USMCA

The National Council of Textile Organizations announced Dec. 6 that it endorses the U.S.-Mexico-Canada Agreement, and will lobby for it. The organization said the U.S. exported $11.8 billion in textiles within the NAFTA region in 2017. The trade group views USMCA as an improvement on NAFTA because the rewrite has stronger rules of origin for sewing thread, pocketing, narrow elastics and some coated fabrics; it has stronger customs enforcement rules; and it closes what NCTO calls the Kissell Amendment loophole. The Kissell Amendment, which covers Department of Homeland Security uniform and body armor purchases, allows sourcing from NAFTA partners, not just American producers. According to a 2017 GAO report, 58 percent of DHS spending on uniform body armor procurement is for imported items. If USMCA becomes law, apparel purchased for the agency will have to be sewn in the U.S., an NCTO spokesman said. He said the change affects "more than $30 million worth of contracts on an annual basis."

There may be a new opportunity for discussing a North American Single Window now that the U.S.-Mexico-Canada Agreement trade negotiations are completed, U.S. and Canadian officials said during the stakeholder's forum of the U.S.-Canada Regulatory Cooperation Council on Dec. 5. While the trilateral engagement toward a North American Single Window for data entry remains an inherently difficult undertaking, "it's going to be made infinitely easier, I believe," by the agreement to update NAFTA, said Lea-Ann Bigelow, director of interagency collaboration in the CBP Office of Trade. Mike Junek, director of the Canada Border Services Agency programs branch, agreed that completing the USMCA will allow the agencies to shift to other initiatives, such as a North American Single Window. A first step will be "defining what we mean by a North American Single Window" and there's been some work done previously on data harmonization efforts, but "I think the time is right to pick it up again," Junek said. The North American Single Window was discussed for several years, but there's been little movement as the agencies focused on higher priorities recently (see 1609200035).

Leaders in Congress's trade committees on both sides of the aisle didn't seem appreciative of President Donald Trump's latest threat to withdraw the U.S. from NAFTA before its replacement is voted on. Trump, speaking to reporters on Air Force One on Dec. 2, said: "I will be formally terminating NAFTA shortly. And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well." Larry Kudlow, the president's top economic adviser, told reporters on a conference call Dec. 3 that the president said that because "he's trying to light a fire under Congress."

Complaints about weak enforceability of the new U.S.-Mexico-Canada Agreement were found among both trade advocates and free-trade skeptics as they reacted to the signing of the pact Nov. 30 in Argentina. Customs and trade facilitation elements were praised by many interest groups, but the failure to get higher de minimis levels from Canadian and Mexican negotiators was a disappointment, several said. And the fact that steel and aluminum tariffs on Canada and Mexico remain troubles many, with the Global Automakers saying "it is unfathomable that this important issue has not been resolved in the context of these negotiations."

Canadian Prime Minister Justin Trudeau said the new NAFTA "lifts the risk of serious economic uncertainty," and President Donald Trump said he doesn't "expect to have very much of a problem" getting the deal through Congress, because it's been "so well reviewed." While most Democrats in the House of Representatives are not rejecting Trump's NAFTA rewrite out of hand, none who publicly responded to the Nov. 30 signing rushed to endorse it, either. It must go through a few more steps before it is approved.

Trade groups called for improvements to Japanese customs procedures as part of any U.S.-Japan Free Trade Agreement, including enhanced cooperation between CBP and Japan Customs to combat fraud, in comments submitted to the Office of the U.S. Trade Representative on negotiating objectives for the potential trade deal. Commenters generally supported an increase in the Japanese de minimis level, but as was the case in prior trade agreement negotiations, disagreed on rules of origin, particularly for textiles.

Significant changes to rules of origin for steel products are coming, should the U.S.-Mexico-Canada Agreement be ratified and take effect as scheduled in 2020, the American Institute for International Steel said in a Nov. 20 blog post. As currently drafted, those rules would become more restrictive for North American steel products of several headings in Chapter 73, with fewer allowable tariff shifts and new regional value content requirements.

Ten Republican senators, led by avid free-trader Pat Toomey of Pennsylvania, wrote to the White House Nov. 20 recommending a lame-duck session vote on the U.S.-Mexico-Canada Agreement. "We are concerned that if the Administration waits until next year to send to Congress a draft implementing bill, passage of the USMCA as negotiated will become significantly more difficult," they wrote. They said that fast track requires a 30-day waiting period between the final legal text's submission and a draft implementing bill's submission, but said that final legal text could be sent before the signing.

The director of Global Trade Watch and the AFL-CIO point person on trade are calling on supporters to talk to their members of Congress now, to ask them to pledge not to vote for the new NAFTA until changes are made to labor standards and provisions extending exclusivity for brand-name medicines. Lori Wallach, of Global Trade Watch, said of the original NAFTA, "This kind of corporate power grab branded as a free trade agreement [is] what birthed the fair trade movement."

International Trade Today is providing readers with some of the top stories for Nov. 13-16 in case they were missed.