Reps from Key Economic Sectors Provide Input to White House

The Office of the U.S. Trade Representative (USTR) held hearings to seek public comment on NAFTA renegotiation from June 27-29. The hearings, chaired by Assistant U.S. Trade Representative for the Western Hemisphere John Melle, generated widespread interest. Witnesses comprising most industry sectors testified, including agriculture, manufacturing, services, technology, energy, automotive, and apparel industries, along with labor and civil society groups.

Although a diversity of views were represented at the hearings, most industry groups agreed that NAFTA should remain a trilateral agreement and be modernized to better suit the current trade and economic environment. Many industry representatives also highlighted the need to preserve existing trade benefits under the current NAFTA. Sections of the Trans Pacific Partnership and the U.S.-Korea Free Trade Agreement were mentioned as provisions that could be used as baselines for updating elements of a new NAFTA agreement.

Two Democratic Members of Congress testified: Representative Bill Pascrell (D-New Jersey), the Ranking Member of the Ways and Means Subcommittee on Trade, and Representative Sandy Levin (D-Michigan). Rep. Pascrell called out the Trump administration for its failure to outline the objectives for the negotiations in specific enough detail. Both Democrats also pushed the president to seek stronger, more enforceable labor standards in a new NAFTA, based on the so-called May 10th Agreement, the 2007 agreement on trade objectives the George W. Bush Administration reached with Democrats.

If the testimony at the hearing is any indication, interest in NAFTA renegotiation is high, and many stakeholders will seek to have their interests served by an updated agreement. The policy debate regarding the scope of negotiations will come to a head when the Trump administration prepares the set of negotiating objectives it will put forward to Congress, expected around mid-July.

Industry “Wants”

Below is a review of major positions taken during the hearings:

  • Agriculture: Agricultural groups in general sought to preserve existing duty-free benefits under the current NAFTA, but varied in their specific issue requests. Meat groups were divided over whether to reinstitute country-of-origin labelling requirements in NAFTA. Dairy groups sought changes to Canada’s dairy supply management program. Produce growers expressed concerns that Mexican produce is currently being dumped in the U.S. market, and requested resolution through the NAFTA renegotiation process.
  • Manufacturing: Manufacturers from several sectors (for example, chemicals and food) requested the Administration to pursue improved commitments to regulatory coherence and cooperation across the three NAFTA countries.
  • Steel: U.S. steel producers continued their push for measures to address the level of foreign imports through the NAFTA renegotiations. They sought a stricter rule of origin for autos and auto parts, including requirements to use North American steel. They also said that enforceable currency provisions should be included in any NAFTA agreement.
  • Textiles: Apparel and textile groups were divided over whether the existing rules of origin under the current NAFTA should be changed. In particular, there was significant discussion of whether tariff preference levels, which allow some goods not meeting rule of origin requirements to qualify for benefits for a limited time, should be eliminated.
  • Internet and Communications Technologies (ICT): ICT groups pushed for commitments to ensure the free flow of data across borders, prohibit data localization, and ensure stronger intellectual property protections. In fact, the inclusion of digital trade protections in NAFTA was pushed for by many industry sectors, including those outside of ICT.
  • Autos: The autos and auto parts manufacturing industry sought to preserve existing duty free treatment, as well as existing rule of origin requirements. They also requested that NAFTA include updated customs procedures (including duty drawbacks).
  • Labor: Labor groups, including the AFL-CIO, sought the elimination of investor-state dispute settlement, stronger rule of origin requirements for autos, stronger labor and environmental provisions, and measures to address currency manipulation.