As part of its ongoing effort to communicate the motor vehicle parts supplier industry’s position on the North American Free Trade Agreement (NAFTA), the Motor & Equipment Manufacturers Association (MEMA) has sent a letter to the Trump administration outlining ways that NAFTA could be successfully improved while preserving the agreement.
“MEMA urges the administration to continue to negotiate with Canada and Mexico with the common goals of sustaining and improving the agreement. Any changes to NAFTA must improve the integrated North American supply base and concurrently preserve and grow U.S. jobs. This, in turn, will strengthen our nation’s ability to manufacture products in the U.S. and export globally,” said MEMA President and CEO Steve Handschuh in the letter. “A withdrawal from NAFTA would have a serious detrimental impact on our nation’s economy. The economic growth and continued prosperity of our industry and this nation requires the U.S. to stay at the negotiating table.”
The letter, which is addressed to President Trump’s U.S. Trade Representative Robert Lighthizer, lists five specific recommendations to improve NAFTA:
- Recognize innovative technology developments by providing suppliers a framework to include research and development, engineering, designing and software development expenditures in regional value content calculations (RVC)
- Retain a tariff shift for automotive parts
- Standardize the rules of origin for automotive parts to allow the options for either tariff shift or RVC with no required tariff shift
- Ensure that aftermarket parts, including remanufactured goods, are not treated differently from new goods imports
- Provide incentives to U.S. companies to train and expand the U.S. workforce
In the letter, MEMA also emphasizes that withdrawal from NAFTA would put American jobs at risk. In 2017, the Boston Consulting Group released a study commissioned by MEMA that demonstrated either a withdrawal or a revised NAFTA (with increased burdensome requirements) could decrease the number of U.S. supplier jobs by more than 50,000. It is important to recognize that each supplier job in the U.S. economy creates another five jobs nationwide. Thus, a withdrawal from NAFTA could cost this country more than 250,000 of these employment-induced jobs.
This letter is just part of MEMA’s multi-pronged, comprehensive effort to communicate the association’s positions on NAFTA to the Trump administration. The message is consistent: NAFTA works, and while modernization is desirable, the U.S. should do no harm to this critical trade agreement.
MEMA’s NAFTA Resource Center wide range of resources and information, details about MEMA’s NAFTA position, and links to send a message directly to members of Congress and tell them to take care in modernizing NAFTA.