In this episode, I visit with Doreen Edelman, a partner at Baker Donelson. We discuss the current state of NAFTA negotiations and some of the key issues including:
- The demand for a US content requirement in the auto industry. Currently under NAFTA, vehicles require at least 62.5 percent North American content but the U.S. is proposing to increase the North American content requirement to 85 percent, along with a United States content requirement increase to 50 percent. The goal of such a requirement is the reduction of the current $64 billion U.S. trade deficit with Mexico.
- The US has proposed inserting a “sunset” clause that would formally end NAFTA after five years, unless all parties agreed to re-authorize and extend the agreement.
- The US has demanded to amend the dispute-resolution framework and wants to either eliminate the arbitration panels entirely, make them non-binding, or make them voluntary.
- There are requests from Mexico and Canada for more access to US government contracts. NAFTA currently ensures that there is a roughly proportional amount of its parties’ government procurement budget available to other NAFTA member countries. The US position is the current process is inherently unfair, and now seek a system that limits US procurement from companies in Canada and Mexico while granting greater access to US companies seeking to sell goods and services to those governments.
- The US is seeking to end the current “supply management” system for dairy, chicken, eggs, and turkey. The current protections have been in place since the 1970’s and set prices that protect Canadian farmers from competition. The system’s detractors view it as government overreach that runs counter to free-market principles.
For more information on Edelman’s thoughts on the current state of the NAFTA negotiations see her blog post “As “Significant Conceptual Gaps” Persist, NAFTA Talks Extended to 2018” on her blog site Export Compliance Matters.