On Monday, July 17, 2017, the Office of the United States Trade Representative (“USTR”) published the list of objectives that its government has for the renegotiation of the North American Free Trade Agreement (“NAFTA”).
NAFTA entered into effect 23 years ago and, now the 3 Member countries (Mexico, United States and Canada) have considered that it is time to analyze and renew this trade agreement, in order to modernize it and, also to include new topics that were not foreseen in the original negotiation.
The U.S. government, after conducting a public consultation process with its industry, published the list of objectives that it will pursue during the renegotiation process of NAFTA, set to begin as of August 16, 2017.
The document, with the list of objectives of the United States for the renegotiation of NAFTA, includes 20 general topics, among which we can mention: trade in goods, trade in services, sanitary and phytosanitary measures, technical barriers to trade, investment, protection of intellectual property rights, state-owned and controlled enterprises, competition, energy and dispute settlement, as well as new topics, such as digital trade in goods and services, and trans-border data flows, labor and environmental measures, and small and medium businesses.
In trade of goods, the U.S. government wants to reduce the commercial deficit with its trading partners, maintaining access without import tariffs. It wants to extend the opportunities for market access to U.S. agricultural products, matching the access that the products exported to the U.S. have, and eliminating non-tariff to trade.
With respect to rules of origin, the U.S. government wants to, without specifying how nor in relation to which products, reinforce the existing rules of origin, to make sure that the benefits of NAFTA are granted to products genuinely produced in the U.S and in North America.
The objective with respect to trade in services will be to look for compromises by the Member countries, to provide fair and open conditions for trade in services, including the implementation of rules that apply to all services, including rules that prohibit discrimination to foreign service providers, rules that prohibit the restriction on the number of service providers in certain markets, and rules that prohibit requirements for service providers to establish local presence.
Regarding digital trade and cross-border data flows, the U.S. will look for commitments from the Parties not to impose customs duties on trade of digital products such as software, music, video and e-books. Also, the U.S. will seek to prevent discriminatory treatment for digitally transferred products and to guarantee that these products will not face governmental discrimination by reason of the nationality or the territory in which the product was produced.
With respect to the protection of intellectual property rights, the U.S. wants to accelerate the full implementation of the Agreement of the WTO regarding Related Aspects of Intellectual Property Rights (“TRIPS”). Also, the U.S. will seek to implement greater standards for the compliance of intellectual property rights, including expedite and effective access to mechanisms of civil, administrative and criminal justice.
The U.S. wants the labor provisions to be an integral part of the Agreement and not part of side agreements. It will seek for the Parties to adopt and maintain, in their laws and practices, the core standards recognized in the declaration of the International Labor Organization. Also, it will be required for the Parties to have laws that include employment conditions with respect to wages, work hours and employment security and health. Finally, the U.S. wants the labor obligations agreed upon to be subject to the dispute settlement mechanisms that apply to other obligations in the Agreement.
The U.S. will look for NAFTA to include provisions regarding anti-corruption, in which the Parties acquire commitments to criminalize government corruption, and to take actions to prevent corruption practices in general.
Regarding the dispute settlement mechanisms, the U.S. will seek to eliminate the mechanism foreseen in chapter 19 of NAFTA, that refers to the review of final determinations of antidumping and countervailing investigations.
This document, with the list of U.S. objectives for the renegotiation of NAFTA, is certainly not consistent with the rhetoric that has characterized the administration of President Trump, and has been considered as reasonable by the Mexican Government.
The International Trade and Customs practice group of EC Legal Rubio Villegas includes a team of professionals with vast experience in NAFTA issues, and would be glad to respond to any questions you may have regarding the renegotiation of said trade agreement.