Many are asking what the Trump Administration’s “America First” position on international trade will mean for Canada, how it will affect NAFTA (the world’s largest bilateral trade relationship) and how they can respond.
The United States has indicated that it wants to renegotiate the NAFTA. In May 18, 2017 letters, the U.S. Trade Representative (“USTR”) notified Congress that the Administration intends to use renegotiation to modernize the NAFTA. USTR noted “NAFTA was negotiated 25 years ago, and while our economy and businesses have changed considerably over that period, NAFTA has not.” To this end, USTR is seeking to include new provisions on intellectual property, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labour, environment and small and medium sized enterprises.
The U.S. should have its negotiating objectives in place by August 16, 2017, the potential start date for the renegotiation and will likely take particular aim at the Canadian and Mexican measure identified as trade barriers in the annual USTR National Trade Estimates Report. For its part, Canada has indicated a willingness to modernize NAFTA and has been taking steps to prepare for the negotiations for some time. Canada will come to the table with its own objectives. Mexican officials have been openly calling for a NAFTA update for some time and should also be ready.
Trade negotiations are complex undertakings that are intended to liberalize trade between the parties to the benefit of all Parties. This has been the case with NAFTA. Despite all the NAFTA Parties having protected particular interests and industries, the Agreement has provided greater benefit overall. If the renegotiations succeed, the NAFTA should increase the overall benefit.
However, NAFTA renegotiation can raise the spectre of lost markets and lost business for individual businesses and sectors. This is because while NAFTA renegotiation will likely result in new opportunities, trade negotiations are complex and have many moving parts. The Parties may engage in “give and take” that will inevitably result in winners and losers; particularly if the Parties are not aware of the full extent of trade interests that are affected.
How should businesses engaged in NAFTA trade or who want to participate protect their interests? They should contact the negotiators to make their position and concerns known so that these can be taken into consideration through the negotiations. Canadian officials are open to industry input as it informs their negotiating position with the U.S. and Mexico and helps ensure that they will arrive at the best possible outcome for Canada. The USTR has put out a request for comments seeking input on its negotiating position by June 12, 2017 and will then hold a public hearing on June 27, 2017. The USTR will use this process to develop its negotiating position.
Woods, LaFortune LLP is an international trade law firm based in Ottawa, Ontario. Our lawyers have extensive experience in trade negotiations and we would be pleased to discuss the NAFTA negotiations and how to ensure that the negotiators are aware of your business, your position and your concerns so that they can be taken into consideration in the negotiations.