Customs, Enforcement Among Priorities in NAFTA Talks, Ross Says
"Customs procedures," trade enforcement, and reducing trade deficits with Canada and Mexico will be centerpieces of the upcoming NAFTA renegotiation, Commerce Secretary Wilbur Ross said May 31 during a discussion at the Bipartisan Policy Center (here). Ross covered U.S. negotiating objectives generally, but said enforcement will be the top priority, “because there’s not much point going through all the trouble to make an elaborate trade agreement if you’re not going to enforce it and really get the benefits of it that you bargained for,” Ross said. Ross’ words largely align with elements that U.S. Trade Representative Robert Lighthizer said the U.S. would pursue for NAFTA in a formal notice to Congress (see 1705180043), as well as with areas that lawmakers cited as priorities relayed by Ross and Lighthizer during closed-door meetings (see 1705160082).
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During a separate earlier NAFTA discussion at the Bipartisan Policy Center, National Corn Growers Association Corn Board Chairman Charles Bowling cited concern about Mexican preparations to slap a 37 percent tariff on U.S. corn if the U.S. undertakes actions that might harm Mexico within the NAFTA framework. “We had a reverse trade mission just last week here, when we had Mexican grain buyers and feed manufacturers here in D.C., and they’ve already said that they’ve started negotiating with Brazil and Argentina,” Bowling said. “If we falter, on the U.S. corn going into Mexico, they have willing sellers that come from” those countries. A 37 percent tariff on U.S. corn imports would mean the U.S. is no longer Mexico’s cheapest corn supplier, he said.
Ross said the “guiding principle” for the upcoming renegotiation is “do no harm,” and distinguished between “blameless” and “blameful” trade deficits. The U.S. trade deficit with Canada in hydrocarbons and electrical energy trade accounts for more than the overall deficit between the two nations, which is “blameless” since the U.S. isn’t yet self-sufficient in energy, Ross said. House lawmakers in a May 30 letter urged Lighthizer to include energy considerations, including continental energy independence, in approaching renegotiation (see 1705310017). The easiest way to close trade deficits with Canada and Mexico will be to import more from the U.S. “For example, some of the agricultural products they buy come from Brazil,” Ross said. “Well, they could give [the U.S.] just a little bit better of a market share than we have now. And that’s just one example of many.”
The U.S. views concessions that Canada and Mexico gave during Trans-Pacific Partnership negotiations as a starting point for the NAFTA renegotiation, and the easiest points of agreement this round will be on provisions that weren’t contained in the original NAFTA, Ross said. “That’s new territory that’s not anybody giving up anything, and by and large, those should be the easiest issues to get done,” he said. “But they’re important because one of our objectives will be to try to incorporate in NAFTA basic principles that we would like to have followed in subsequent trade agreements, rather than starting each one with a blank sheet of paper.” The U.S. is trying to clear long-standing trade irritants to smooth the way for the NAFTA negotiation, including sugar imports from Mexico, softwood lumber imports from Canada, and U.S. dairy exports to Canada. The Commerce Department announced last month that it will reimpose antidumping and countervailing duties on Mexican sugar from Mexico and resume collection of AD/CV duties if they don’t reach an agreement by June 5 (see 1705020009).
During a June 1 press call, Canadian Minister of Foreign Affairs Chrystia Freeland said Ross displayed a sound knowledge of bilateral softwood issues and a “real good faith” effort to conclude a new agreement between the two nations, during two meetings she had with Ross this week. Canada on June 1 announced (here) $867 million in aid to assist Canadian forest industry workers and communities “affected by U.S. measures targeting softwood lumber” (see 1704270022). Freeland said the question of whether softwood would be included in NAFTA renegotiations is a “red herring” right now, as NAFTA parties are at least two-and-a-half months away from formal talks. Canada is open to concluding a softwood agreement before or during NAFTA renegotiations as long as it works, but the issues are currently separate discussions, Freeland said.
With the Mexican presidential election set for mid-2018, the best window to negotiate is from now until late December or early January, Ross said. “The closer you get to it, the more complicated it will become, particularly in terms of getting the Mexican congressional approval,” he said. “And we also shouldn’t forget two other things -- the Trade Promotion Authority expires July of next year, and we, too, have elections, the midterm elections, and those will undoubtedly have some impact on congressional views.”