Archive for the ‘NAFTA’ Category

Thursday, February 18th, 2010

The following article is excerpted from the 18 February 2010 edition of “WorldTrade Interactive”.

Trade issues, relatively neglected in 2009 as a new president and a strengthened Democratic majority in Congress focused on other issues, are set to take on a larger profile in 2010 as policymakers look to trade to help boost domestic employment. The Obama administration is expected to focus on negotiating two multilateral agreements and strengthening enforcement of existing pacts.

Congress, meanwhile, will consider issues such as trade preference reform and food safety as well as a customs reauthorization bill&hellip.

Pending FTAs. In recent weeks administration officials have repeatedly signaled an interest in advancing the free trade agreements the U.S. has already negotiated with Colombia, Panama and South Korea. These FTAs have languished for several years due to congressional concerns about labor rights in Colombia, Panama’s status as a tax haven and limited access to Korea’s auto and beef markets. …

New FTAs. Although the Doha Round negotiations are unlikely to see much if any progress this year, the Obama administration is pursuing only one new FTA, a regional agreement dubbed the Trans-Pacific Partnership that currently encompasses Singapore, Chile, Brunei, New Zealand, Australia, Peru and Vietnam. This choice appears to signal a focus on more commercially significant FTAs that would provide meaningful export opportunities, which could be easier for Congress to accept…

China. Until recently, neither the Obama administration nor Congress had much interest in pushing China on trade irritants for fear of jeopardizing economic recovery efforts, among other things. That may well change in 2010. The administration is making a major effort to double exports over the next five years as part of an effort to increase domestic employment, and observers say further opening China’s market will be vital to that initiative. …

Customs Reauthorization. Prompted in large part by trade community concerns that U.S. Customs and Border Protection needs to restore the balance between its trade facilitation and trade enforcement efforts, a wide-ranging customs reauthorization bill was introduced in the Senate last August, received a hearing by the Senate Finance Committee in October, and could be marked up this April or May. A similar bill is currently being drafted in the House.

Prospects for this legislation are unclear. Progress could be slowed if jurisdictional issues arise among the congressional committees that oversee trade and homeland security. In addition, the trade community is expected to seek the removal or revision of certain provisions, including one that would allow import data collected for national security reasons to be used for commercial enforcement efforts&hellip.

Mexican Trucks. In March 2009, Mexico imposed tariffs of 10% to 45% on $2.4 billion worth of U.S. exports in retaliation for the termination of a U.S. pilot project that allowed up to 100 Mexico-domiciled motor carriers to operate beyond the border commercial zones and the same number of U.S. carriers to operate in Mexico. Affected products include Christmas trees; certain fruits, vegetables, juices and nuts; health and beauty items; tableware, kitchenware and glassware; manmade fiber yarn; carpets; jewelry; home appliances; sunglasses; and pens and pencils.

Despite pleas for action by affected U.S. industries, the Obama administration had done little to address this issue. That changed recently when USTR Ron Kirk visited Mexico City and said there is “a sense of urgency” to find a solution.

Thursday, May 7th, 2009

The following news release has been issued today by DFAIT.

Canadian Minister of International Trade and Minister for the Asia-Pacific Gateway, Stockwell Day, United States Trade Representative Ron Kirk, and Mexican Secretary of the Economy Gerardo Ruiz Mateos today issued the following statement calling for an end to unscientific bans on pork imports from their respective countries due to the fears of the H1N1 flu virus, noting the large and negative economic impact of such bans. More than a dozen countries worldwide have sought to ban pork imports from H1N1-affected nations:

“We would like to express our concern for the victims of the current outbreak of H1N1 human influenza. Our governments remain committed to doing everything possible to bring the outbreak under control.

“We are also concerned that some trading partners are imposing restrictions on trade in swine, pork and other meat products from North America that are without scientific justification and inconsistent with their international obligations. These unjustified restrictions will likely result in serious trade disruptions without cause and result in significant economic damage.

“On May 2, the World Health Organization [WHO], the World Organization for Animal Health [OIE], the Food and Agriculture Organization [FAO] and the World Trade Organization issued a statement saying that ‘there is no evidence that the virus is transmitted by food. There is currently therefore no justification in the OIE Terrestrial Animal Health Standards Code for the imposition of trade measures on the importation of pigs or their products.’ They stressed that ‘pork and pork products, handled in accordance with good hygienic practices recommended by the WHO, FAO, Codex Alimentarius Commission and the OIE, will not be a source of infection.’

