The Office of the United States Trade Representative (USTR) has issued a Federal Register notice requesting comments on U.S. priorities for the renegotiation of the North American Free Trade Agreement (NAFTA). Comments from interested parties are due on June 12. Requests to participate in the hearing on this issue are also due on June 12. The hearing will be held on June 27.
U.S. companies with significant trade or investment ties with Canada and Mexico can use this opportunity to seek to ensure that a renegotiated agreement will provide free and fair market access opportunities across North America.
What Is NAFTA?
NAFTA is a trilateral free trade agreement among the United States, Canada and Mexico. It entered into force in 1994. NAFTA eliminates tariffs on almost all goods, with the notable exception of certain agricultural products traded with Canada, and includes detailed rules of origin to identify products that would benefit from tariff-free treatment. Like other free trade agreements, however, NAFTA covers a wide array of other economic activity, including product standards; sanitary and phytosanitary measures; intellectual property; investment; trade in services, including financial services, telecommunication services and other services; and government procurement. NAFTA also included provisions that permit certain professionals from Canada and Mexico to more easily obtain U.S. work authorizations.
NAFTA is a complex agreement, covering 22 chapters and hundreds of pages. In broad terms, however, NAFTA seeks to guarantee a nondiscriminatory, open market across the continent and a fair, transparent regulatory environment to facilitate trade.
Why the NAFTA Renegotiation Is Important
NAFTA entered into force 23 years ago, and many of its rules are outdated. For example, NAFTA was negotiated long before the widespread use of the internet and the rise of e-commerce and social media. Input and manufacturing processes have evolved over the last few decades. Services have grown in importance and now account for approximately 80 percent of U.S. gross domestic product. With massive investments in research and development in recent decades, and the resulting inventions of revolutionary technologies that are embedded in goods traded across borders, heightened protection of intellectual property rights is now more than ever critically important to trade and investment. The visa and immigration provisions in NAFTA may be cut back, but if not, they should be streamlined and updated to reflect the professions where workers are now in shortage. Furthermore, given the passage of time, there are opportunities for obtaining new market access in areas where NAFTA parties were previously unwilling to negotiate.
The newly negotiated agreement might also set the template for how the United States approaches free trade agreements with other countries. While the Trump administration withdrew the United States from the TransPacific Partnership, it has announced that it intends to seek bilateral free trade agreements with countries across Asia and Europe.
U.S. Objectives for the Renegotiation
USTR’s request for comments allows companies the opportunity to influence the U.S. objectives for the renegotiation. The specific areas on which USTR has sought comments are the following:
- tariffs and other measures that present barriers to trade in goods
- customs and trade facilitation
- modifications to rules of origin or origin procedures for NAFTA qualifying goods
- sanitary and phytosanitary measures and technical barriers
- trade in services
- digital trade issues
- intellectual property rights
- government procurement
- environmental issues
- labor issues
- issues of particular relevance to small and medium-size businesses
- trade remedies
- relevant state-owned enterprise issues