The House Ways and Means Trade Subcommittee discussed at a hearing this week various ways to modernize and improve the North American Free Trade Agreement (NAFTA).
The hearing was one day after the Trump Administration released its negotiating objectives for updating and enhancing NAFTA to ensure the agreement continues to benefit America’s manufacturers, services providers, farmers, workers, and consumers.
“Since its entry into force in 1994, the North American Free Trade Agreement, or NAFTA, has transformed the U.S. and North American economy. It has reduced barriers to our exports and allowed American businesses to sell their goods and services more freely and competitively to markets around the world,” Subcommittee Chair Dave Reichert (R-WA) said.
Dennis Arriola, executive vice president at Sempra Energy, said NAFTA has been a “big win” for the U.S. energy sector, creating U.S. jobs and strengthening the country’s energy security.
Christine Bliss, president of the Coalition of Services Industries, added that U.S. trade with both Canada and Mexico in services exports alone amounts to $88 billion as of 2015. This supports 587,000 American jobs, she said.
Despite its success, things have changed since then, Reichert explained.
“In 1994, the digital economy was in its infancy, Mexico had yet to undertake significant legal and regulatory reforms, and the North American supply chain had not yet fully developed. Today’s challenges require new rules, not only to reduce tariffs on our exports but to remove non-tariff barriers as well,” Reichert said.
Witnesses all agreed that it must be updated for the 21st Century. Thomas Linebarger, CEO at Cummins, Inc., said a modernized NAFTA should include provisions that enable cross-border data flows.
“We urge negotiators to create a far smaller, simpler set of harmonized tariff codes for low-value goods, and make information about all import/export rules easy to access – for example, through an open API,” Althea Erickson, a representative from global, online retailer, Etsy, said.
Jason Perdue, an agriculture producer from York, Nebraska, believes modernization should look to improve agriculture trade with Japan and other Asia-Pacific countries.
“An agreement that has done this much good and that supports tens of thousands of jobs in the dairy sector alone must be preserved. That is why we believe we must ensure that no new trade restrictions arise through the NAFTA modernization discussions,” Stan Ryan, president and CEO of Washington state dairy company, Darigold, said.
Reichert concluded that an updated NAFTA must lay the foundation for the United States to negotiate strong, enforceable trade agreements around the world.
“It is important that we get this right. A modernized NAFTA agreement will serve as a template for future agreements with our trading partners – particularly in the Asia-Pacific region, where our withdrawal from TPP has left an urgent void. When North America wins, America wins,” Reichert said.