“In view of the above, we urge our trading partners to remove these restrictions on our products immediately. We will continue to follow this situation closely, and will take any steps to prevent the enforcement of unjustified measures against our exports, as appropriate.”

Tuesday, May 5th, 2009

The following was written by John Manley, a former deputy prime minister and counterpart to the U.S. secretary of homeland security, and Gordon Giffin, a former U.S. ambassador to Canada, for today’s edition of “globeandmail.com”.

Canada and the U.S. share a special long-standing relationship that doesn’t include Mexico

We read with interest the recent column by our friends Robert Pastor and Andrés Rozental in these pages recently. We, too, believe that the North American free trade agreement has been an enormous success and a boon to the economies of each country. We do not, however, agree that the trilateral framework suggested by NAFTA should be automatically transferred to all aspects of North American relations. To the contrary, as two people who have been at the core of the management of the Canada-U.S. dynamic, we respectfully disagree.

Our friends seem skeptical that Canada and the United States share a “special relationship.” We assert that this is a unique bilateral relationship, a model in international relations built over many decades based upon similar values and democratic institutions and common heritage.

While geography makes us neighbours, it is neither the sole nor the dominant determinant for policy development. In fact, this relationship is amplified in our global partnership. We are two of the oldest democracies on Earth. We were partners in liberating Europe in the Second World War. Together, we confronted communism during the Cold War, assuring our mutual defence as partners with Europe in the North Atlantic Treaty Organization and with one another in the North American Aerospace Defence Command. We built prosperous economies with the joint construction of the St. Lawrence Seaway in the 1950s and the 1965 auto pact, followed in 1989 by the Canada-U.S. free trade agreement. Today, our young men and women are fighting and dying together in Afghanistan.

By contrast, the trilateral relationship began with NAFTA in 1994. It is an economic arrangement with none of the deep historical and other connotations of the Canada-U.S. partnership. While the United States does have two borders, the similarity ends at that statement. It is more than 70 years since president Franklin D. Roosevelt declared the Canada-U.S. border to be the longest undefended border in the world. Under no logic does it follow that the U.S. borders with Canada and Mexico should be treated identically. Very simply, the issues for U.S. policy-makers are different on the two borders. In the south, concern with illegal immigration is a predominant one. Only to a very minor degree is illegal immigration a problem on the northern border, and to the extent it does concern policy-makers, it is a concern shared both ways.

Prof. Pastor, of American University in Washington, and Mr. Rozental, of the Brookings Institution, describe the aftermath of 9/11 as a lost opportunity for trilateral partnership when Canada negotiated the Smart Border Accord with the United States (conceived, negotiated and signed in less than three months).

But even there, the differences are striking. After 9/11, more than 250 U.S.-bound aircraft and their passengers found themselves welcomed in Canada, and more than 100,000 Canadians made their way to Parliament Hill in Ottawa for the world’s largest tribute to the 9/11 victims. A few weeks later, Canadian soldiers were fighting with their American counterparts in Afghanistan. In contrast, Mexican attitudes at the time were quite different.

Furthermore, Canadian and U.S. police and intelligence forces already collaborate in unique ways and many of our people commonly cross our border (or at least wish to do so) as if it were a neighbourhood intersection.

In fact, the Smart Border Accord was an opportunity that would have been lost had it been bogged down in three-way discussions. And let’s not forget that NAFTA itself was simply a follow-on to the Canada-U.S. FTA.

While the borders and many of the policy opportunities are very different, there are some points upon which we agree with our friends. As the world becomes more and more interdependent, those who have a shared perspective and common interests need to be close collaborators in dealing with issues such as the environment, international financial regulation and reform of international institutions.

We and our two friends all collaborated on an important study for the Council on Foreign Relations that advocated advancing the concept of a North American Community, a vision we continue to share. But such a goal can be achieved only if Canada and the United States define a new and evolutionary template for our bilateral progress. It will take that anchor in the northern part of the continent to make continentwide progress possible.

