Making the Case for Modernizing NAFTA

Making the Case for Modernizing NAFTA

This piece was originally published in the August 2017 issue of electroindustry.

Craig Updyke, Director, Trade and Commercial Affairs, NEMA

In formal written comments as well as oral testimony at a June public hearing, NEMA communicated its objectives and advice to the Trump administration regarding reopening and modernizing the North American Free Trade Agreement (NAFTA) among Canada, Mexico, and the United States. With NAFTA negotiations expected to begin in August, NEMA urged the administration to focus on supporting and enhancing the current North American commercial environment.

Mexico and Canada are far and away the largest and second-largest export markets, respectively, for the U.S. electroindustry. Mexico is the second-largest source of U.S. imports of NEMA-scope products, while Canada is the fifth largest.

“Working together, with advice from NEMA and other stakeholders, the three governments can modernize the agreement to advance rules-based open trade and remove unnecessary frictions and barriers to make North America a manufacturing location of choice for companies to do business,” said Kyle Pitsor, NEMA vice president of government relations, at the June 28 hearing. Mr. Pitsor highlighted several key areas for action.

First, NAFTA should be updated to support cooperation and collaboration on regulatory and technical standards matters to reduce and eliminate trade conflicts and improve efficiencies while upholding safety, security, and other national objectives such as environmental protection. Second, the U.S. and its counterparts should use NAFTA to expand and deepen cooperation and collaboration on customs trade facilitation and enforcement. Third, rules used to determine whether a product qualifies for duty-free treatment under NAFTA should support member companies’ supply chains. In addition, certification of compliance with such rules should be made less burdensome.

Other areas of NEMA interest on NAFTA include rules on digital trade, government procurement, and availability of testing and certification services.

Based on President Trump’s criticism of the 23-year-old trade pact and his pledge to withdraw from or reopen it, NEMA staff spent the spring and early part of this summer consulting with member companies on their goals and objectives. In April, NEMA conducted a webinar on NAFTA basics, key areas for negotiation, and what to expect from the administration. This was held in parallel with an online survey of all Association Voting Representatives to solicit member companies’ ideas on how to improve NAFTA. The survey closed well before the administration formally notified Congress on May 18 of its intent to pursue negotiations with Ottawa and Mexico City. According to the NEMA-supported 2015 Trade Promotion Authority law, this notification set in motion a 90-day consultation period that concludes on August 16.

NEMA also initiated discussions with regional association counterparts on industry recommendations to the three governments.

The autumn will be spent consulting with NEMA members and advising U.S. negotiators as they try to reach consensus with their counterparts from Ottawa and Mexico City. Mexican officials have openly stated their preference to conclude the negotiations by the end of the year.

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