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Maneuvering Beyond the Post-Election NAFTA Strategy

Cited as the “worst trade deal in history” while on the campaign trail, renegotiating NAFTA by the Trump administration is definite. The administration has made the focus and tone of future negotiations clear on the White House website. Additionally, Commerce Secretary Nominee Wilbur Ross has stated that once confirmed, NAFTA will be addressed early and that “all aspects” of the trade agreement were up for negotiation. Thus, the time has come for US, Canadian and Mexican businesses to begin reviewing NAFTA usage in their trade compliance portfolio.

Prospective Changes

The Trump administration has not released any solid, detailed, policy proposals for NAFTA revitalization.  However, on the White House website in the section titled Trade Deals That Work for All Americans, the administration is clear that it will withdraw from the agreement “if our partners refuse a renegotiation that gives American workers a fair deal.”

Taken in context with comments made on the campaign trail, the nomination of Wilbur Ross as Commerce Secretary, as well as advances in technology since the program’s inception, NAFTA Policy may be shaped in the following ways:

  • Additional language may be added to account for advancement in telecommunications, cross border data-flows and exports of digital products
  • Higher tariffs may be imposed on goods traveling northbound from Mexico and/or NAFTA rules of origin may be renegotiated
  • The United States may withdraw from the multi-lateral NAFTA agreement in favor of bilateral agreements

Looking Forward

While the details for the administration’s NAFTA plan are taking shape, savvy businesses should begin reviewing their trade compliance portfolios and running scenarios in anticipation of any change in the program. In particular, contingencies can and should be put into place that cover increases in tariff especially for northbound transactions from Mexico. As the administration has scrutinized the automotive industry, suppliers and manufacturers in the automotive and heavy machinery industries should take special care to review their NAFTA usage.

 Additionally, businesses should begin reviewing how their data is being transmitted to customs and their IT capabilities as it is likely that any renegotiation of NAFTA may involve modernizing the agreement to account for technological advances.

The Allyn Advantage

Allyn has 25 years of Global Trade Compliance, Logistics and Tax experience and is closely monitoring all news from the administration as it relates to NAFTA and other trade policy.  For questions or assistance in reviewing your trade compliance portfolio or in developing contingency plans, please contact us at sales@allynintl.com.

 

References:

http://money.cnn.com/2017/01/18/investing/wilbur-ross-hearing-trump-commerce-secretary/

http://www.businessinsider.com/trump-to-sign-executive-order-to-renegotiate-nafta-2017-1

http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/themexicoinstitute/2017/01/23/trump-to-announce-plans-for-renegotiation-of-nafta-five-ways-to-improve-the-agreement/&refURL=https://www.google.com/&referrer=https://www.google.com/

 

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