The Security and Prosperity Partnership is a trilateral framework established in 2006. Few would cite this as a formula for progress. In fact, if the two borders are dysfunctional, as our friends suggest, it is evidence of the difficulty in making progress with three parties at the table, rather than two.

And while U.S. Homeland Security Secretary Janet Napolitano did say we have to recognize that the northern border is a “real border,” she did not say the two borders must be treated alike. She said there “needs to be some level of parity between the two borders,” which is her way of saying people from her part of the country should not feel they will be treated unreasonably harshly.

Importantly, she then went on to distinguish the way U.S. authorities are collaborating with Canada, including in law enforcement, and she pointed out that the enormous volumes of trade must be considered. The point is: She did not assert that there were no differences, but that both are legal borders and we cannot ignore that we have one in the north.

Many of the challenges faced by Mexico must be taken seriously by Canada and the United States. However, that would suggest the need for a collaborative development program initiated by Canada and the United States to assist Mexico in meeting those challenges. It does not mean that we are at a point where all North American policies and issues can be “trilateralized.” The three economies and societies are not at relative parity.

If the concept of a real North American Community is ever going to be realized, it will be because leadership has been shown by the northern partners.

Monday, May 4th, 2009

The following is extracted from today’s edition of “WorldTrade Interactive”.

In what was billed as his first major policy address since taking office, U.S. Trade Representative Ron Kirk recently laid out his trade policy priorities for the coming year. Kirk’s comments were consistent with the direction the Obama administration has charted on trade thus far, but some aspects are already being challenged by members of Congress.

Kirk began by highlighting the need for a change in U.S. trade policy, which he said “had its problems” even before the current global economic crisis. “To many Americans, U.S. trade policy has lacked rhyme or reason,” he said. “People wondered whether we were getting enough out of the agreements that were negotiated. Many people have felt that enforcement was being neglected, and that our trading partners have been running roughshod over us, pulling good jobs overseas. They’ve been concerned that lower labor and environmental standards have allowed other countries to undercut U.S. producers. The benefits of trade, and the reasons for pursuing a strong trade agenda, have not always been as evident as some of trade’s negative effects.”

Kirk emphasized that while there is thus a temptation to “turn inward” and “just stop trading,” the proper response is to engage in an “aggressive effort to keep trade flowing and open more markets” to U.S. goods and services&hellip.

Specific initiatives will include the following.

FTAs. Kirk made clear that the Obama administration will work to implement pending free trade agreements with Panama, Colombia and Korea by “looking for new solutions to the issues that have dragged on” with respect to those agreements. However, this position is starting to come under fire from some congressional Democrats&hellip.

Kirk also indicated that the Obama administration intends to pursue FTAs of its own at some point but that its strategy for doing so will be different than that of the Bush administration. “When it’s time to strike new trade deals, we’ll seek bigger ones that access major markets for American workers, farmers, ranchers, manufacturers, and service providers” and “reflect our values on the rights of workers and protection of the environment, in ways that also level the playing field for workers here at home,” Kirk said.

Enforcement. USTR will determine which of the trade barriers identified in its National Trade Estimate report are costing the U.S. the most jobs and opportunities and will then use “all the tools in USTR’s toolbox,” including direct dialogue and formal consultations as well as litigation when necessary, to eliminate them.

Small Businesses. USTR will seek to better reflect the interests of the 97% of U.S. exporters that have fewer than 500 employees “at the negotiating table, in the enforcement process, and in those instances when competition forces a worker to transition from one job to another.”

Transparency. USTR is working to open up the process of developing and implementing trade policy by “doing thorough reviews and making sure Congress and the public have access to better information about our trade efforts,” including by rolling out an updated Web site.

Monday, May 4th, 2009

The following is an excerpt from John Ibbitson’s new book “Open & Shut: Why America Has Barack Obama, and Canada Has Stephen Harper”. It appeared in the 2 May 2009 edition of “globeandmail.com”. The author, a member of The Globe and Mail’s Washington bureau, invites readers to join a discussion of politics in Canada and the United States at www.globeandmail.com/open&shut.

Just as free trade in the 1980s and 1990s did nothing to lessen Canadian sovereignty or independence, so, too, a bilateral, continental security perimeter would make the continent safer for both Canadians and Americans without betraying our independence.

The way to get the Americans to trust the border is to give them confidence that both countries have the will and ability to protect it.

