NAFTA

manufacturer worker checking engineering file on a laptop

The issue

President Trump has long maintained that discouraging imports would bring back millions of manufacturing jobs even though most economists say that is unlikely. Within days of taking office, he signed an executive order withdrawing the United States from the Trans-Pacific Partnership trade agreement, and indicated that he wanted to review all current free trade agreements.

Trump followed by launching negotiations in 2017 to modernize the landmark North American Free Trade Agreement, which has boosted trade between the United States, Canada and Mexico for a quarter-century. After a year of talks with Canada and Mexico, Trump told Congress this August that he planned to sign an agreement reached with Mexico alone but that Canada might still be added. NRF said coming to terms with Mexico was “encouraging” but called Canada “an essential trading partner” and said all three countries must be included to preserve the agreement’s benefits to U.S. businesses, workers and consumers. At the end of September, the administration announced that the new pact had been expanded to include Canada and would be called the United States-Mexico-Canada Agreement rather than NAFTA. NRF is reviewing the details “to ensure it promotes U.S. economic growth and maintains access for products American families need at the prices they can afford” but welcomed the inclusion of all three countries. Under procedures for approval, a vote by Congress is not expected before the first quarter of 2019.

Why it matters to retailers

Like other trade agreements that reduced barriers to international trade, NAFTA helps retailers provide American families with the products they need at prices they can afford. A study conducted for NRF and other trade associations found that withdrawing from NAFTA would cost consumers $5.3 billion in higher prices because of tariffs that would be imposed on goods from Mexico and Canada. Retailers would see a $10.5 billion hit to their bottom lines, and 128,000 retail-related jobs could be lost over three years.

NRF advocates for a ‘do no harm’ approach to NAFTA

person welding steel

NRF is working to ensure that NAFTA modernization efforts do not harm the underlying agreement and is closely monitoring other issues. NRF agrees that a number of NAFTA’s provisions need to be updated to reflect today’s business environment, including issues such as digital trade, for example. But NRF told USTR that the priority in negotiations should be to “do no harm” to the existing pact.

NRF has said threats by the White House to withdraw from NAFTA or include a sunset provision “should be a non-starter.” Other proposals to include restrictive new rules of origin, new trade remedies or the elimination of investor protections would significantly weaken the agreement and should be rejected. In an op-ed, NRF President and CEO Matthew Shay said an end to NAFTA would cost the United States jobs and harm the economy while resulting in higher prices for consumers and reduced availability of products ranging from apparel and electronics to fresh fruits and vegetables.

NRF has helped lead lobbying visits to Capitol Hill to reinforce the message that the business community supports NAFTA modernization but that withdrawal should not be an option. NRF wants Congress to assert its oversight authority to ensure that the negotiations improve the agreement rather than weaken it.

Learn more about global trade

Global Trade
 
U.S. companies need modern trade policy in order to become more competitive and grow.
Read more
Tariffs
 
NRF supports free trade and the elimination of tariffs which harm U.S. businesses and consumers.
Read more
Renewable Fuel Standard
 
The ethanol mandate costs restaurants $3.2 billion a year, driving up costs for consumers.
Read more