Maintaining transparency during negotiations of the North American Free Trade Agreement, the Office of the U.S. Trade Representative has updated its summary of objectives for renegotiations as the fifth round of talks comes to a close. The list is an update of the July document that was released ahead of the start of negotiations.
Although the objectives are mostly the same, some changes have been made.
For trade in goods, USTR added the objectives of increasing transparency in import/export licensing procedures and to discipline import/export monopolies to prevent trade distortions.
When addressing industrial goods, USTR’s latest objectives added a need to expand market access for remanufactured goods exports by ensuring that they are not classified as used goods that are restricted or banned.
July’s objectives included “reducing or eliminating remaining tariffs.” November’s update clarified that statement by reading “eliminating remaining Canadian tariffs on imports of U.S. dairy, poultry and egg products.”
USTR dug in further into Canada’s dairy industry by announcing the goal to “eliminate unjustified measures that unfairly limit access to Canada’s markets and unfairly decrease market access opportunities in third countries for U.S. dairy products, such as cross-subsidization, price discrimination and price undercutting.”
The U.S. also is seeking to increase the rule of origin threshold. Currently, 62.5 percent of parts in auto production must come from North American factories. USTR wants to increase that to 85 percent. Furthermore, USTR wants a new provision that will require 50 percent of a vehicle be manufactured in the Unites States. Car manufactures are opposed to the latter proposal, citing increased costs and decreased global competitiveness.
One objective added to the “Trade in Services” section is to “retain flexibility for U.S. nonconforming measures, including U.S. nonconforming measures for maritime and long-haul trucking services.”
OOIDA supports removal of provisions allowing long-haul trucks from Mexico.
The Office of the United States Trade Representative hosted a three-day public meeting in D.C. in late June on “matters relevant to the modernization” of the North American Free Trade Agreement in the ramp up to the ongoing negotiations.
Nearly 140 witnesses from the U.S., Canada, and Mexico offered suggestions. OOIDA Executive Vice President Todd Spencer delivered comments on behalf of the Association’s members.
Spencer made it clear that OOIDA is adamant that the cross-border trucking program with Mexico should be dropped from the program.
“The system we have that has been in place for years – trailers being swapped at the borders – and has been going on with Mexico for years works well,” he says. “For economic reasons, it doesn’t really work for Mexican trucks to cross the border and go too far beyond the commercial zones.”
Regarding government procurements, USTR added a provision that will “ensure reciprocity in market access opportunities for U.S. goods, services, and suppliers in Canada and Mexico.” The U.S. is seeking a limit for Canadian and Mexican companies of one dollar in public contracts for every dollar U.S. companies earn those countries.
One significant addition towards the end of the document allows for “a mechanism for ensuring that the parties assess the benefits of the agreement on a periodic basis.” Reports suggest that the U.S. has been seeking a five-year sunset clause that would essentially eliminate the entire deal if not fully endorsed every five years. The above addition allows some wiggle room for Canada and Mexico, both of which are likely to oppose any such sunset clause.
“USTR’s objectives represent a serious effort to renegotiate the agreement to update its provisions to the best 21st century standards and rebalance the benefits of the deal so that each country succeeds,” the updated report states. “U.S. proposals reflecting these objectives are supported by a diverse group of American interests. If these objectives are achieved, the United States will obtain more open, equitable, secure and reciprocal market access, and the entire NAFTA region will benefit.”
The fifth round of NAFTA negotiations began Nov. 15 and is scheduled to conclude Nov. 21. Details regarding the specifics of the negotiations are mostly unknown since talks are taking place behind closed doors. The three NAFTA ministers agreed to step back this time around to provide negotiators with more time to analyze proposals and conduct internal consultations, according to a U.S. Trade Representative Office news release.
Several news sources are reporting that NAFTA talks were still at a stalemate on the final day of Round 5 on Tuesday, Nov. 21. Negotiators for the three countries were in disagreement on some hot button issues, including rule of origin, government procurements and the sunset clause. Negotiations will continue through March 2018.
Full text of the updated objectives can be found here.
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