NAFTA Renegotiation October Update

Transcription

1 NAFTA Renegotiation October Update Hosted by United States Fashion Industry Association (USFIA) and Akin Gump Strauss Hauer & Feld LLP October 25, :00 P.M. Eastern/11:00 A.M. Pacific

2 Do you have a question? During the webinar, all attendees will be assigned to listenonly mode. Please use the Questions box on your dashboard to ask a question during the webinar.

3 NAFTA: Where We Stand Today Hosted by the US Fashion Industry Association and Akin Gump Strauss Hauer & Feld LLP October 25, Akin Gump Strauss Hauer & Feld LLP

4 NAFTA: Where We Stand Today Introduction Fourth Round Review NAFTA Withdrawal Upcoming Rounds Preview Question and Answer 3

5 NAFTA: Where We Stand Today Justin McCarthy Akin Gump Joshua Teitelbaum Akin Gump 4

6 Fourth Round Review USTR Ambassador Lighthizer: If we end up not having an agreement, my guess is all three countries would do just fine Frankly, I am surprised and disappointed by the resistance to change from our negotiating partners We have seen no indication that our partners are willing to make any changes that will result in a rebalancing and a reduction in these huge trade deficits Countries are reluctant to give up special preferences. Canadian Minister Freeland: We have seen proposals that would turn back the clock on 23 years of predictability, openness, and collaboration under NAFTA. In some cases, these proposals run counter to the WTO. This is troubling. Mexican Minister Guajardo: We want to find a win-win situation, but this won t be at the detriment to our national interests. 5

7 Fourth Round Review Hot Issues Hot Issues Text Tabled by US, Rejected by MX and CA Autos: US proposes requiring 50% US content and 85% regional content; current rule requires only 62.5% regional content. Dairy: US tabled text that would undermine Canada s supply management system that controls prices for its dairy producers Government Procurement: USTR tabled text with dollar-for-dollar requirement only giving as much access to USG contracts as MX and CA give to the US Regional Trade Remedies: USTR s trade remedy notice also indicated that USTR plans to table a proposal to change AD/CVD methodologies to allow for claims by regional (rather than national) producers, supported by FL and GA agriculture sectors. Investor-State Dispute Settlement (Ch 11): US proposes making ISDS opt-in allowing each country to decide whether it wants to adopt ISDS Trade Remedy Dispute Settlement (Ch 19): US proposes eliminating the panels that resolve AD/CVD disputes between NAFTA parties. State-to-State Dispute Settlement (Ch 20): US proposes to make the system nonbinding. Sunset Clause: Automatically terminates agreement after five years unless all three countries agree to renew it. Decision to renew would be made by the President and include a review of bilateral trade deficits. 6

8 Fourth Round Review - Textiles US NAFTA Proposal (Sept 2017): USTR proposed to eliminate all TPLs and instead included placeholder text for a short supply list to be added later. US NAFTA Proposal (Oct 2017): USTR proposes to replace TPL flexibilities with CAFTA-like short supply list and commercial availability mechanism MX Prepares Response: Mexico may propose in the coming rounds to expand the TPLs rather than just maintain the status quo. The CAFTA Short Supply List 150 items total, including 43 original items (3 items were added then removed) US administered administrative process for adding and subtracting items None of the original 43 items may be removed from the list NAFTA does not have a SSL or an administrative process for changing the textile rule of origin to address issues of short supply 7

9 NAFTA Withdrawal The President has long advocated for withdrawal of NAFTA April 2017: Planned to withdraw but prevented by cabinet and (8/27/2017): We are in the NAFTA (worst deal ever made) renegotiation process with Mexico & Canada. Both being very difficult, may have to terminate? Trump/Trudeau Press Conference (10/11/17): I think Justin understands this: If we can't make a deal, it'll be terminated and that will be fine. 8

10 NAFTA Withdrawal What the Law Says The Agreement: Article 2205 of NAFTA provides that parties may withdraw from NAFTA so long as they provide the other NAFTA parties with written notice six months before withdrawing from the agreement The Implementation Act: Section 109(b) terminates the President s authority to make proclamations to implement requirements under the Agreement. If Withdrawn, Then What? The proclamations issued by US presidents to implement the Agreement will not have any effect. This includes changes to duties on imports. Duties on goods imported from Mexico will revert to the general, column 1, tariff rates under the Harmonized Tariff Schedule. The NAFTA Implementation Act temporarily suspended the previously negotiated US- CA agreement of The US-CA FTA is expected to be revived if the US withdraws from NAFTA. Presumably, goods could enter the US duty free under this agreement. Will Congress Act to Limit the President s Authority to Withdraw Unilaterally? Article I Section 8 of the Constitution gives Congress the authority To regulate Commerce with foreign Nations, and among the several States Under the law it passed in 2015, Congress could rescind the trade promotion authority it delegated to the President by passing a resolution of disapproval 9

11 Upcoming Rounds Preview Future Schedule Detailed: Round 5: Mexico City November Chief Negotiators Meet in Washington in December Round 6: Canada, Date TBD ***Talks will extend into Q1 2018*** Hot Issues For Upcoming Rounds: Autos Dairy Sunset Clause Government Procurement Dispute Settlement Chapters 11, 19, & 20 Textiles Chapter TPLs will they stay or will they go now? SSL a substitute or a complement? 4 WEEKS! 10

12 Questions & Answers Justin McCarthy Joshua Teitelbaum 11

13 Q u e s t i o n s? Please use the Questions box on your dashboard on the right side of your screen. C o n t a c t u s a f t e r t h e w e b i n a r : info@usfashionindustry.com Phone: