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90 Day Count Down: NAFTA Renegotiation

Last week, newly confirmed U.S. Trade Representative Robert Lighthizer sent the final North American Free Trade Agreement (NAFTA) notification letter to Congress. The notification letter from the Trump Administration indicating the Administration’s intent to begin the process for modernizing the NAFTA is just one of the required steps laid out in the Bipartisan Congressional Trade Priorities and Accountability Act (TPA).

Key highlights are provided below:

  • Ambassador Lighthizer underscored that the administration “will consult closely with Congress in developing our negotiating positions to ensure that they are consistent with Congressional priorities and objectives” as laid out in Trade Promotion Authority.
  • "Many (NAFTA) chapters are outdated and do not reflect modern standards. For example, digital trade was in its infancy when NAFTA was enacted.” The administration’s “aim is that NAFTA be modernized to include new provisions to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labor, environment, and small and medium enterprises."
  • "Establishing effective implementation and aggressive enforcement of the commitments made by our trading partners under our trade agreements is vital to the success of those agreements and should be improved in the context of NAFTA.”
The notification starts the clock on a 90-day waiting period before U.S. negotiators can sit down with their counterparts from Canada and Mexico. While NAFTA has benefited the specialty chemical industry (Since NAFTA entered into force, trade in chemicals between NAFTA countries has more than tripled, from $20 billion in 1994 to $63 billion in 2014), as a 23 year old agreement, there are provisions that should be updated: including updated Rules of Origin for chemicals, allowance of duty drawback, and better regulatory cooperation and transparency. 

SOCMA will continue to work with its members to identify parts of NAFTA that have been beneficial to them and parts that should be updated over the next few weeks so that the Administration is properly armed with negotiating objectives that will benefit the specialty chemical industry. 

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