Modernizing NAFTA – a breakdown by Mary Estelle Ryckman

On August 27, the Administration announced a preliminary agreement in principle with Mexico which is intended to modernize the over 20-year old North American Free Trade Agreement the NAFTA. The preliminary agreement reached with Mexico includes, according to the Office of the U.S. Trade Representative and subject to finalization, modern standards in several key areas of interest to our exporters.  I am highlighting only a few aspects of the agreement here.  For more information, please go to www.ustr.gov for their factsheet.

The NAFTA governs trade among the United States, Canada, and Mexico, covering over $1.2 trillion in trilateral trade in 2017, up 6.5% from 2016.  For the state of New York, Canada is its number one market and Mexico ranks 8th.  New York shipped $15.3 billion to Canada in 2017, up 2.4% from 2016. Our state’s exports to Mexico were $3.1 billion in 2017, and up 5.4% from 2016.  Consequently, the renegotiation of the NAFTA matters to our county, region and state.

First, let’s consider our small and medium-sized businesses.  The agreement requires the value of shipments entering Mexico without customs duties or taxes will be raised, from 50 USD to 100 USD.  This along with minimal formal entry procedures is aimed to make it easier for more small and medium-sized businesses to ship to Mexico.   The new Digital Trade obligations will prohibit customs duties from being applied to digital products distributed electronically (e.g., software, e-books), guarantee enforceable consumer protections, and ensure digital suppliers are not restricted in their use of electronic authentication or signatures.

Second, let’s look at the new protections for our innovators, our creative companies. The new agreement, if finalized, will modernized NAFTA’s provisions on intellectual property rights protection. Protections for rightsholders from theft of trade secrets, including state-owned enterprises, has been improved including protection of trade secrets during litigation process and imposition of penalties for government officials who wrongfully disclose trade secrets.  Provisions strengthening protections for pharmaceutical and agricultural innovators have also been included.  The minimum copyright term has been extended to 75 years for song performances, and the provisions ensure that works such as digital music can be protected through current technologies.

The renegotiations are not over, however.  Canada is meeting with U.S. officials in Washington this week to determine if Canada can join the consensus.  There are a few difficult issues outstanding and then the agreement needs to go up to Congress for approval.

If you are interested in taking advantage of opportunities in global markets, please take our brief Global Markets Survey so we can better serve you.

For help accessing global markets please contact Mary Estelle Ryckman, Global Markets Advisor, Saratoga County Prosperity Partnership at mary.ryckman@saratogapartnership.org or call 518.871.1887.