Mexico minister calls for 'flexibility' in reworking NAFTA

By Leika Kihara

TOKYO (Reuters) - Mexican Economy Minister Ildefonso Guajardo said on Monday the only way countries re-negotiating the North American Free Trade Agreement (NAFTA) will find a solution is through "sufficient flexibility" to narrow differences.

Guajardo said U.S., Mexican and Canadian negotiators will be "engaging strongly" in July to reach an agreement that is "feasible, workable and benefits the three nations involved.

"The only way we will find that solution is if countries involved have sufficient flexibility to be able to find that narrow strip where we have to land," he said.

"An agreement that does not give us certainty, does not give us rules that have to be obeyed and mechanisms to settle disputes will not be of help for the business community."

He said there was a "high chance" there will be an agreement on renegotiating NAFTA, but the timing depends on how flexible each country can be.

The United States, Canada and Mexico have been in months of negotiations to rework NAFTA, which President Donald Trump says harms his country.

White House economic advisor Larry Kudlow has said Trump will seek to replace NAFTA with bilateral deals with Canada and Mexico, something both countries say they oppose.

U.S. trading partners have been furious over Trump's decision to impose tariffs on steel and aluminium imports from Canada, the European Union and Mexico as part of his "America First" agenda.

Fears of a global trade war come as Trump's decision to back out of the G7 joint communique torpedoed what appeared to be a fragile consensus on a trade dispute between Washington and its top allies.

Guajardo said public discontent over globalisation and open trade was evident even before Trump took office, saying that the current U.S. administration's position showed the system did indeed need fixing.

"We need to reconstruct our trade policies in order to strengthen them and make them more resilient in new times, where the population has been very clear in expressing their feelings through electoral processes," Guajardo said.

(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Sam Holmes)