AEM will keep a close eye on NAFTA revisions

By Alex Russ, AEM Director, International and Regulatory Affairs  

NAFTA has emerged over the last 23 years as a vital tool for promoting U.S. exports, cross-border trade and investment.

Envisioned by President Reagan, negotiated under President George H.W. Bush and enacted under President Clinton, NAFTA encompasses the U.S., Canada and Mexico trade relationship. Canada and Mexico are the biggest markets for U.S. equipment exports, and last year that broader trade relationship amounted to over $525 billion in U.S. trade with Mexico and nearly $545 billion in U.S. trade with Canada.

President Trump campaigned on renegotiating NAFTA. A well-considered renegotiation has the potential to enhance cross-border trade and investment by addressing issues like agriculture, digital trade, cross-border data flows, government procurement, as well as customs and trade facilitation, just to name a few.

The Trump administration must allow for the renegotiation process to play out; it is vital that the United States does not pull out of the current agreement until a new agreement is ratified.

Disrupting cross-border supply chains and placing tariffs on goods and services will cause serious economic harm to the equipment manufacturing industry. Abandoning NAFTA would make inputs more costly and products more expensive in turn. Both would make U.S. equipment manufacturers less competitive in the global marketplace. If one in five American jobs depends on trade, what will happen if we lose duty-free access to Mexico, America’s second largest export market?

The equipment manufacturing industry supports 1.3 million American jobs and contributed $159 billion to the U.S. economy in 2016. If 30 percent of equipment manufactured in the U.S. is destined for export, what happens to these communities when people buy less of their American-made products?

Negotiating trade agreements is a laborious and technical process. Obtaining public and industry input, reaching consensus on provisions and getting political and public support to ratify an agreement in multiple countries takes time. It is important to get it right.

As the United States, Canada and Mexico prepare to revisit the terms of NAFTA, we are calling on all governments to work diligently and thoroughly to obtain the best outcome possible. An outcome that not only helps our industry continue to grow and compete, but also an outcome that helps the communities we are so proud to serve. 

For More Information

For more information on the Canada Working Group, contact  Alex Russ, AEM director, international and regulatory affairs, in AEM's Washington, D.C., office (aruss@aem.org, tel: 202-898-9006).

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