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The North American Free Trade Agreement (NAFTA)

The North American Free Trade Agreement (NAFTA) re-negotiations between Canada, the United States and Mexico are at a pivotal time for the Canada-US trade relations and the future of manufacturing in North America. Because manufacturers are at the core of Canada's trade relationship, CME is committed to being the leading voice on this issue. 

In 2016, manufactured goods exports reached an all-time high of nearly $355 billion and made up almost 70 per cent of all the goods Canada sells abroad. Of that $355 billion, more than 82 per cent go to our NAFTA partners. Much of this trade is due to the deep integration of manufacturing operations across the NAFTA region and in particular between Canada and the US. This integration has created a unique relationship for our countries; we do not simply trade goods with each other, we build things together, we innovate together, we compete with the world together. 

Our Priorities

Based on feedback from CME member companies and our partner organizations across the Canadian Manufacturing Coalition, we have identified four broad, overarching priorities that need to be followed in the upcoming NAFTA renegotiations. These are:

  1. Do no harm to the current business environment: North America's deeply integrated manufacturing sector leverages the individual strengths of each NAFTA partner to innovate, collaborate and compete globally.
  2. Eliminate barriers to trade within NAFTA: Eliminating remaining barriers to trade will improve operational efficiencies; decrease the cost of doing business and enhance global competitiveness. As part of this process, internal trade facilitation rules, including customs processes and regulatory alignment, need to be strengthened.
  3. Modernize and expand the agreement: An enhanced NAFTA that covers more sectors and products, eliminates remaining barriers to trade and investment, leverages the opportunities created by technological advances, and protects against the creation of future barriers will stimulate growth and prosperity. 
  4. Leverage NAFTA for common approaches to trade with outside countries: The deep level of integration in North American manufacturing requires a coordinated approach to dealing with mutual threats from unfair trading practices from outside the NAFTA region. 

Within each of those priority areas, Canadian manufacturers have identified specific recommendations that will lead to an improved agreement that facilitates trade, investment and manufacturing activity across North America.

Specific Recommendations from Canadian Manufacturers

  1. Ensure NAFTA renegotiation results in maintaining at least the same degree of access into and from the Mexican and US markets that Canadian manufacturers currently enjoy.
  2. Update, modernize and coordinate customs procedures to reflect current business realities; and better leverage technology to reduce administrative burdens, increase security and speed border crossing times. 
  3. Strengthen regulatory cooperation to allow products to be designed, tested and produced once and sold across the region without additional regulatory approvals.
  4. Expand and update the range of business professionals, including skilled workers, permitted to move freely within NAFTA without administrative reporting requirements. 
  5. Establish a joint strategic trade infrastructure committee with appropriate committed funding to coordinate investments in internal and external trade infrastructure.
  6. Enhance Chapter 19 dispute resolution processes by eliminating Article 1902 and replacing it with a common North American approach to defining what constitutes an actionable trade offense. 
  7. Expand NAFTA's Trade in Services chapter by using the framework TPP agreement to broaden and deepen Canada's commitments to eliminate existing and potentially future exclusions.
  8. Using the TPP agreement's Digital Trade chapter as a model, create a new chapter within NAFTA to support growth in the digital economy and manufacturing. 
  9. Except in cases that fall under existing national security exemptions, completely eliminate all national and sub-national government procurement restrictions under NAFTA to allow for the free flow of goods, services and technologies.
  10. Work with the US and Mexico to develop a common North American approach to addressing unfair trading practices from outside the region - an approach that specifically addresses industry concerns about currency manipulation, illegal substitution and dumping. 
  11. Work with the US and Mexico to develop a common approach to eliminating non-tariff barriers in non-NAFTA countries. In addition, develop a unified approach to raising regulatory, environmental and labour standards outside NAFTA to North American standards.

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