The Trump administration formally launched its effort to renegotiate the North American Free Trade Agreement (“NAFTA”) with Canada and Mexico this week in an effort to attain better terms for U.S. workers and manufacturers.
In a letter to U.S. lawmakers, U.S. Trade Representative Robert Lighthizer “said he triggered a 90-day consultation period with the U.S. Congress and American public that would allow NAFTA talks to begin after August 16,” per Reuters. “In his letter to congressional leaders, Lighthizer said that NAFTA needs modernization for digital trade, intellectual property rights, labor and environmental standards, rules for state-owned enterprises and food safety standards.”
Lighthizer told reporters late last week, "As a starting point for negotiations, we should build on what has worked in NAFTA and change and improve what has not. If renegotiations results in a fairer deal for American workers there is value in making the transition to a modernized NAFTA as seamless as possible."
The move comes after the Trump administration submitted a vague set of guidelines to Congress in March for renegotiating NAFTA in line with Trump's campaign promise to widely alter the trade deal, which was crafted by former President Bill Clinton and enacted in 1994.
On the campaign trail, Trump described NAFTA - a deal intended to eliminate most trade tariffs between the three nations, increase investment and tighten protection and enforcement of intellectual property - as a "disaster" responsible for wiping out U.S. manufacturing jobs, as it allowed companies to move factories to Mexico to take advantage of low-wage labor.
As for what the effect of a Trumped-down NAFTA would look like for fashion, most industry insiders are not optimistic. Some have triumphed such plans, indicating that for U.S. apparel workers, the era of free trade has been devastating. Since NAFTA went into effect in 1994 and the Central America Free Trade Agreement ("CAFTA") followed in 2006, the effect on employment has been significant. Employment fell by 80 percent from 1990 to 2010, according to the U.S. Labor Department.
However, the some of the most vocal have declared that NAFTA – which supports hundreds of thousands of textile, apparel and footwear jobs in the U.S., with up to one quarter of U.S. textile exports going to NAFTA partners – is vital the health of the American apparel industry. As noted by Steve Lamar, the American Apparel and Footwear Association's Executive Vice President, U.S. "textile, apparel and footwear supply chains — and the hundreds of thousands of jobs they support — are much better with NAFTA than without it."
Lamar further notes: "U.S. threats to withdraw from NAFTA may seem like a good ploy to maximize negotiating leverage, but in reality, the threats induce damaging business uncertainty that disrupts highly efficient supply chains that today benefit companies, workers, consumers and communities across the country. The textile, apparel and footwear industries need access to global suppliers and global customers to stay competitive, and free trade agreements like NAFTA are key to that imperative."