Boosting de Minimis Levels, New 'Disciplines on the Use of Customs Brokers' Among USTR NAFTA Objectives

USTR will also work to include provisions for electronic payment of duties, taxes, fees and charges associated with imports and exports; use of risk management systems for customs control and post-clearance audit procedures; and reduced documentary requirements, the agency said. The U.S. will seek enhanced harmonization of customs data requirements across borders. USTR’s July 17 official submission to Congress of NAFTA negotiating objectives means it could start renegotiating the deal as early as Aug. 16 -- as the administration intended (see 1705180043) -- under the timeline set by the Trade Promotion Authority (TPA).

The administration will push for provisions for internet publication of all customs laws, regulations and procedures; for designating points of contact for questions from traders; and for use of reusable containers, according to the objectives. USTR seeks provisions that “ensure that, to the greatest extent possible, shipments are released immediately after determining compliance with applicable laws and regulations and provide for new disciplines on timing of release, automation, and use of guarantees.” USTR is also looking to promote provisions on advance rulings, and administrative and judicial customs appeal processes.

During a July 18 House Ways and Means Trade Subcommittee hearing on NAFTA modernization, subcommittee Chairman Dave Reichert, R-Wash., said customs processing is one of the most frequent topics constituents raise in the context of NAFTA. Providing for electronic customs forms and eliminating unnecessary customs regulations should also be goals for renegotiation, he said. Coalition of Services Industries President Christine Bliss agreed in written testimony (here) that using electronic customs forms, electronic signature and authentication, and secure online payment should be goals of the NAFTA renegotiation. She also called for the U.S. to push Canada and Mexico to increase their de minimis levels. “On trade facilitation, NAFTA must ensure that ambitious, high-standard customs policies are harmonized across Canada and Mexico to promote U.S. e-commerce exports and SME exporting opportunities,” she said. “This includes substantial increases to Canada and Mexico’s customs de minimis threshold for express and postal shipments.” Etsy Senior Director of Global Policy Althea Erickson also called for USTR to work for increased Canadian and Mexican de minimis levels (here).

Reichert in his opening statement (here) praised USTR’s objectives as setting a “high and ambitious bar” to face several trade challenges, but subcommittee ranking member Bill Pascrell, D-N.J., generally criticized USTR’s document, saying it lacks clarity on what NAFTA should look like. Pascrell added that the objectives don’t show the updated deal will bring jobs and wage growth back to the U.S. However, Pascrell added that he was encouraged the objectives include ensuring that state-owned enterprises are subject to strong disciplines beyond measures outlined in the World Trade Organization Agreement on Subsidies and Countervailing Measures, but he noted that these issues are “on the margins” of NAFTA.

AFL-CIO trade and globalization policy specialist Celeste Drake called USTR’s objectives a rehash of those of the Trans-Pacific Partnership, but said the trade remedies section of the July 17-released document is a bright spot. She noted, however, that trade remedies can defend existing jobs, but not create new ones, noting that her union would have preferred more specificity on trade remedies in the objectives. Reps. Ron Kind, D-Wis., and Lloyd Doggett, D-Texas, during the hearing agreed with Drake that USTR’s negotiating objectives borrowed heavily from the TPP.

On rules of origin, the administration wants to ensure NAFTA’s benefits go to products “genuinely made in the United States and North America,” and incentivize sourcing within the continent, the objectives say. USTR also wants to “establish origin procedures that streamline the certification and verification of rules of origin and that promote strong enforcement, including with respect to textiles,” and “promote cooperation with NAFTA countries to ensure that goods that meet the rules of origin receive NAFTA benefits, prevent duty evasion, and combat customs offences,” according to the objectives.

The USTR will work to eliminate NAFTA’s Chapter 19 binational dispute settlement process for challenging countries’ antidumping and countervailing duty measures, it said. USTR will also seek a separate domestic industry provision for perishable and seasonal products in AD and CV duty proceedings, to facilitate the ability to impose measures based on “third-country dumping,” and to eliminate the deal’s global safeguard exclusion in order to allow the U.S. the ability to apply measures in future investigations, the agency said. The U.S. Lumber Coalition applauded (here) the proposed elimination of binational AD/CV panels, which it said are unconstitutional, unworkable and have undermined U.S. laws to counter unfair trade practices applied to Canada and Mexico.

