Great Lakes Metro Chambers Push for Action on Infrastructure, Immigration and Trade

The Detroit Regional Chamber and the Great Lakes Metro Chambers Coalition met with members of Congress and their staff during a two-day fly-in to Washington, D.C. last week to discuss several recently proposed policies that will affect business in the Great Lakes region.

During the visit, the Coalition met with Sen. Bob Casey (D-PA), Rep. Tom Emmer (R-MN 6), and Sen. Gary Peters (D-MI), among others. This visit primarily centered around advancing three of the Coalition’s top policy priorities: the development of a robust, nationwide infrastructure plan; increasing high-skilled immigration; and supporting the preservation of the North American Free Trade Agreement (NAFTA).

Coalition members spent much of their time discussing President Trump’s recently proposed infrastructure, immigration and trade policies. The infrastructure policy allocates $1.5 trillion in investment that was proposed in February. The Coalition supports developing comprehensive infrastructure legislation and increased federal funding for key projects, including an upgrade to the Soo Locks.

Regarding immigration, the Coalition continues to support high-skilled immigration. Data shows that immigrants bring the talent, labor, and spending power needed to help grow the Great Lakes’ economy. According to a New American Economy report, in the Great Lakes region alone, immigrants account for half of the population growth over the last 15 years and drove almost two-thirds of the region’s working-age population growth in the same amount of time.

Finally, the Coalition met with representatives to discuss the preservation of NAFTA. Modernization is necessary to improve trade between the United States and its allies, but pulling the United States from NAFTA would be catastrophic for businesses across the Great Lakes region that rely on restrictive-free trade with Canada and Mexico.

The Coalition will continue to engage the administration on improving infrastructure, immigration and trade regulations to help grow the region’s economy.

For more information on the Great Lakes Metro Chambers Coalition, visit http://greatlakesmetrochambers.com.

NAFTA Negotiations Are Underway: 5 Things Businesses Should Know

By Stacy Ettinger

Officials from the United States, Canada and Mexico will meet in Washington, D.C. this week to begin negotiations to modernize the North American Free Trade Agreement (NAFTA). The three countries have set an ambitious negotiating schedule, with a plan to hold seven rounds of talks before the end of the year.

The following is a brief look at the schedule for NAFTA renegotiation, key issues likely to be on the negotiating agenda, and the economic relationship between the United States and its NAFTA partners.

Renegotiation Schedule

With elections scheduled in the United States and Mexico in 2018, the NAFTA renegotiation process would likely be a political liability if it drags on too long. The plan, therefore, is to finalize an agreement before the end of the year. With input from businesses and other stakeholders, negotiators are in the process of drafting proposed text to present at the first negotiating session in Washington, D.C. beginning this week.

Six additional negotiating sessions are scheduled through December. After negotiations wrap up, the House of Representatives and Senate will need to vote on, and President Trump will need to sign legislation implementing the agreement. Mexico and Canada also will need to vote to implement per their domestic legal requirements, before a new, “modernized” NAFTA takes effect.

Issues on the Agenda

All three countries go into NAFTA modernization negotiations with their own objectives. Key issues include the following:

  • Tightening Rules of Origin

The United States is looking to “update and strengthen” the rules of origin “to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.” This might mean raising the North American content requirement for goods to qualify for duty-free treatment. Parts and inputs sold between the NAFTA partners that previously qualified for duty-free treatment could become subject to tariffs.

While U.S. import duties generally are relatively minimal, the same cannot be said for Mexican and Canadian import duties. Given the extensive reliance on integrated cross-border supply chains, the additional duties could drive manufacturers to rethink their sourcing strategies and consider suppliers outside the NAFTA region.

  • Market Access for Agricultural Goods

NAFTA has been very beneficial for cross-border trade in agricultural goods. However, certain products continue to be a source of serious friction between Canada and the United States, including dairy and lumber. Expect both countries to stand their ground to protect sensitive agricultural industries.

  • Energy Production and Transmission

Canada and the United States greatly expanded their bilateral energy trade under NAFTA. Mexico is in the process of opening its oil, gas and power sectors and is looking to incorporate provisions in NAFTA to ensure its energy industries are included in regional energy trade.

  • Eliminating Red Tape

The United States, Canada and Mexico will likely find common ground on proposals regarding regulatory and customs processes that would reduce bureaucratic delays and “red tape.” Given the magnitude and frequency of cross-border transactions between NAFTA partners, any agreement on modernization, simplification and harmonization of customs procedures and processes would result in significant cost savings, particularly for small and medium-sized businesses. Encouraging regulatory cooperation as a way to improve transparency and regulatory compatibility would likely have similar benefits.

  • New Rules for Digital Trade

The United States, Canada and Mexico also have mutual interest in establishment of strong rules promoting and protecting e-commerce and digital trade. The NAFTA countries agreed to such rules, including prohibiting customs duties on digital goods and services, as part of the TPP (Trans-Pacific Partnership) negotiations. Digital trade was in its infancy when NAFTA was negotiated, and there is support among the three countries to address this issue in the ongoing NAFTA modernization efforts.

What Should You Be Doing?

The issues discussed above are just some of the items on the NAFTA renegotiation agenda. NAFTA modernization efforts are on the fast track, and now is the time to engage with government officials to ensure negotiating text reflects your interests.

Benefits of NAFTA

Negotiated 25 years ago, NAFTA was the most comprehensive free trade agreement at the time. With a few exceptions, tariffs on goods produced and traded within North America were reduced to zero. Barriers to investment were eliminated. And service providers were generally free to operate throughout the North American market. The resulting economic integration between the United States, Mexico and Canada is extensive. Canada is the leading market for U.S. exports and the number one customer for each of the Great Lakes states. Mexico is the United States’ second largest export market. The largest categories of traded goods include automobiles and parts, petroleum products, and industrial machinery and equipment.

Stacy Ettinger, a partner in the Washington, D.C. office of the law firm K&L Gates, has worked as a senior legal advisor at the U.S. Department of Commerce where she advised agency officials on U.S. and foreign trade rules, supervised dispute settlement proceedings before the World Trade Organization, and represented the U.S. in international trade negotiations.