After weeks of voicing a clear position on behalf of its members regarding renegotiating or modernizing the North American Free Trade Agreement (NAFTA), the Motor & Equipment Manufacturers Association (MEMA) testified before the United States Trade Representative (USTR) during a June 28 public hearing.
“MEMA members operate in a global industry with suppliers, customers and facilities worldwide,” said MEMA President and CEO Steve Handschuh. “Our testimony aims to communicate in no uncertain terms that open markets and integrated supply chains provide the framework for economic growth and jobs in our industry. NAFTA has served our industry, the American worker and the U.S. economy well.”
MEMA stressed the current economic impact of the motor vehicle industry and the role that NAFTA plays in its growth.
“MEMA supports a balanced modernization of the NAFTA that creates a 21st century trade agreement. It must foster a competitive U.S. manufacturing environment and avoid unintended risks that may impact domestic jobs, increase production costs and disrupt supply chains,” said Leigh Merino, MEMA senior director of regulatory affairs, in her testimony. “MEMA members operate in a global economy that depends on a on a strong North American trading economy and a worldwide network of suppliers and customers for continued viability and growth. Our industry’s 19 percent job growth can be attributed, in part, to the NAFTA model. NAFTA-enabled ‘nearshoring’ of an interconnected supply chain between the U.S., Canada and Mexico has allowed the U.S. manufacturers to compete with the rest of the world.”
During its testimony, MEMA also urged the administration to keep in mind additional industry challenges dealing with capacity, sales volumes and skilled workforce.
“Both original equipment manufacturers and suppliers are operating current manufacturing facilities at peak capacity. Any additional capacity would require new or expanded facilities at a time when U.S. sales volumes are at their peak and the economic viability of opening new facilities is minimized,” Merino said. “Like many manufacturing industries, suppliers are having a difficult time finding enough skilled tradespeople to fill open positions. Despite these challenges, our collective objective is to maintain and increase the existing higher value-added manufacturing in the U.S. where we already have a competitive advantage”
As the NAFTA undergoes revisions, MEMA says it would support the following criteria:
- Establishing a level playing field for all parties, and strongly supports initiatives that would eliminate unfair trade practices globally.
- Increasing and encouraging cooperation between countries and the industry to improve international trade.
- Allowing flexibility in key NAFTA provisions on how to qualify items because of the substantial manufacturing process in the region and to update the rules of origin that reflect current and future manufacturing environments.
- Including investor-state disputes and other NAFTA forums that could speed conflict resolution including tariff classifications.
- Enforcing Intellectual Property Rights (IPR) protection.
- Aligning data protection and privacy laws so that data can freely flow within NAFTA.
- Ensuring that U.S. Federal Motor Vehicle Safety Standards and other similar provisions are accepted in treaty countries.
- Promoting a harmonized regulatory system, particularly working with Mexico to implement safety and environmental provisions that are in line with the U.S. and Canada.
- Regulating the move and residence of laborers, their dependents and business visitors across NAFTA (for example, allowing for additional inner-NAFTA work visas beyond the current program).
- Requiring that imports of all aftermarket parts − including remanufactured goods − not to be treated differently from new goods imports.
- Utilizing draft components of previous trade agreements that are beneficial for all three countries (e.g. services, IPR).
The June 28 testimony was one of several actions MEMA has taken in recent weeks to ensure that MEMA’s members are well-represented in the lead-up to NAFTA discussions. In comments submitted June 12 to United States Trade Representative Robert Lighthizer, MEMA took a firm stance on behalf of its members arguing that great care be taken in renegotiating or modernizing NAFTA.
MEMA’s communications regarding NAFTA to the Trump administration is part of an ongoing effort to raise concerns about newly proposed tax and trade policies. MEMA says it adamantly supports reasonable tax and trade policies that will increase American competitiveness in a global economy while continuing the 19 percent job growth the supplier industry has seen in the past five years.