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Lawmakers Oppose NAFTA Proposals as Fifth Round of Talks Gets Underway

Friday, November 17, 2017
Sandler, Travis & Rosenberg Trade Report

Members of the House and Senate registered their opposition to several Trump administration proposals to revamp NAFTA this week as the fifth round of negotiations to update the agreement got underway in Mexico City. Expectations for the round were dampened when the three trade ministers announced they would not attend.

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In a Nov. 15 letter to U.S. Trade Representative Robert Lighthizer, a bipartisan group of 72 House members from 23 states decried the White House’s proposal to increase the NAFTA regional content requirements for automobiles from 62.5 percent to 85 percent and add a requirement for 50 percent U.S. content. NAFTA has led to “increased vehicle production in the United States, more secure jobs for those working in the industry, and a globally competitive U.S. motor vehicle industry that leads the world in innovation,” the letter said. But the current rules of origin are “already the highest of any trade agreement worldwide,” said Rep. Mark Sanford, R-S.C., and changing them as proposed “seems like a recipe for disaster.” The letter explained that such changes would “eliminate the competitive advantages provided to the U.S. auto industry under the current NAFTA rules – or lead to rejection by Canada and Mexico and the end of the agreement,” in either case resulting in reduced sales, production, and exports.

In a separate Nov. 15 letter to Lighthizer, three senators said a proposed provision that would automatically terminate NAFTA after five years unless it is specifically renewed is “unnecessary.” (Mexican economy minister Ildefonso Guajardo reportedly said this week that a review every five years would be acceptable but not in association with an automatic termination.) They also criticized the administration’s emphasis on using trade agreements to reduce the U.S. trade deficit, stating that seeking to create domestic jobs “through enacting additional barriers to trade and taxes on imports should not be the focus of U.S. trade policy.” On this point they added that statistics from the last decade show at the least a negative correlation between U.S. jobs and the trade deficit and at times actually indicate an inverse relationship.

Meanwhile, some of the nearly 30 NAFTA negotiating groups began meeting Nov. 15 even though the round will not formally begin until Nov. 17. However, the trade ministers of each country said that following their “substantive discussions” at a recent meeting of the Asia-Pacific Economic Cooperation forum they agreed not to attend the NAFTA talks “so negotiators can continue to make important progress on key chapters advanced in round 4.”

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