Do No Harm and Support Trade Facilitation in Updated NAFTA, Commenters Say to USTR

NAFTA negotiators should embrace trade facilitation and “do no harm” to existing cross-border relationships as they rework the agreement, trade associations said in comments to the U.S. Trade Representative (here). USTR on June 13 extended the deadline for comment submission on the expected NAFTA renegotiation from June 12 until 11:59 p.m. on June 14, citing "high interest" and a need to ensure all interested participants have an opportunity to comment. USTR requested input on potential modifications to the agreement following the administration’s formal notification to Congress that it intends to start renegotiating the agreement as early as mid-August (see 1705220007 and 1705180043).

Any renegotiated agreement should not negatively affect current regional value chains, and the transition should be “seamless” and maintain NAFTA’s current trilateral form, the National Retail Federation said (here). Rather than creating new restrictions, the new NAFTA should open markets and strengthen North America’s integrated production platform, reflecting a changing world economy, the National Foreign Trade Council (NFTC) said (here). The bulk of the more than 500 comments filed so far were from private citizens, many urging outright repeal.

Comments from industry groups cautioned against using the agreement to erect new trade barriers. The modernized agreement “must ensure that all goods remain fixed at zero,” the NRF said. “Under no circumstances should the United States seek to impose new duties on imports from Canada or Mexico (e.g., to offset sales of value-added taxes assessed by either country on sales of domestic or imported merchandise),” it said. The modernized agreement “should not impose new rules of origin that would disrupt” today’s global value chains, and “should also not result in more restrictive or burdensome rules than what exists today,” the NRF said.

Negotiators should instead move in the other direction, creating more flexibility in the supply chain by way of cumulation provisions, the NRF said. The modernized agreement should permit companies to combine the value of goods produced within the NAFTA region with the value of goods produced in other free trade agreement partners, it said. “In the case of NAFTA, this would permit a more integrated value chain to develop between Canada, the United States, Mexico, Colombia, Chile, Peru and the countries that are parties to the Dominican Republic-Central America Free Trade Agreement,” it said.

Other ways to make rules of origin “as flexible and efficient as possible” include provisions allowing duty-free treatment for goods with a de minimis value of less than 10 percent non-originating content, the U.S. Council for International Business said (here). Changes should be adopted to reduce qualifying transactional costs, it said. “Certifying products are NAFTA-sourced is a regulatory burden and level of proof is hampering trade,” USCIB said. In addition to rules of origin changes, there should also be “a comprehensive Customs and Trade Facilitation chapter, covering customs and trade facilitation-related matters that have historically been provided for in other FTA chapters,” it said.

Trade facilitation provisions should be put in place that reflect commitments under the World Trade Organization Trade Facilitation Agreement, the NFTC said. All agencies with border responsibilities should provide information online, new regulations should be issued through a transparent procedure with the opportunity for comment, and provisions on advance rulings should be standardized and improved, it said. “In the case of Mexico, a formal appeal process should be implemented to allow for review of such rulings,” the NFTC said. “Provisions should be included to address release and clearance of goods at the border, including the use of paperless entries."

The modernized agreement should allow for acceptance of electronic signatures for the certification process in all three countries, the NFTC said. The U.S., Mexico and Canada should work to harmonize their trusted trader programs, and duty drawback provisions should be modernized to conform with similar provisions in other U.S. trade agreements, it said. Canada and Mexico have already taken measures to counter the negative effects of drawback restrictions that were originally put in place to prevent China from using Mexico as a platform for component parts to be exported to the U.S., industry groups have said (see 1704170025).

Stakeholders in the express industry called for streamlined de minimis shipment and informal entry procedures in the amended NAFTA. The Express Association of America (EAA) called for (here) the U.S. to prioritize increasing Canada's and Mexico's respective $15 and $50 de minimis levels through the agreement to the U.S.'s $800 level. EAA pointed to U.S. free trade agreements with South Korea, Colombia and Peru, which contain mutual obligations for the parties to establish de minimis at the level prescribed by U.S. statute at the time they were signed.

Mexico's informal entry procedures -- for imports valued up to $1,000 for businesses and $5,000 for individuals -- are allowed for each importer only once a month, and "in any case, require the filing of a lengthy and detailed entry document, resulting in little if any true simplification relative to a full formal customs entry," FedEx wrote in its comments (here). The company called for "assurance" of simplified clearance for shipments valued between the de minimis level and $2,500.