Broadly, the administration wants an updated NAFTA to “preserve the ability of the United States to enforce rigorously its trade laws, including the antidumping, countervailing duty, and safeguard laws,” the objectives say. USTR wants to promote cooperation among NAFTA countries’ trade remedy administrators, particularly regarding information sharing that would improve the ability to monitor and address trade violations, “such as through self-initiation.” The administration will also push for an early warning import monitoring system for products from non-NAFTA countries agreed by NAFTA parties to be sensitive, the objectives say.

The objectives call for provisions to ensure labor obligations are subject to the same dispute settlement mechanism applying to other enforceable provisions of the agreement. USTR also noted that it wants a NAFTA that requires initiatives to ban forced labor goods made in and outside of North America. The agency will also during renegotiation work to establish public advisory committees to express concerns about countries’ implementation of labor commitments, and to codify a senior-level “Labor Committee” to regularly meet to oversee implementation of labor commitments. USTR also seeks to bring labor and environment provisions into the core of the agreement, rather than in side agreements

Sen. Sherrod Brown, D-Ohio, in an emailed statement said, “we clearly need to see more details” on the renegotiation objectives. “The real test will be whether President Trump puts American workers over corporate profits once negotiations begin,” Brown said.

The U.S. Council for International Business (USCIB) in a statement (here) said the objectives cover many key issues, but called out USTR for omitting references to investor-state dispute settlement (ISDS). Preserving ISDS and achieving trilateral customs uniformity are among the recommendations of Kansas City Southern CEO Patrick Ottensmeyer, according to testimony (here) for the Ways and Means hearing. But Drake said ISDS should be eliminated, and in testimony (here) called it a “separate justice system for foreign investors for which there is no legal or moral justification.”

The Consumer Federation of America (CFA) was critical in its reaction to the release of the objectives. The group said in a statement (here) that USTR’s document is packed with “vague references and technocratic jargon,” bearing “little resemblance to Trump’s campaign bluster.” CFA Food Policy Institute Director Thomas Gremillion blasted the objectives’ omission of any intent to push for country-of-origin labeling (COOL) provisions as “outrageous.” The Agricultural Marketing Service on March 2, 2016, repealed COOL requirements for muscle cuts of beef, pork, ground beef and ground pork (see 1603020019), after the WTO on Dec. 7, 2015, authorized Canada and Mexico to raise tariffs on U.S. exports in retaliation for U.S. COOL regulations on those muscle cuts (see 1512070017).

Noting that the ability to export fewer goods could “be devastating” to the rural American economy, Ottensmeyer during the hearing said that Kansas City Southern provided a map to USTR showing the percentage of local Midwestern economies dependent on agricultural trade, by county. “It puts a different light on the issue, because when you talk about just the sheer number of jobs in rural Kansas or South Dakota or Iowa, Nebraska, the numbers aren’t overwhelming compared to Texas or Illinois, or the East Coast or West Coast,” he said. “But if you look at it as a percentage of the local economy, the percentage of local GDP in those counties that is related to international trade of agricultural products, it could potentially be devastating if those markets didn’t remain open to those farmers.”

In another July 17 statement (here), Canadian Foreign Affairs Minister Chrystia Freeland offered few opinions on USTR’s released objectives, only noting the release of objectives is part of the U.S.’s “internal process” and required under TPA. But she reminded that Canada is the U.S.’s No. 1 customer. “Canada buys more goods from the U.S. than China, Japan, and the United Kingdom combined,” she said. U.S. Chamber of Commerce Executive Vice President Myron Brilliant said in a statement (here) the administration is recognizing it “must do no harm” to U.S. jobs, businesses and industries that depend on North American trade, and that it is adhering to the TPA process.