The Office of the U.S. Trade Representative’s updated NAFTA negotiating objectives released Nov. 17 could signal potential U.S. amenability to alternatives to its proposal to make NAFTA's investor-state dispute settlement mechanism optional, but skepticism remains about whether the U.S. envisions NAFTA’s ISDS continuing under the structure it does today, according to analysts. Members of the Trump administration have taken a hawkish tone toward NAFTA’s existing ISDS regime, with U.S. Trade Representative Robert Lighthizer accusing businesses of using the system as a pretext for outsourcing (see 1711060024), and calling it “political risk insurance” after the fourth NAFTA negotiation round last month (see 1710180024).
U.S. Trade Representative (USTR)
The U.S. cabinet level position that oversees trade negotiations with other countries. USTR is part of the Executive Office of the President. It also administers Section 301 tariffs.
The Office of the U.S. Trade Representative late on the afternoon of Nov. 17 released an updated list of NAFTA negotiating objectives, including new language on objectives to “increase transparency” in import and export licensing processes among the parties and to reinforce commitments to continue practices to review and correct countries’ final administrative actions, “if warranted.” The updated list continues most of the language of the original negotiating objectives released in July (see 1707180022), including all of the same customs proposals, consisting of positions to raise Canada’s and Mexico’s de minimis thresholds to $800, reduce customs documents and procedural formalities, and provisions to provide for automation for import, export and transit processes.
The International Trade Commission launched an investigation to examine U.S. trade in goods and services and investment in sub-Saharan Africa, the ITC announced Nov. 17. The Office of the U.S. Trade Representative requested the review in a letter ITC received Oct. 23. The report is expected to be delivered to USTR by April 30, 2018. The ITC will host a public hearing to inform the review on Jan. 23, 2018, for which requests to appear should be filed no later than 5:15 p.m. Jan. 9, the ITC said.
The U.S. seeks to reduce its $29.6 billion goods trade deficit with India and to identify and address trade barriers bearing on intellectual property rights, and on goods including manufactured and agricultural products, U.S. Trade Representative Robert Lighthizer said after conclusion of the annual U.S.-India Bilateral Trade Policy Forum on Oct. 27. “I am confident that with continued work, we will be able to accomplish these goals,” Lighthizer said in a statement. The U.S. pressed for strong outcomes in areas including non-science-based agricultural trade barriers, “continuing and new regulatory and technical barriers” impacting sales of “U.S. high technology and other products,” tariffs in several agricultural and industrial sectors, and protection and enforcement of IPR, the Office of the U.S. Trade Representative said. While “both sides had differing views that could not be resolved immediately,” the two sides agreed it is “critical” to continue strong engagement through “the coming months” to achieve concrete outcomes before the next forum in 2018, USTR said.
It’s unclear whether U.S.-Canada Free Trade Agreement (CFTA) provisions related to drawback, certificates of origin and import relief measures would spring back into force if the U.S. withdraws from NAFTA, according to a recent Q&A posted by the National Customs Brokers & Forwarders Association of America. NAFTA Implementation Act Section 107 states that some CFTA provisions will remain suspended until the suspension itself is terminated. This could mean that those suspensions would, by default, remain active in any post-NAFTA world, even though Canada and the U.S. formally agreed through a January 1993 exchange of letters to broadly suspend the operation of CFTA when NAFTA took effect, with the suspension “to remain in effect for such time as the two governments are Parties to NAFTA,” the NCBFAA said.
Canadian Foreign Affairs Minister Chrystia Freeland complained of U.S. negotiating positions during the ongoing NAFTA renegotiation, some of which she said violate World Trade Organization rules, during an Oct. 17 press conference. U.S. Trade Representative Robert Lighthizer shot back later by saying he is “surprised and disappointed” that both U.S. partners are resisting a U.S. call to help reduce its trade deficit. During a closing trilateral ministerial press conference at the conclusion of the fourth round of the NAFTA renegotiation in Washington, Freeland said that a formal U.S. proposal during this round to create a 50 percent U.S. content requirement for automobiles would “severely disrupt” North American supply chains and make U.S. car producers less competitive, relative to imports from outside the region.
Despite some progress on customs, small business and competition policy within NAFTA renegotiations, the U.S. has put forth “several poison pill proposals still on the table that could doom the entire deal,” U.S. Chamber of Commerce CEO Tom Donohue said in remarks set for an Oct. 10 speech at the U.S.-Mexico CEO Dialogue in Mexico City. Those pitches include five-year sunset provisions, tightened rules of origin, an optional investor-state dispute settlement (ISDS) mechanism, and a “dollar for dollar” opening of North American procurement markets, he said.
Former U.S. Trade Representative Robert Zoellick said Oct. 5 there’s a 50 percent or greater chance that President Donald Trump pulls out of NAFTA within a year or so. Congress should “assert its constitutional power” and delay “self-defeating actions” the U.S. could pursue to make the agreement more protectionist or to withdraw, said Zoellick, who is now non-executive chairman of AllianceBernstein and senior fellow at Harvard's Belfer Center for Science and International Affairs. “This is a message for the business community, the farm community, everybody that cares about this relationship,” Zoellick said during an event at the Atlantic Council. “You have to press” Congress.
The Office of the U.S. Trade Representative is accepting comments on the implementation of the environmental chapter of the U.S.-Singapore Free Trade Agreement through Oct. 2, USTR said. The U.S. and Singapore will hold a public session on implementation of the environmental chapter, Chapter 18, on Oct. 4 in Singapore, USTR said.
U.S. Trade Representative Robert Lighthizer and Malaysian Trade and Industry Minister Mustapa Mohamed met in Washington on Sept. 11, and directed their staffs to ramp up cooperation on intellectual property, agriculture, “goods,” labor and the environment under the countries’ Trade and Investment Framework Agreement, the Office of the U.S. Trade Representative said. Lighthizer and Mohamed will “stay in close touch” over the next months to evaluate progress in resolving “outstanding issues” and engage on ways to enhance economic ties and promote “more balanced trade” between the U.S. and Malaysia, USTR said. The agency also pointed to the $24.8 billion goods trade deficit the U.S. had with Malaysia in 2016, and to the fact that the Malaysia was the U.S.'s 18th largest goods trading partner last year, with $48.5 billion in bilateral goods trade.