Mexico watch: Paradise Papers; Nafta 5th round

Mexico finmin talks 'Paradise Papers'

Mexico's finance minister José Antonio Meade (pictured) addressed the release of the 'Paradise Papers', which leaked financial documents tied to dozens of powerful figures, stressing that holding offshore assets does not automatically imply illegal activity.

"The mere fact of having [offshore assets] is not to say that this is an indication that what is being done is a crime ... what is [a crime] is having it offshore to practice evasion." said Meade in an interview released through the ministry.

The trove of financial documents leaked with the Paradise Papers has sparked calls for investigations in halls of power around the world. Among those Mexicans named in documents is telecom multi-billionaire Carlos Slim and other magnates, as well as union leaders, public officials, soccer players and even priests.

Meade said strides have been made with the sharing of financial information between nations. The minister noted a key discussion held six years ago at the G20 meeting in Mexico City addressed tax base erosion and the obstacles in place at that time making investigation of offshore accounts difficult for tax authorities.

"From six years to now this has changed a lot, we have automatic information exchange ... and that allows this information to flow so that we have better elements of control," said Meade. "It is important that the information flows so that whoever needs to pay taxes does so."

Mexico's tax authority (SAT) released a statement Monday as news broke on the 'Paradise Papers', saying it will review the information of named individuals and companies in the dossier, and "if there are elements commensurate to the commission of acts of tax evasion, then, where appropriate, begin the exercise of legal authority."

Fast-track Nafta hopes pinned to fifth round

In a note to investors, Citibanamex said further complications during the upcoming round of Nafta discussions in Mexico City would likely end any possibility of a signed agreement coming before next year's presidential elections.

"We are still expecting a successful renegotiation as our base scenario, but we continue to stress the risks that the talks could derail," reads the note, adding that it sees further additional talks to occur in 1Q18, regardless of what happens this month in Mexico City.

The bank is still giving a 25% chance of success for "fast-track" approval, which would require the US Trade Promotion Authority (TPA) to send a report to congress with recommended changes to the law before the end of the year. The bank added that the current TPA framework itself expires July 1, 2018 - coincidentally, the same day as the Mexican presidential election.

Following a very rocky fourth round of Nafta talks last month in Washington DC, negotiators have added two days to the fifth round to allow for further discussions on the most controversial topics.

The bank added: "If the fifth round of negotiations ends up being more complicated, then our fast-track scenario is no longer feasible, and the US government would have to ask congress to extend the TPA," which is the bank's baseline scenario with a 45% likelihood.