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August 24, 2017 11:00 AM, EDT
North American Trade Reps Start Talks on NAFTA Overhaul
Reshaped Cross-Border Deal Could Have Profound Impact on Freight Carriers, Supply Chain
At the border crossing Sam Hodgson

Trade representatives from the United States, Canada and Mexico have begun talks aimed at resetting terms of the North American Free Trade Agreement, a process that is expected to take many months to conclude and which could have profound implications for freight carriers and the supply chain operations of companies in all three countries.

President Donald Trump struck a pessimistic tone for the talks last week, suggesting that the United States would probably withdraw from NAFTA “at some point.”

“I don’t think we can make a deal because we have been so badly taken advantage of,” Trump said at a campaign-style rally in Phoenix on Aug. 22.

Comments filed in advance of the opening round of talks, in response to a request from U.S. Trade Representative Robert Lighthizer, reflected an overwhelming desire of transportation service providers, automakers and agricultural groups to preserve the basic tenants of the landmark trade agreement that has been in effect since 1994.

“NAFTA has been good for the U.S., good for the American worker and good for our country’s economy,” said Ann Wilson, senior vice president of government affairs for the Motor & Equipment Manufacturers Association. “NAFTA has provided an opportunity for U.S. manufacturers to compete with the rest of the world.”

Cameron Bruett, head of corporate affairs at JBS USA, a leading producer of beef and pork products based in Greeley, Colo., said food and agriculture exports to Canada and Mexico have more than quadrupled from $11 billion in 1993 to $43 billion in 2016.

“We welcome the opportunity to identify ways to modernize NAFTA while preserving the core benefits of the agreement,” he said.

Lighthizer speaks during the NAFTA renegotiations. (Andrew Harrer/Bloomberg News) 

The Trump administration has said that it wants a complete overhaul of the agreement in an effort to bolster domestic manufacturing by, for example, requiring a greater percentage of autos and auto parts produced under the pact to be made in the United States.

“We all agree that NAFTA needs updating,” Lighthizer said in advance of the opening round of talks in Washington with Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Secretary of Economy Ildefonso Guajardo Villarreal. “This is a 23-year-old agreement and our economies are very different than they were in the 1990s.”

Although many Americans have benefited from NAFTA, Lighthizer said that the agreement has “failed ... countless Americans.”

“We cannot ignore the huge trade deficits, the lost manufacturing jobs, the businesses that have closed or moved because of incentives — intended or not — in the current agreement,” he said.

I don’t think we can make a deal because we have been so badly taken advantage of.

President Trump

At least 700,000 Americans have lost jobs due to changing trade flows resulting from NAFTA, Lighthizer asserted.

“I want to be clear that [President Trump] is not interested in a mere tweaking of a few provisions and a couple of updated chapters. We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement.”

Lighthizer said the administration’s goals are to protect digital trade and services, e-commerce, update customs procedures, protect intellectual property, improve energy provisions, enhance transparency rules and promote science-based agricultural trade.

There should also be provisions to guard against currency manipulation and processes for dispute resolution that “respect our national sovereignty and our democratic processes,” he said in a statement preceding the talks.

Lighthizer said he wants provisions to protect against dumping of low-cost products and unfair competition from state-owned enterprises.

“We should assure that there is equal access and reciprocity in government procurement and agriculture,” he noted.

Navistar Inc., a manufacturer of commercial trucks, diesel engines and school buses based in Lisle, Ill., said it is urging negotiators to ease restrictions on U.S. exports of used vehicles in Mexico.

“Navistar recently began to export used heavy-duty trucks to Mexico and we intend to increase quantities in the years ahead,” Jim Spangler, vice president of corporate affairs for Navistar, said in a letter to the U.S. trade representative. “The U.S. should not allow protectionist elements in Mexico ... to undermine a market opening made possible by NAFTA.”

Barbara Glenn, CEO of the National Association of State Departments of Agriculture, said her group wants to see restrictions lifted on wine distribution in Canada and the removal of tariffs on U.S. milk products.

The chief executive The Greenbrier Cos., a U.S.-based manufacturer of rail cars and parts, said the company’s future depends on preserving the ability to trade freely with Canada and Mexico.

“Greenbrier has never moved a single job from the United States to Mexico,” CEO William Furman said in a letter to the U.S. trade representative. “Far from hurting our U.S. workforce, NAFTA has enabled it to grow as a result of the efficiencies it produced.”

A second round of talks is set for Sept. 1-5 in Mexico, followed by meetings in Canada in late September and back to the United States in October.

Marissa Gamache, a special writer for TT, contributed to this article.