The security leg of this agreement, then, would include common rules for accepting refugees, joint inspection of containers leaving international destinations en route to either country, and an integrated terrorist watch list. Most important, it would expand NORAD, the joint command that protects the continent’s airspace, to include land and water.

This would lead to the presence of American forces on Canadian soil and within Canadian coastal waters. It would also lead to the presence of our forces on their territory.

There’s no reason to assume that either country’s sovereignty would be compromised in the process.

Offering to move from co-operation to integration on security would afford Canada the opportunity to ask for the same on the economy. As the final tranche of this comprehensive continental agreement, Canada should propose a customs union.

This would be the biggest, boldest move Canada could make: a joint tariff, based on bilateral consent, that would allow both countries to erase the border completely, permitting the free flow of goods, services and people between our two countries, no passport or work visa required — a freedom those in the European Union already enjoy. As part of the union, both countries would drop all remaining protections in agriculture, cultural industries and financial services. After all, our supply management boards are anachronisms, promoting inefficient farming and expensive milk in the nostalgic desire to preserve family farms that mostly no longer exist.

Our artists are globally competitive — how would Americans laugh without our comedians, and where would bad popular music be without our Bryan Adams, Celine Dion, and Shania Twain? — and in a world where information flows in every direction via the Internet, protecting such antiquities as television broadcasters and book, magazine or newspaper publishers is as nonsensical as protecting the family farm.

A customs union won’t cost us our identity, whatever that is; it will produce the opposite. Just as NAFTA spurred Canadian business entrepreneurship, so, too, will dropping cultural protections encourage Canada’s artistic entrepreneurs. The worst that will happen is that we may have to adopt American spelling.

And no, this won’t give Americans control over our immigration policy. For one thing, if they had any say over who we let in and how many, we would have some say over who and how many they let in. That wouldn’t be such a bad thing: America’s immigration system is littered with confusing categories and places too little emphasis on bringing in skilled workers. Instead, millions of Mexicans and other Latinos flood the country, providing labour for jobs Americans aren’t willing to do themselves. The Yanks could do worse than imitating us on immigration.

But that’s beside the point. What matters is that both countries would want to retain full control over their immigration policies, but that under the agreement each would welcome the other’s citizens into its labour market. Canada would have to take steps to ensure that illegal immigrants don’t move into Canadian jobs, but legality is already easy to verify.

But there’s a caveat: If I’m wrong, if the Americans would not agree to any further substantial easing of the border without significant restrictions on Canadian immigration, then Canada should walk away from the discussions. The only thing more important than promoting increased access to American markets is preserving Canada’s robust multicultural identity. That identity is based on the world’s most enlightened immigration policy, which encourages more people to move to our country, per capita, than any other nation, and which ensures that they come from all parts of the world, preventing the emergence of a race-based underclass such as the United States already created through slavery and is recreating through Latino immigration and which Europe is duplicating by allowing the vast majority of its immigrants to come from former colonies, which in many cases means northern Africa and the Middle East. Immigration is who we are. It is our future. It is the one thing we must never bargain away.

For the foreseeable future, any conversations we have with the United States over the border should not include Mexico. In this respect, NAFTA may actually have harmed the Canada-U.S. relationship. Every time Canada brings a border proposal to the United States, the Americans shake their head. “We’d be interested,” they say, “but if we did it for you, we’d have to do it for the Mexicans.” The truth is, Canada and the United States are developed nations, winners in the global lottery of wealth. Mexico, sadly, is not.

As the frightening violence surrounding the drug cartels illustrates, the country is still far distant from becoming a modern, liberal democracy with a developed economy and adherence to the rule of law. Canada and the United States need to talk about the problems at our border.

The Mexicans and the Americans can talk about their border on their own. That’s why our border should be subject to a new treaty, not to NAFTA.

We live in the real world. Politically, a full environmental, security and economic union is a proposal too far. But Stephen Harper should start with this level of proposed integration and then remove each item that is politically impossible until he reaches a package that he believes he can sell to his caucus, Parliament and the Canadian public. And he should invite Michael Ignatieff to 24 Sussex for dinner, to explain that package. After all, the Opposition Leader spent a considerable portion of his adulthood in the United States. If anyone understands the importance of improving the state of Canada-U.S. relations, it’s Ignatieff. Let the opposition to the initiative align behind the Bloc, the NDP and the Greens. Let’s have an open debate on the proposal.

