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Mexico Sets Sights on EU Trade Deal as NAFTA Talks Wane

Mexico will not be left out in the dark if the U.S. decides to call it quits on the North American Free Trade Agreement.

The North American nation that’s currently caught up in ongoing—and increasingly grim—NAFTA renegotiations with the U.S. and Canada, has said it could reach a framework for a trade deal with the European Union in the next two weeks.

On Wednesday, Mexican Economy Minister Ildefonso Guajardo told Reuters on the sidelines of the WTO’s ministerial meeting in Buenos Aires last week, that the two sides are having technical meetings expected to precede higher-level talks on the EU’s turf in Brussels this week.

Guajardo said there’s a “possibility, but not a guarantee” of an “agreement in principle” by the end of this year, though that will depend on the Brussels talks and whether the ministers will be able to come together to eke out an agreement.

Whether it shakes out before 2018 or not, Mexico has clearly been working to put its eggs in baskets other than the one belonging to the United States, as NAFTA talks have been tied up largely over U.S. demands to up the input of American raw materials in cars.

Mexico and the EU already have an agreement that has cut tariffs on goods like cars and machinery since 2000, and both sides agreed in 2015 to deepen their trade relationship. If this deal goes forward, it would free up trade in sectors like e-commerce and agriculture. But mostly, it would lessen Mexico’s dependence on the U.S.

“The main achievement is strategic and geopolitical. The EU is filling the vacuum left by the U.S. with its unique third-way approach to trade,” Alessia Mosca, an Italian lawmaker in the European Parliament told Politico.

Officials briefed on the talks have said an agreement could come as soon as mid-week, provided both sides can reach accord on things like agriculture exports, investment dispute settlement and rules of origin.

Apart from cozying up with the EU on trade, Mexico and Canada have both vowed to keep NAFTA going even if the U.S. bows out, and Mexico has also been in advancing talks with China about a trade deal there too.

[Read more on U.S. trade moves: Is the U.S. Getting Left Behind on Trade?]

The EU has also been expanding its trade relations—the bloc is in talks for a deal with Japan and Canada and has alluded to possible deals with Australia, New Zealand, Malaysia and Mercosur (Argentina, Brazil, Paraguay and Uruguay).