MAY 24, 2017
SIDLEY UPDATE
Trump Administration Opens Comment Period on
Renegotiation of the North American Free Trade Agreement
The Office of the United States Trade Representative (USTR) has issued a Federal Register notice requesting
comments on U.S. priorities for the renegotiation of the North American Free Trade Agreement (NAFTA).
Comments from interested parties are due on June 12. Requests to participate in the hearing on this issue
are also due on June 12. The hearing will be held on June 27.
U.S. companies with significant trade or investment ties with Canada and Mexico can use this opportunity to
seek to ensure that a renegotiated agreement will provide free and fair market access opportunities across
North America.
What Is NAFTA?
NAFTA is a trilateral free trade agreement among the United States, Canada and Mexico. It entered into
force in 1994. NAFTA eliminates tariffs on almost all goods, with the notable exception of certain agricultural
products traded with Canada, and includes detailed rules of origin to identify products that would benefit
from tariff-free treatment. Like other free trade agreements, however, NAFTA covers a wide array of other
economic activity, including product standards; sanitary and phytosanitary measures; intellectual property;
investment; trade in services, including financial services, telecommunication services and other services;
and government procurement. NAFTA also included provisions that permit certain professionals from
Canada and Mexico to more easily obtain U.S. work authorizations.
NAFTA is a complex agreement, covering 22 chapters and hundreds of pages. In broad terms, however,
NAFTA seeks to guarantee a nondiscriminatory, open market across the continent and a fair, transparent
regulatory environment to facilitate trade.
Why the NAFTA Renegotiation Is Important
NAFTA entered into force 23 years ago, and many of its rules are outdated. For example, NAFTA was
negotiated long before the widespread use of the internet and the rise of e-commerce and social media. Input
and manufacturing processes have evolved over the last few decades. Services have grown in importance and
now account for approximately 80 percent of U.S. gross domestic product. With massive investments in
research and development in recent decades, and the resulting inventions of revolutionary technologies that
are embedded in goods traded across borders, heightened protection of intellectual property rights is now
more than ever critically important to trade and investment. The visa and immigration provisions in NAFTA
may be cut back, but if not, they should be streamlined and updated to reflect the professions where workers
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SIDLEY UPDATE
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are now in shortage. Furthermore, given the passage of time, there are opportunities for obtaining new
market access in areas where NAFTA parties were previously unwilling to negotiate.
The newly negotiated agreement might also set the template for how the United States approaches free trade
agreements with other countries. While the Trump administration withdrew the United States from the
TransPacific Partnership, it has announced that it intends to seek bilateral free trade agreements with
countries across Asia and Europe.
U.S. Objectives for the Renegotiation
USTR’s request for comments allows companies the opportunity to influence the U.S. objectives for the
renegotiation. The specific areas on which USTR has sought comments are the following:
•
tariffs and other measures that present barriers to trade in goods
•
customs and trade facilitation
•
modifications to rules of origin or origin procedures for NAFTA qualifying goods
•
sanitary and phytosanitary measures and technical barriers
•
trade in services
•
digital trade issues
•
intellectual property rights
•
investment
•
competition
•
government procurement
•
environmental issues
•
labor issues
•
issues of particular relevance to small and medium-size businesses
•
trade remedies
•
relevant state-owned enterprise issues
If you have any questions regarding this Sidley Update, please contact the Sidley lawyer with whom you usually work or
Neil R. Ellis
Partner
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James Mendenhall
Partner
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Andrew Shoyer
Partner
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Eric M. Solovy
Partner
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Partner
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Brenda A. Jacobs
Counsel
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SIDLEY UPDATE
Page 3
Sidley International Trade Practice
From our offices throughout North America, Europe and Asia, Sidley Austin LLP’s International Trade group assists
companies, governments and trade associations worldwide on transactional, regulatory, dispute settlement and policy matters.
Success in today’s global marketplace requires an understanding of the rules that govern every aspect of the international
economy – from capital movements to trade in goods and services, to intellectual property and product standards. Our team of
seasoned negotiators, deal-makers, litigators and policy advisers draws on extensive private sector and government experience
to help companies and governments shape these rules and resolve disputes arising under them. Combined with our
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solutions to our clients.
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