The Trump administration has submitted a vague set of guidelines to Congress for renegotiating the North American Free Agreement (“NAFTA”) with Mexico and Canada, on the heels of President 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.
This week, U.S. Trade Representative Stephen Vaughn wrote in a letter to Congress that the Trump administration intends to start talking with Mexico and Canada about making changes to the pact. The letter, however, sets forth few details, and per the AP, “appears to keep much of the existing agreement in place, including private tribunals that allow companies to challenge national laws on the grounds that they inhibit trade — a provision that critics say allows companies to get around environmental and labor laws.”
Interestingly, the draft also contains some provisions that were part of the Trans-Pacific Partnership, a 12-country Asia-Pacific trade agreement negotiated by the Obama administration but swiftly rejected by Trump.
In the letter to Congress, Vaughn says the White House wants to be able to prioritize U.S. companies over Mexican and Canadian ones for any American government contracts, and that “improving NAFTA has the greatest potential to benefit the workers, farmers and firms of the United States,” particularly since Canada and Mexico are “among the largest export markets for [U.S.] manufacturing.”
Still yet, Vaughn calls NAFTA “clearly outdated” and in need of an upgrade in his memo, which cites changes to enable to the U.S. ” to level the playing field on tax treatment,” which the Washington Post states is “a brief and cryptic phrase that could suggest duties on Canadian and Mexican products” and to establish clearer rules for intellectual property and labor rights.
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.”