Heck, let’s have an election on it. We’re having them all the time anyway. Why not fight one on something that actually matters?

And let us take this proposal to U.S. President Barack Obama and tell him that in a postglobal world, this is what the relationship between Canada and the United States should be: two sovereign nations trading freely together, their citizens travelling back and forth between each other’s countries, watching each other’s backs, and working together to heal and protect the planet. This is what North America should be. This is what the world should be.

Friday, May 1st, 2009

The following was written for today’s edition of “globeandmail.com” by Andrés Rozental, a former deputy foreign minister of Mexico and a senior fellow in foreign policy studies at the Brookings Institution, and Robert Pastor, a professor and co-director of the Center for North American Studies at American University in Washington.

A crisis often presents governments with an opportunity that can be either seized or missed. One lost chance came shortly after 9/11, when Mexico asked Canada to jointly negotiate a smart border agreement with the United States, as a way of ensuring that our respective land borders be kept as open as possible under Homeland Security concerns to trade in goods and services. Canada rejected the idea of working together in favour of a separate bilateral negotiation with Washington, mainly because it felt its own relationship with the United States was so special that including Mexico would only contaminate the process with issues extraneous to Ottawa’s agenda. The result: two nearly identical agreements, signed six months apart, that could have been one of the first trilateral successes of the post-NAFTA era but that, instead, emphasized our differences.

Today, we face another such opportunity. We can only hope that, this time, Canada seizes the moment rather than following the misguided idea that excluding Mexico from the common North American agenda is in its best interest. The swine flu pandemic is an ideal issue on which we should be working together, not only to halt the spread of the virus within our own region and to third countries but to ensure that solidarity among us avoids the adoption of damaging defensive measures by others that will negatively affect trade, tourism and communications to and from all of North America.

The North American free-trade agreement came into being largely because of Canada, which took the lead in negotiating an earlier trade pact with the United States. When Mexico first decided to propose a separate bilateral treaty with Washington, Canada asked to be included. Although Ottawa’s initial approach was mainly for defensive reasons and to preserve the gains it had achieved with its earlier bilateral FTA, the decision to negotiate à trois eventually led to the creation of the most formidable free-trade area in the world in terms of territory and, until very recently, gross product and population.

Since NAFTA came into force, trade has tripled and foreign direct investment has quintupled in North America. In its first seven years - until 2001 - integration among the three countries soared. From 1994 to 2001, intra-regional trade as a percentage of our total trade with the world increased from 43 per cent to 57 per cent, almost reaching the levels that Europe only achieved after five decades. But since 2001, the process has stalled, and irritants in the trilateral relationship have emerged. There are several reasons for this, but it’s mainly because the three countries of North America have reverted to two bilateral relationships - U.S.-Canada and U.S.-Mexico - rather than approaching our common challenges together.

Recently, some Canadian voices have called for a strategy to dump Mexico and cut deals only with the United States. According to these voices, being associated with Mexico and its drug-trafficking, violence and immigration problems could infect the supposed special relationship between Ottawa and Washington. They say Canada’s unique ties with its southern neighbour give it an opportunity to advance its interests more effectively on its own than if Mexico is included, especially on issues related to border security and trade irritants. They must have been very distressed when Homeland Security Secretary Janet Napolitano suggested that the United States prefers to treat its two neighbours and its two borders on the basis of equality. Doesn’t Washington know, these Canadians think, that the two borders are so different?

Well, they’re actually not that different. In addition to the fact that both are dysfunctional and outdated for the same reasons, many of the issues we face - including the current public health emergency - can only be addressed effectively if we work together. Disease, pollution and international crime cartels don’t respect territorial sovereignty, so only a concerted North American strategy can defend us against these and other threats to our health, security and well-being.

Today, Mexico is facing crises of unprecedented proportions. The swine flu epidemic, drugs, violence and a severe economic decline threaten our daily lives and undermine our global competitiveness. Wouldn’t this be an ideal opportunity for Canada to join the United States and Mexico in mitigating these threats? Isn’t this a great opportunity for Canada to join its North American neighbours and allies in working together, rather than separately?

