The bright side of NAFTA redo

As USTR collects NAFTA public comments, AAEI members see the positive in a renegotiation of the agreement

By: Eric Johnson
Photo: Willrow Hood /
   The U.S. Trade Representative on Thursday concluded three days of public hearings on the North American Free Trade Agreement (NAFTA), a deal which the Trump Administration signaled in May that it wants to renegotiate.
   Along with testimony given by lobbyists and other parties impacted by the 23-year-old trade deal, USTR is sitting on thousands of written submitted comments. These comments will ostensibly shape, in part, the way the administration approaches a renegotiation.
   Last week in Austin, more than 300 trade policy and compliance experts gathered at the American Association of Exporters and Importers annual conference, and NAFTA was a frequently discussed topic. No surprise there.
   Hardly anyone would be more impacted by a major change to NAFTA than U.S. importers and exporters, and within those companies, the people tasked with helping those supply chains adapt to the change would be trade compliance professionals.
   It’s hard to find consensus among such a large group of people. But if there was a broad consensus, the trade urged the administration not to rip up NAFTA.
   “Don't use a machete, use a scalpel,” Michael Flickinger, an advisor on customs and accounting to the American Petroleum Institute (API), said in a panel at AAEI on trade agreements. “NAFTA is not broken. You are looking at trade the wrong way.”

Don't use a machete, use a scalpel.

   Flickinger said that in comments to the USTR, API was trying to emphasize that North America is connected, like it or not. For example, North American refineries are the only place able to handle Canadian heavy sour crude. That crude is turned into products like lipstick and Tupperware as well as gasoline, among other things. Not only is there a benefit to consumers from having these products available at lower prices, that activity is also tied to supply chain-related jobs, he said.
   That theme of “tweak, don’t destroy” ran through the entire conference. During a luncheon keynote on the first day, U.S Customs and Border Protection Acting Commissioner Kevin McAleenan said his counterparts in Mexico “couldn’t have been more on the same page in terms of modernizing (NAFTA) but also continuing forward with what works.”
   McAleenan thanked the trade for providing feedback.
   “A lot of that is (based on) your recommendations,” he told attendees.
   Marianne Rowden, president and chief executive officer of AAEI, admitted that her organization made a strategic decision to tweet out its trade policy priorities to this administration, rather than the rely only the traditional means of sitting down with trade officials.
   Indeed, the Trump Administration has cast uncertainty over trade policy in general, based on the president’s almost instant withdrawal from the Trans-Pacific Partnership and incendiary comments about unfair trade practices by everyone from China to Mexico to Germany. But there was a feeling at Austin that the NAFTA renegotiation could actually provide a platform to improve the trade deal and make it more relevant in a world where e-commerce is exploding, for example.
   “Harmonization of standards is important, especially in an e-commerce environment where you’re dealing with different agencies,” said Luisella Basso, vice president, international trade and customs compliance at Pitney Bowes Global Ecommerce, during a panel on trade facilitation.
   The trade must be, in a certain sense, happy to hear U.S. Trade Representative Robert Lighthizer warn his own administration that the renegotiation won’t be a short process. Trade experts have theorized that the president and his advisors might not have knowingly committed to a renegotiation if they actually understood what the process entailed and where it might eventually lead. Whereas Lighthizer is a seasoned trade negotiator, Trump and his economic advisors are not. It will be interesting to see how the timeline of this, not only the content, plays out.