On May 18, 2017, the Trump Administration took its first formal step in delivering on President Trump’s much anticipated campaign promise to renegotiate the North America Free Trade Agreement (“NAFTA”). By formally notifying Congress of its plan to renegotiate NAFTA, the Administration has started the clock on a 90-day period, after which the United States can officially begin its NAFTA renegotiation talks with Canada and Mexico. Such 90-day period will end on August 16, 2017.
Renegotiation Points
During the next 90 days, the Trump Administration will consult with Congress to develop negotiating objectives and positions. According to U.S. Trade Representative Robert Lighthizer, the Trump Administration considers the current, 23-year-old NAFTA outdated and aims to “modernize” the trade agreement to include new provisions addressing the following points:
- Digital trade
- Intellectual property rights
- Regulatory practices
- State-owned enterprises and services
- Customs procedures
- Sanitary and phytosanitary measures
- Labor
- Environment
- Small and medium enterprises
- Stronger enforcement for violations
The Trump Administration has repeatedly claimed that it prefers to keep NAFTA as a trilateral agreement, but it has never ruled out the possibility of breaking NAFTA into two smaller pacts with Mexico and Canada. Unfortunately, the formal notification letter from the U.S. Trade Representative contains few details about the Administration’s plans for NAFTA. However, Congress will require the Administration to publish more detailed objectives and priorities at least 30 days prior to formal negotiations among NAFTA countries, which are expected to begin sometime after the expiration of the 90-day period discussed above.
With significant changes to NAFTA possible and uncertainties looming, it is critical for companies with U.S., Mexican and Canadian international business interests to stay informed. We will continue to closely monitor the Trump Administration’s progress on the renegotiation of NAFTA and provide timely updates.
For more information regarding NAFTA, please contact Jan de Beer, Katherine Berkley or Chanhee Han in Frost Brown Todd’s International Trade Compliance Service Team.