NAFTA re-negotiations begin | KPMG | US

NAFTA re-negotiations begin

NAFTA re-negotiations begin

Representatives of the United States, Canada, and Mexico are staking out their opening positions in the North American Free Trade Agreement (NAFTA) re-negotiations, with the first round of re-negotiations beginning today in Washington, D.C.

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What will each party seek? Trade professionals believe that Canada and Mexico both will want to see the agreement preserved, given its importance to their economies. The U.S. position will depend in part on President Trump’s perceived antipathy for NAFTA, with NAFTA’s importance to U.S. consumers and its popularity with certain members of Congress. The Trump Administration may be expected to try to bridge that gap, changing and modernizing NAFTA without fundamentally altering it in ways that would hurt U.S. consumers, companies, or workers.

In an opening statement, U.S. Trade Representative Robert Lightheizer said:

 

…I know we all agree that NAFTA needs updating. This is a 23 year-old agreement and our economies are very different than they were in the 1990s. We need to modernize or create provisions which protect digital trade and services trade, e-commerce, update customs procedures, protect intellectual property, improve energy provisions, enhance transparency rules, and promote science-based agricultural trade. 

 

The USTR statement notes, as examples, provisions or areas that need changes:

  • Measures to address trade deficits and provide for balance and reciprocity
  • Rules of origin provisions—particularly with respect to automobiles and auto parts, with requirements added for greater NAFTA content and substantial U.S. content
  • A “verified” country-of-origin rule (not a “deemed” rule)
  • Strong labor provisions 
  • Effective provisions to guard against currency manipulation and measures to guard against market-distorting practices of other countries, including third-party dumping and state-owned enterprises

 

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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