Canada needs to accept Mexico as a true partner. If it does, the North American concept will be reinvigorated and become an example of progressive co-operative integration, rather than a failed experiment to be disdained and discarded.

Monday, April 20th, 2009

This publication has been provided in order to give the reader a better understanding of the verification process under the North American Free Trade Agreement (NAFTA).

It is available on the CBSA web site, at:

http://www.cbsa-asfc.gc.ca/publications/pub/bsf5083-eng.html

Friday, April 3rd, 2009

The following article is by Peter G. Hall, Vice-President and Chief Economist, Export Development Canada.

“Never waste a good crisis”. This has recently become the mantra of key policymakers, who are seizing the moment to enact good legislation. Sadly, the crisis has also dredged up discussion of policies that, if applied, would cause great harm. Protectionism is close to the top of that list.

The world has spent the last 30 years – arguably more – freeing up trade. The evidence is manifold. From the GATT round of discussions to the WTO rounds, the Canada-US FTA, NAFTA, EU integration and ongoing accession, implementation and negotiation of other regional trade agreements, to the host of bilateral agreements in place or on the table, the world has bought into freer trade as a means to greater global prosperity – a prosperity that each adherent participates in. To top it off, considerable effort has been devoted to freeing up international investment flows, a critical element of global trade, through a profusion of bilateral double-taxation agreements and investment protection agreements. It doesn’t stop there – many more deals are in the works.

Current economic conditions will likely spur much debate about the ultimate effectiveness of this protracted mega-shift in world commerce. Without a doubt, trade policies put in place, together with the unprecedented explosion of computing power and communication technology, have brought an historical shift in global trade linkages. Trade now accounts for 65% of global GDP, up from 40% just 25 years ago. Moreover, global productivity growth has shifted upward over the same timeframe, a testament to today’s more efficient global distribution of production. Many countries, both industrialized and emerging, have experienced these productivity gains.

Given this backdrop, the words ‘Buy American’ in US fiscal stimulus legislation sent shockwaves around the world, kindling fears of a global relapse into protectionism. France joined the fray, advocating a ‘France-first’ industrial policy that would require multinationals to begin their layoffs offshore. More recently, Mexico announced retaliatory trade measures against certain US goods.

In addition, the nationalisation or near-nationalisation of Western banks has led to allegations of covert protectionism, in which domestic deals would receive favourable treatment.

The rhetoric alone is troubling. Protectionism is an instinctive defence mechanism that sells well. It might even yield temporary benefits, but in the end, hurts its perpetrators and everyone else, too. Even more discouraging, one action leads to a sequence of retaliatory actions that snowball, magnifying the damage and, especially in today’s integrated economy, ensures that the effects
are felt almost universally.

Will the wish for a quick win carry the day? We can all hope that reason will prevail, and that rhetoric will remain just that. Multinational corporations understand that their competitive position depends critically on maintenance and enhancement of the current system. And it’s quite likely that the average worker gets it too, perhaps more than ever before.

The bottom line? The case for continued globalisation remains strong. Reverting to protectionism would increase costs worldwide, lower overall welfare, and prolong the recovery. No one wants that. With economic conditions as bad as they are, the last thing needed is additional bad news.

Monday, January 26th, 2009

What is NAFTA?
It’s the acronym for the North American Free Trade Agreement, a trade agreement between Canada, the United States, and Mexico that allows for reduced or duty-free rates on goods that are imported from these countries.

On the goods that I’m ordering from the US, how can I determine if they’ll qualify for NAFTA?
The only people who can make that determination is the supplier or the manufacturer of the goods.

We discovered that goods that we had recently imported from one of our US suppliers qualified for NAFTA. How can we now recover the duty we have paid?
Customs Act regulations allow you to file for a refund within one year of importing the goods. When submitting your claim you must provide a copy of the NAFTA certificate along with the original documentation.

We recently imported some goods from a supplier who gave us a NAFTA certificate, but we discovered that the goods do not qualify under NAFTA. What should we do?
Obtain a letter from your supplier that explains the incorrect use of NAFTA, and then file an amendment to the customs entry.

I am expecting a shipment from the US. Can I prepare the NAFTA certificate for these goods myself?
Because the supplier or the manufacturer are the only people authorized to determine whether certain goods qualify for NAFTA, they are the ones that must complete the NAFTA certificate.