Monthly freight flows between the US and its NAFTA partners plunged 10% month-on-month in July, but rose 6.5% from a year earlier.
According to data from the Bureau of Transportation, US freight flows with Canada and Mexico climbed to US$89.2bn in July.
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From June to July 2017 the value of US freight flows to Canada fell 12.3% to US$44.8bn. US trade with Mexico was valued at US $44.4bn in July, down 8.8% from June.
However, on a year-to-date basis from July 2016, total trade with the US and its NAFTA partners grew 6.5% – up 5.6% with Canada and up 7.4% with Mexico.
Talks between Mexico, Canada and the US to renegotiate the terms of the NAFTA agreement began in August and are still underway, with the next round of negotiations scheduled for 11-15 October.
The third round finished at the end of September with “significant progress” but concerns the three partners will not be able to conclude negotiations by the end of the year.
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By GlobalDataNAFTA renegotiations continue but concerns remain
NAFTA came into effect on 1 January 1994 with the aim of eliminating barriers to trade and investment among the three partner countries.
Since then it has helped encourage a regional textile and apparel supply chain among its members. The US typically exports yarns and fabrics to Mexico, where they are cut and sewn into apparel (taking advantage of the country’s lower labour costs); with the finished garments then shipped back to the US and Canada for consumption.
US apparel imports under NAFTA have declined over time and the US has been keen to renegotiate the terms of the agreement with its partners in a bid to reduce the trade deficit and bring more manufacturing jobs back to the US.
But while the US has a trade deficit with NAFTA partners for apparel ($1.13bn in 2016), US apparel imports from Canada and Mexico often include textile inputs “Made in the USA” through the western hemisphere supply chain. So cutting the trade deficit on apparel could inadvertently and ironically have a negative impact on US textile exports to the NAFTA region.
Rules of origin is another major issue related to the textile and apparel sector in the NAFTA renegotiation. Even though the typical business model for fashion companies is “making anywhere in the world and selling anywhere in the world,” USTR has proposed adding more national content requirements to the agreement and eliminating mechanisms intended to make textile raw material sourcing more flexible and less costly.
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