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Trade Committee Chiefs See Room for Improvement in NAFTA Objectives

Thursday, July 20, 2017
Sandler, Travis & Rosenberg Trade Report

The Trump administration’s summary of its objectives in revamping the North American Free Trade Agreement met with mixed responses from the leaders of the House and Senate committees overseeing trade policy, and not solely along political lines. The objectives will guide U.S. negotiators in the forthcoming talks, which are expected to get underway in August in Washington, D.C.

The administration’s 17-page summary covered a range of topics but some of the trade chiefs said more details are needed. Senate Finance Committee Ranking Member Ron Wyden, D-Ore., criticized the summary for being “hopelessly vague” on issues such as intellectual property rights, investment, currency manipulation, and government procurement. House Ways and Means Committee Ranking Member Richard Neal, D-Mass., added that the “complete lack of clarity or specificity” on some issues suggests that the administration “may not even know what it wants.” Senate Finance Chairman Orrin Hatch, R-Utah, acknowledged the preliminary nature of the summary but said the objectives “will be further developed as the negotiations proceed.”

Ways and Means Chairman Kevin Brady, R-Texas, however, hailed the “detailed negotiating objectives” that he said “set an ambitious standard for improving NAFTA.” Ways and Means Trade Subcommittee Chairman Dave Reichert, R-Wash., added that the objectives would address challenges that businesses face in “today’s digital economy,” including burdensome customs procedures, the expansion of forced localization requirements and restrictions on the flow of cross-border data, and inadequate rules governing e-commerce.

The leaders also identified improvements they would like to see to the administration’s list. Hatch called for stronger IPR protections, upgraded rules and enforcement procedures for U.S. exporters and investors, and improved regulatory practices that “treat American goods and services fairly.” Wyden and Neal criticized the administration for putting forth “watered down versions” of provisions negotiated in the Trans-Pacific Partnership, which Trump withdrew the U.S. from shortly after taking office in January, and said the objectives fall far short of the overhaul that NAFTA needs and that Trump promised. Brady, on the other hand, noted that the administration’s proposal on state-owned enterprises would “go well beyond TPP” and set a high standard that the U.S. could use as a model for future trade agreements.

The leaders also highlighted the importance of ensuring that a revised NAFTA does not jeopardize the benefits the existing pact has provided. Brady and Reichert said negotiators “must preserve the advantages” that U.S. consumers, manufacturers, and farmers already enjoy in addition to seeking expanded access to Mexico and Canada. Hatch called for “a strong trade agenda that will benefit American families,” a possible reference to the fact that administration officials have focused on the impact of trade on domestic manufacturing but have said little about the lower costs and improved choices it has offered to consumers.

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