What’s going on?
U.S. President Donald Trump has released a draft letter to Congress outlining the administration’s goals for a revamped North American Free Trade Agreement (NAFTA).
Trump has been talking about renegotiating the decades-old agreement since his pre-election campaigning days. Then – as now – the particulars of the changes he’s after are unclear, but this letter gives the most detail to date as to what a renegotiated NAFTA may encompass.
(To get up to speed, check out our earlier blog post on Trump and NAFTA.)
The draft letter is far-reaching in scope, with vague references to changing a number of aspects of the agreement including government tax policy, procurement, agriculture, intellectual property, rules of origin, telecommunications and dispute resolution. It also suggests a mechanism to impose tariffs if imports flood in and threaten U.S. industry.
The U.S. is by far Canada’s largest trading partner, with three-quarters of our exports flowing south of the border. In addition, Canada is the number one trading partner to 35 of the U.S. states. This offers a reasonable amount of certainty that the U.S. will want to maintain a good trading relationship with Canada.
However, much uncertainty remains…
What does this mean for Canadian import/export companies?
- There is a possibility of major changes to your trading relationship with customers south of the border.
- Proposed easing of access to the Canadian market through the reduction of non-tariff trade barriers could allow greater competition from lower-cost suppliers in the U.S. and Mexico.
- The suggestion of changes to NAFTA rules of origin could go one of two ways: that additional goods will qualify for NAFTA or that fewer goods will qualify… New opportunities for your business or new threats to your domestic market.
What should you do?
- Get involved with your industry’s trade association to have input on a larger scale. If you don’t have one, contact the Canadian Association of Importers and Exporters (IE Canada) and add your voice to many others with a stake in NAFTA’s future.
- We at Cole will do our best to stay on top of the changes that will affect you. So, continue to monitor our website and blogs for additional information, too.
- Keep a close watch on the situation – credible and up-to-date news sites are already providing regular updates on NAFTA-related news (see below). Talk to your broker about how any changes will affect you.
Still wary? That’s understandable. Let us help.
Feeling uncertain about the future of your company’s trade with the U.S.? Who isn’t! A lot of things are up in the air and it can be hard to keep track of what’s what and to know what’s coming around the corner.
Cole’s experienced free trade professionals can help you understand any changes as they happen and help anticipate the impact of what’s yet to come.
In the meantime, we can help you qualify your goods for NAFTA as it stands, and ensure you maximize the benefits of a renegotiated NAFTA down the road. Email us today for further information on NAFTA or other Free Trade Agreements.
Information provided by: NAFTA & Free Trade Dept. - Cole International