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Retailers Tell USTR What They Want From NAFTA

There’s been much ado about NAFTA, and before the Trump Administration gets to the negotiation table, retailers want trade leaders to know what they need from the agreement.

In a letter to the United States Trade Representative Robert Lighthizer Monday, the National Retail Federation outlined some key priorities for any would-be “modernization” of the more than 20-year-old trade deal between the United States, Mexico and Canada.

“Since the agreement was negotiated over two decades ago, it does not reflect today’s global value chain or many new ways of doing business in the global economy” NRF president and CEO Matthew Shay said in a statement. “A number of its provisions affecting ‘old’ ways of doing business need to be updated and modernized to reflect today’s business environment as well as what may come in the future.”

The letter, a response to calls for comments on negotiating objectives, asked that the Administration take heed of four guidelines when taking another look at NAFTA: do no harm to the current agreement, keep the agreement trilateral, conclude negotiations quickly and provide a seamless transition.

There’s no telling whether any of those things will actually happen, but the NRF is doing its part for retail and the one in four U.S. jobs the sector supports.

“U.S. retailers are the primary direct link between American families and farmers, workers and producers in the United States, Mexico and Canada. Retailers buy apparel, footwear, consumer electronics, food products and many other consumer goods from suppliers in Canada and Mexico. Some U.S. retailers operate stores in Canada and Mexico which they supply with goods purchased locally but also from U.S. manufacturers and farmers,” the letter stressed, continuing to say, “NAFTA has supported these jobs by freeing much economic activity between the countries of unnecessary burdens, and by helping to grow the U.S. economy in general.”

Now, as supply chains have deepened and the Internet has considerably changed how retail does business, the NRF agrees that NAFTA needs to catch up to accommodate some of these shifts. But at the same time, retail can’t afford for NAFTA to go back on some of the competitive advantages it has fueled.

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“A modernized NAFTA must ensure that tariffs on all goods remain fixed at zero. Under no circumstances should the United States seek to impose new duties or taxes on imports from Canada or Mexico,” the letter noted.

When it comes to rules of origin, NRF said changes should not disrupt today’s global value chains or make things any more burdensome than they already are.

“The Administration should take this opportunity to include a provision in a modernized NAFTA that permits companies to ‘cumulate’ value of goods produced within the NAFTA region with value of goods produced in other free trade agreement partners,” NRF wrote in the letter. “In the case of NAFTA, this would permit a more integrated value chain to develop between Canada, the United States, Mexico, Colombia, Chile, Peru and the countries that are parties to the Dominican Republic-Central America Free Trade Agreement.”

The letter goes on to address concerns surrounding duty drawbacks, digital commerce, labor and environmental protections and investment issues, but the overarching concern is that the U.S. has to remain competitive in the face of Asia’s command in the space.

“We encourage the Administration to evaluate how trade has changed within the region over the past 23 years,” NRF wrote. “For example, there is very little apparel production in the Unites States today and, despite NAFTA and other FTAs, Asia is now the dominant supplier of apparel—by far. Negotiators should consider new provisions in a modernized NAFTA that would further support apparel manufacturing and regional integration among the NAFTA partners.”