trade will continue. In spite of the alleged efforts to diversify the destiny of exports, Mexico will continue highly dependent of trade with the United States and the relation will continue being highly asymmetric.
2. Economies in the three NAFTA nations will suffer; less in the United States and Canada than in Mexico, especially due decreased growth and investment rates in our country. Of course, there also will be winners.
3. Trade rules will change, but not too much. Mexico, the United States and Canada are still members of the World Trade Organization (WTO) and its rules would apply. The advantages of NAFTA would be gone, but Mexico is not going back to protectionism and import substitution industrialization policies.
4. It is unlikely that the end of NAFTA will cause a setback in the current protection of IP rights in Mexico. Even without NAFTA, our country would still be a party of many bilateral and multilateral agreements (notably, the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPS) that bind Mexico to keep the current legislation.
5. On the other hand, without NAFTA, Mexico will have little incentives to enhance the protection of IP rights, mainly in the field of technological innovation, where our northern neighbor enjoy a dominant position. I can think about a few examples of “not-happenings” if NAFTA ends: a) extending the term of patents due unjustified delay in examination or in issuance of marketing authorizations; b) providing a better regulation to the “non-reliance” aspect of efficacy and security data for new chemical entities to be used in pharmaceuticals and agrichemicals[2]; c) providing a minimum exclusivity term for sad data[3]; d) extending the patentability of certain developments that today are not even considered inventions, and; e) providing some sort of provisional protection procedures for inventions that are subject matter of published pending patent applications.

We do not know what the future of NAFTA will be; last October, some pessimistic estimates calculated that that the chances of survival of NAFTA were less than 50%[4]. If negotiations are not succesful and NAFTA ends, it would certainly not be the end of the world but, whatever the outcome may be, Mexicans should think again what kind of relation we want with our North American neighbors and the rest of the world.

[1] Josefina Zoraida Vázquez and Lorenzo Meyer, México frente a Estados Unidos. Un ensayo histórico, 1776-2000, 4^th ed., México, FCE, 2001, p. 239.  The English translation is mine.

[2] Data protection regarding safety and efficacy of new chemical entities for medicines and agrochemicals have tow aspects: non-disclosure and non-reliance. Only non-disclosure is properly covered by the statute and regulations, while non-reliance enjoys a weak protection, limited to pharmaceuticals, from an administrative internal guideline of the Mexican FDA. Such guideline may be easily suspended or terminated at any time.

[3] TRIPS does not provide a minimum term for data exclusivity. NAFTA states a minimum five years term, the same that the internal guideline of the Mexican FDA, although the guideline is applicable to pharmaceuticals only. The end of NAFTA will leave the term of data exclusivity in a weaker situation.

[4] “US demands raise fears that leaving NAFTA could hurt economy” at Chicago Tribune; electronic version at http://www.chicagotribune.com/business/sns-bc-us–nafta-in-danger-20171011-story.html. date of review: December 2, 2017.