The trade association representing US retailers has said many of the key proposals for the modernisation of the North American Free Trade Agreement (NAFTA) are not forward-looking enough and may do more harm than good.
As the fourth round of talks got underway in Washington last week to renegotiate the trilateral deal between the US, Canada and Mexico, National Retail Federation president and CEO, Matthew Shay, called on President Donald Trump not to withdraw from the agreement but instead to work on modernising it.
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“While we support modernising the agreement, we are concerned that some of the proposals the United States has or will put forward move away from the ‘do no harm’ mantra touted by the administration and supported by the business community,” Shay wrote in a comment piece. “A true modernisation of NAFTA should push the agreement forward to address today’s environment as well as the future. Unfortunately, many key proposals seem to look backward and may end up doing more harm than good.”
Shay believes that threatening to withdraw from NAFTA, or to include a sunset provision “should be a non-starter” and that proposals to include restrictive new rules of origin, new trade remedies or the elimination of investor protections should be rejected.
Instead, he suggests the inclusion of provisions to eliminate digital trade barriers in order to benefit businesses of all sizes, but particularly small businesses, and to improve customs procedures for both trade facilitation and enforcement.
“An end to NAFTA would cost the United States jobs and harm the economy while resulting in higher prices for consumers and reduced availability of products ranging from apparel and electronics to fresh fruits and vegetables,” he wrote.
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By GlobalData“We continue to believe NAFTA has been a positive free trade agreement that has benefited US businesses from retail to manufacturing to agriculture, and more importantly, US workers and consumers. We continue to urge the administration to seek a modernised NAFTA that will continue to provide benefits to all stakeholders while recognising today’s value chains and the potential for the future.”
Concerns have continued to mount that a renegotiated NAFTA will not be reached after Trump said at a press conference ahead of the fourth round of talks that the deal will be terminated if a new one cannot be struck.
“It’s possible we won’t be able to make a deal, and it’s possible that we will,” he told reporters.
NAFTA came into effect on 1 January 1994 with the aim of eliminating barriers to trade and investment among the US, Canada and Mexico.
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.
NAFTA renegotiation – Key issues for textiles and apparel
On completion of the third round of negotiations in late September, significant progress was hailed in several areas, but concerns remained that the three partners won’t be able to conclude negotiations by the end of the year.
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