International Trade

NAFTA Is a Good Deal for the States

Just as renegotiation of the North Atlantic Free Trade Agreement (NAFTA) appeared to be picking up some much-needed speed, the Administration introduced yet another complicating factor into negotiations late last week. The President ordered the Commerce Department to open an investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether automobile imports pose a threat to U.S. national security and would therefore warrant tariffs or other trade restrictions. Canada and Mexico are America’s largest auto part suppliers as well as NAFTA negotiating partners.

FTA negotiations are painstaking and difficult even under the best of circumstances, however, NAFTA renegotiations face a dizzying array of obstacles some of which are and others not within the Administration’s control. Presidential elections will be held in Mexico on July 1, and the front-runner, the left-leaning Andres Manuel Lopez Obrador, once wanted to dissolve NAFTA but has since signaled that he would respect a NAFTA agreed upon before his election. However, he will likely want to amend a NAFTA still in process when he takes office which will result in more changes to the Agreement requiring approvals by both Canada and the United States. Read more about Mexico’s upcoming election here. The ill-considered steel and aluminum tariffs that the Administration rolled out earlier this year have also complicated negotiations as the United States has yet to decide whether or not to exempt Canada – the top exporter of steel to the United States – and Mexico from the tariffs. The next self-imposed deadline for a steel/aluminum tariff decision is June 1. In the background are the Trade Promotion Authority rules that give Congress oversight over the resulting renegotiated agreement before it can be signed and that impose a series of additional deadlines to meet. The Administration’s manufactured distractions shift the focus of the Agreement’s negotiators from aspects of the FTA where modernization would benefit the states and American industry to addressing the latest hurdle. Each unnecessary delay jeopardizes finalizing renegotiation of this vital trade framework.

In the back and forth of NAFTA renegotiation members of ALEC have not lost sight of the essential fact that this Agreement is good for the states. All but one of the 50 states count Mexico and/or Canada as a top three trading partner. Because of the trade framework’s importance to the states, ALEC adopted model policy calling for NAFTA modernization and urging the strengthening of the intellectual property provisions of a renegotiated NAFTA. The model policy can be accessed here and here. Lawmaker members of ALEC also signed a letter reaffirming their commitment to the Agreement and underscoring the importance of strong Investor State Dispute Settlement (ISDS) provisions in the renegotiated NAFTA. The letter can be accessed here and an op-ed authored by ALEC staff can be found here. ALEC published an article on those states that have the most to lose if the United States fails to renegotiate the agreement which is here.

While in need of updates, NAFTA is a good deal for the states and a good deal for America. Protectionism has never benefited the United States, and the anti-trade rhetoric coming from Washington is steadily eroding the confidence that America’s negotiating partners have in the United States. Negotiations require discipline and hard work, however, NAFTA modernization is well worth the effort. The nation is counting on a successful negotiation of this vital trade framework.

In Depth: International Trade

International trade creates and supports millions of American jobs that offer higher than average wages and drive economic growth. As a testament to the strength of American entrepreneurship, the vast majority of U.S. exporters are not large corporations but small to medium-sized enterprises. Those that doubt the power of global…

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