US Should Keep Pushing Mexico and Canada on de Minimis, Trade Group Leader Tells Lawmakers
The U.S. should keep pressing Mexico and Canada to raise their de minimis levels and work to collaborate with them on trade enforcement against dumping and illegal subsidies during the ongoing NAFTA renegotiation, lawmakers heard in testimony for the House Foreign Affairs Trade Subcommittee Dec. 12. While Canada and Mexico have said they’re not “ready” to get on board with a U.S. proposal to raise their $15 and $50 respective de minimises to the U.S.’s $800 level, an increase could spur an e-commerce boom as de minimis wasn’t a consideration in the original NAFTA negotiations, Council of the Americas Vice President Eric Farnsworth said during a hearing. A negotiating impasse on de minimis is slowing completion of an updated NAFTA customs chapter (see 1712010039).
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Farnsworth was responding to a question by subcommittee ranking member Bill Keating, D-Mass., about potential ways an updated agreement could benefit e-commerce. Further, the three countries should address “tax avoidance” during negotiations, including through collaborating on trade enforcement against third-country dumping and illegal subsidies, AFL-CIO trade policy specialist Celeste Drake said.
Daniel Allford, president of Houston robotics manufacturer ARC Specialties, spoke about the benefits of NAFTA, and said he would have to lay off about 15 of his 65 employees if the U.S. withdraws. Approximately 15 percent of ARC’s revenue comes from exports to Mexico, and another 15 percent from exports to Canada, he said. Tariff-free trade with the U.S.’s NAFTA partners should remain, and any changes that could threaten that should be vetted, Allford said in submitted testimony. Amid the specter of withdrawal and tightened restrictions in NAFTA, Allford fears an unfair trade environment, he said. “Tariffs and red tape on one side can create reciprocal tariffs and red tape on the other,” Allford said.
The AFL-CIO believes the Trump administration’s transparency on its push to use the renegotiation to limit special legal privileges for investors is positive, Drake said. She also praised U.S. Trade Representative Robert Lighthizer for willingness to meet with organized labor during talks. Yet she said more steps should be taken to convey confidence that NAFTA will be better than its past. Labor and environment side agreements should be embedded in NAFTA core text, said Drake and McLarty Associates Vice Chairman John Negroponte, and labor standards should be enforced, as the Mexican government continues to collaborate with employers and “employer-dominated unions” to keep standards low, Drake said.
Keating said he is “unconvinced” President Donald Trump is taking NAFTA negotiations seriously, as shown by his administration’s proposals. “For starters, the unrealistic timing that has been placed on these negotiations only suggests the administration is willing to accept more of the same,” Keating said. “I hope I’m wrong about that. But negotiating wholesale changes to trade policy to break longstanding trade practices takes time. No matter how quickly you might want to change habit, and how willing we are to make sure it works towards that end … We should be very careful about anything that moves quickly in this city.”