Groups debate merits of NAFTA as renegotiation nears

WASHINGTON — With renegotiation of the North American Free Trade Agreement (NAFTA) on the horizon, both Mexican and U.S. business interests — including the tire and auto parts industries — want to ensure that NAFTA is updated and strengthened, not repealed or fatally weakened.

"Amend it — don't end it!" said North American Strategy for Competitiveness (NASCO), a pro-NAFTA coalition whose 100-plus members include Bridgestone Americas, the Michigan Department of Transportation, the U.S.-Mexico Chamber of Commerce and the Association of Mexican Importers & Exporters.

"To avoid lost exports and lost jobs, NAFTA should be amended, not terminated," NASCO said in comments to the Office of the U.S. Trade Representative (USTR). "NAFTA already has an amendment process built in to ensure that it can be modified as needed."

USTR solicited comments and requests to testify until June 12 for a June 27 hearing at International Trade Commission headquarters on how to renegotiate NAFTA with an eye toward its modernization.

• This story appeared in the July 3 print issue of Tire Business.

Negotiated more than a quarter-century ago, NAFTA has been the focus of heated controversy. The tripartite agreement between Mexico, Canada and the U.S. has been credited for facilitating the free flow of business and goods between the three countries, and condemned as a job-killer for manufacturing workers in all three.

"While our economy and U.S. businesses have changed considerably over that period, NAFTA has not," the May 23 USTR notice in the Federal Register said.

"The success of NAFTA and its impact on the U.S. economy cannot be refuted, with tri-national trade up by 245 percent since 1993," said Albert C. Zapanta, president and CEO of the U.S.-Mexico Chamber of Commerce, in his comments to USTR.

"The U.S. is $127 billion richer each year due to the 'extra' trade growth that results from the cooperation of the NAFTA partnerships," Mr. Zapanta wrote.

On the other hand, United Steelworkers International President Leo W. Gerard told the USTR that NAFTA, as originally written, did far too little to protect not only manufacturing jobs, but also the healthcare, service and public sector jobs that serve manufacturing.

"It devastated former 'factory towns,' the ripple effect has changed the lives of not only former manufacturing workers but these workers as well," Mr. Gerard wrote.

"Workers in Canada and Mexico have also suffered under NAFTA's oppressive design as companies have relocated production and sourcing without allowing workers to properly share in the fruits of their labor."

The USTR notice generated hundreds of requests to testify and nearly 12,500 comments. Among those organizations requesting to testify were the Auto Care Association (ACA) and the Motor & Equipment Manufacturers Association (MEMA), whose members benefit greatly from NAFTA.

"NAFTA's elimination of tariffs, foreign investment protections and opening of the services markets facilitated the integration of regional supply/value chains," said Aaron Lowe, ACA senior vice president, regulatory and government affairs, in his comments to USTR.

"Simply put, NAFTA established rules that promote consistency and predictability for U.S. manufacturers, retailers, distributors and service providers," Mr. Lowe said.

In its comments, MEMA noted that the motor vehicle industry has leveraged NAFTA to create an integrated supply chain across North America.

NAFTA also has driven innovation in the motor vehicle industry, including vehicle-to-vehicle communications and automated driving features, MEMA said.

"This is not merely a matter of life-saving and vehicle efficiency technology development, but also the work associated with these new technologies will drive job development in the U.S. which, in turn, will promote exports and ensure that the U.S. will maintain its technology and innovation leadership position in the world," it said.

Many of the recommendations for renegotiating NAFTA concentrated on e-commerce and technological solutions. The U.S.-Mexico Chamber of Commerce, for example, recommended, among other things, the creation of a Smart Border that would leverage technology to provide essential security and improve efficiency in the smooth and timely transport of goods.

NASCO made a long list of recommendations, including:

• Creation of a government-industry "Infrastructure Bank" using a market-driven approach to identify priorities for necessary infrastructure upgrades along international borders;
• Establishment of a North American energy agreement;
• Continuation of a "Beyond the Border" initiative for a cooperative process for security and trade facilitation; and
• Expansion of training and credentials for professionals in North America, plus introduction of common standards for training and certifications for North American manufacturing and logistics careers.

MEMA's recommendations included:

• Establishing a level playing field for all parties, including the global removal of non-tariff barriers;
• Enforcing intellectual property rights protections;
• Ensuring that U.S. motor vehicle safety standards are accepted in all treaty countries; and
• Requiring that imports of all aftermarket parts, including remanufactured goods, are treated the same as new goods.

E-commerce and streamlining customs procedures are essential to modernizing NAFTA, according to the ACA.

"While nearly 80 percent of Americans do at least some shopping online, compared to only 22 percent in 2000, one of NAFTA's largest shortcomings is its lack of e-commerce provisions that protect and promote cross-border protections," Mr. Lowe wrote. "Likewise, tremendous strides have been made in trade facilitation since NAFTA was adopted.

"NAFTA's customs administration provisions should be consistent with the WTO (World Trade Organization) Trade Facilitation Agreement and the United States should seek to identify ways to reduce border wait times and obstacles that impact U.S. exports to Canada and Mexico," he said.

Officials of several tire companies could not be reached for comment. Continental Automotive Systems, a sister company of Continental Tire the Americas L.L.C., said only that it supports free trade and that it cannot speculate on how NAFTA might be renegotiated.