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NAFTA Letter Drafted for Negotiations

Negotiations can move forward 90 days after approval

The United States Trade Administration has drafted a letter which presents the Administration’s intent to initiate negotiations related to the North American Free Trade Agreement (NAFTA) and its architecture, and to strengthen our trade relationships in North America.  The letter states that the NAFTA was negotiated 25 years ago and it’s time for an update.  An update is needed on topics which have been negotiated in more recent trade agreements such as labor and environment, rules for intellectual property rights, state-owned enterprises, rules of origin, customs procedures, and ensuring the benefits of trade benefit to small- and medium-sized businesses. The draft notice contains 19 objectives for negotiation, which are listed below.

The draft letter even gives a quick history lesson on North American Trade agreements,

“More than 30 years ago, we began bilateral trade negotiations with Canada. The resulting U.S.-Canada Free Trade Agreement entered into force on January 1, 1989. In 1991, bilateral talks began with Mexico, which Canada joined. The NAFTA followed, entering into force on January 1, 1994. Tariffs were eliminated progressively, with all final duties and quantitative restrictions eliminated by 2008.

Since, 1993, U.S. trade with Canada and Mexico has more than tripled, from $293 billion to $1.07 trillion in goods in 2016 and from $43 billion to $139 billion in services in 2015 (latest data available). The two countries account for 29 percent of total U.S. goods trade and are among the largest export markets for agricultural goods, and are the second and third largest sources of imports. For reasons of scale alone, improving the NAFTA has the greatest potential to benefit the workers, farmers and firms of the United States.”

In addition to the following objectives, the letter states that the United States will take care of the protection of health, safety, environment, essential security and consumer interests.

The draft letter indicates that objectives for negotiation include:

To view full details of each objective, read the full letter here

Trade in Goods
  • Address U.S. import sensitivities
  • Seek to maintain and expand current market access on trade & improve opportunities for U.S. exports
  • Seek to eliminate non-tariff barriers to U.S. exports
  • Maintain fully reciprocal access to NAFTA country markets for U.S. textile & apparel products
  • Seek to level the playing field on tax treatment
Agriculture and Sanitary and Phytosanitary (SPS) Measures:
  • Seek to reduce or eliminate non-tariff barriers to U.S. agricultural exports
  • Maintain commitments to eliminate all export subsidies on agricultural products, while maintaining the right to provide bona fide food aid and preserving U.S. agricultural market development and export credit programs
  • Seek to secure more open and equitable market access to agricultural products through SPS measures & eliminate any SPS restrictions that are not based on science
  • Seek to strengthen cooperation between U.S. and NAFTA countries’ SPS authorities
Rules of Origin
  • Seek rules of origin that ensure the Agreement supports production and jobs in the USA
Customs Matters & Enforcement Cooperation
  • Seek to have NAFTA countries improve upon their WTO trade facilitation commitments
  • Seek to strengthen collaboration in implementing the WQTO Trade Facilitation Agreement & create a procedure for exchanging information on trade facilitation-related issues
Technical Barriers to Trade (TBT)
  • Seek to have the NAFTA countries improve their WTO TBT commitments & eliminate any unjustified TBT measures
  • Seek to strengthen collaboration in implementation the WTO TBT Agreement and create procedure for exchanging information on TBT-related issues
Intellectual Property Rights
  • Seek to establish standards to be applied in NAFTA countries that build on the foundations in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights and other intonational intellectual property agreements
  • Seek to secure fair, equitable and nondiscriminatory market access opportunities for U.S. persons that rely on intellectual property protection
  • Strengthen intellectual property rights enforcement procedures
Trade in Services
  • Expand market opportunities for U.S. services
  • Pursue comprehensive approach to market access
Investment
  • Seek to establish rules that reduce or eliminate artificial or trade-distorting barriers to U.S. investment in NAFTA countries
  • Seek rights comparable to U.S. legal principles and practice for U.S. investors in NAFTA countries
  • Seek to ensure that U.S. investors receive favorable treatment
  • Maintain and seek to improve procedures to resolve disputes between U.S. investors and the NAFTA countries
Digital Trade & Cross-Border Data flows
  • Seek commitments from the NAFTA countries not to impose customs duties on digital products or unjustifiable discriminate among products delivered electronically
  • Seek to ensure that the NAFTA countries refrain from implementing measures that impede digital trade in goods & services, restrict cross-border data flows, or require local storage or processing of data
Government Procurement
  • Seek to establish rules that require government procurement to be conducted in a manner that is consistent with U.S. law and the Administration’s policy on domestic procurement preferences
  • Seek to expand market access opportunities to U.S. goods, services and suppliers of goods and services in the government procurement markets of the NAFTA countries
Transparency & Regulatory Reform
  • Make each NAFTA’s country’s administration of its trade and investment regime more transparent
  • Establish consultative mechanisms to improve regulatory practices
Anti-Corruption
  • Seek commitments to ensure that the NAFTA countries apply high standards prohibiting corrupt practices
Competition
  • Address anticompetitive business conduct
  • Seek provisions for cooperation on competition law and policy
State-owned and State-controlled Enterprises
  • Seek commitments to eliminate or prevent trade distortions and unfair competition favoring
  • Seek commitments to ensure state-owned enterprises engaging in commercial activity to do so on the basis of commercial considerations
  • Seek commitments that ensure transparency in the level of ownership, control and support of state-owned enterprises
Trade remedies
  • Seek safeguard mechanism for allow temporary revocation of tariff preferences, if increased imports from NAFTA countries are a substantial cause of serious injury or threat to the domestic industry
  • Seek to preserve the ability of the U.S. to enforce & promote its trade remedy laws
Environment
  • Effectively enforce each NAFTA country’s environmental laws
  • Eliminate fisheries subsidies that distort trade
  • Seek environmental enforcement
Labor
  • Adopt and maintain measures and enforce labor rights
Antidumping and Countervailing Duty (Chapter 19) Dispute Settlement
  • Eliminate Chapter 19 dispute settlement of antidumping and countervailing duty determinations in light of U.S. experiences where panels have ignored the appropriate standard of review and applicable law, and where aberrant panel decisions have not been effectively review and corrected
State-to-State Dispute Settlement and Institutional Provisions
  • Encourage the early identification and settlement of disputes
  • Improve compliance procedures with the agreement
  • Review the agreement after five years of its entry into force

 

The above issues have been sent to the House and Senate trade oversight committees for review before it is formally submitted, which could take place in a week or so. Negotiations could begin as early as 90 days after the notification. [source]