Dive Brief:

• Over 14,000 citizens and corporations issued public comments on NAFTA modernization to the United States Trade Representative, revealing a wide variety of needs but a general push for improved cross-border trade and infrastructure, Fleet Owner reported.
• FedEx and UPS were among the most prominent corporate comments. FedEx argued the USTR should negotiate for greater "de minimis" thresholds, or the value at which imports are exempted from taxes.  Canada's is $15 and Mexico's is roughly $50, but the U.S. threshold is $800. UPS seeks a program guaranteeing faster border crossings for trusted shippers.
• Other key questions brought up by the comments focus on how the U.S., Mexico and Canada manage border infrastructure funding, regulate foreign truckers, document customs processes, trade disputes, and each other's regulatory restrictions such as Environmental Protection Agency rules.

Dive Insight:

Industry comments reveal a transition from thinking about NAFTA renegotiation as a threat to operations, to considering an opportunity for business expansion.

When news broke that the administration would kick off renegotiations on the trade deal, industry groups urged the USTR to "do no harm," rather than proposing new policy ideas. Now, groups are in full policy mode, advocating for changes to infrastructure, technology, rules and treatment of foreign partners. Not all comments are positive, but by and large they are hopeful: modernizing NAFTA can be a stepping stone to fix structural issues that only became apparent years after the first treaty was signed.

FedEx's insistence on changing de minimis thresholds is one example. The countries have different thresholds in part because they tax products differently. Any import to Mexico is subject to a value-added tax, so the threshold must necessarily be low so consumers do not import products with the purpose of skirting taxes. However, this necessarily slows the import process due to customs processing, and in a way encourages the illicit transport of goods to avoid paying customs fees.

The comments also reveal how heavily integrated supply chains are within the NAFTA region.

"Many multinational companies regionalize their supply chain and source components and finished goods from all three countries precisely because NAFTA exists, and the manufacturers and the consumers in all three countries benefit," the American Association of Exporters and Importers (AAEIA) and Importers said in their public comments.

In fact, many of the organizations issuing comments address the trade talks first as a "modernization," rather than simply a "renegotiation." The AAEI, Union Pacific, The Plastics Industry Association, and Deere & Company are among those using this language. 

"We support the modernization of NAFTA for the sole purpose of enhancing U.S. access into Canada and Mexico markets," wrote The Plastics Industry Association. "In a survey of our members this year, we found that 82 percent of PLASTICS members export to both Canada and Mexico, and a majority of the survey respondents expressed confidence in continued growth for their businesses in both markets."

However, the picture is not all rosy. Various associations also reflected on how, despite general growth, NAFTA failed to secure jobs and production in various industries. United Steelworkers and the Association of Western Pulp and Paper Workers unions reflected on the thousands of jobs lost and stagnating wages in their respective industries. Both challenged the USTR to prioritize labor and not just corporations in their negotiating objectives, particularly in regards to foreign regulations.

The distinct priorities and numerous comments show the path to modernization and renewed talks will be difficult, to say the least. But they also provide a shared opportunity for the region to improve a decades-old deal. As the USTR heads to a hearing on June 27, and into negotiations as early as August, the representatives will have to consider competing domestic and foreign demands. 

Yet, the George W. Bush institute warns in its comments to not treat the deal as an end-all solution to the nation's economic woes, further suggesting five steps to improving the deal.

"Upgrading or modernizing NAFTA will not address the underlying structural concerns with the U.S. economy," it wrote in its public comments. "We must focus on ensuring our current and future workers are competent with the technologies and information systems required to create and build today's products. "Fixing" NAFTA can neither accomplish this nor substitute for this investment."