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Talks to Revamp NAFTA Slated to Begin This Week

August 14, 2017

Trucking and logistics interests are keeping a close eye on talks to revamp the North American Free Trade Agreement begin this week – particularly those involved in the automotive industry.

Talks are scheduled to start Wednesday and expected to last six or seven months.

President Trump, who on the campaign trail called NAFTA "the worst trade deal signed maybe anywhere,” has blamed the 23-year-old trade agreement for the lost of American jobs in car factories. The United States had a $74 billion trade deficit with Mexico in autos and auto parts last year, according to U.S. Census Bureau data.

However, there’s a complicated supply chain involved in the current automotive manufacturing system, with parts crisscrossing NAFTA borders. The top commodity category transported between the U.S. and Mexico in May 2017 by value was vehicles and parts, of which $4.1 billion or 46.6% moved by truck. The top commodity category transported between the U.S. and Canada also was vehicles and parts, of which $5.5 billion, or 55.8%, moved by truck.

As the Detroit Free Press reports, “The automotive industry wants to be able to ship parts and vehicles back and forth across the border with less red tape, wants negotiators to understand that billions of dollars have been spent to develop a highly efficient North American manufacturing supply chain and is fighting to block any changes to the percentage of parts made in the originating country to qualify for tariff-free trade.”

Shannon Newton, president of the Arkansas Trucking Association, told the Northwest Arkansas Democrat Gazette that people throughout the industry are concerned that rapid changes could ripple through supply chains before anybody has time to adapt. "The industry has anxiety over change, and it's not necessarily that the way we are doing it is the best way," Newton said. "It's that the way freight currently flows is dependent upon the methodologies that are currently in play."

The auto industry, notes the Freep, also argues that by giving the industry a location for low-cost production in Mexico, NAFTA has ensured that North America is competitive with other leading automotive regions globally.

Mexican officials have been meeting with officials in border states, reports Tucson.com, emphasizing that cross-border trucking must remain part of the deal, and that language should be added that includes intellectual property rights and digital trade — something that has grown substantially since the agreement went into effect in 1994.

 

 

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