Feigenbaum Law

NAFTA Renegotiation Update

Corporate Tax Planning
June 2, 2017

On May 18, the United States Administration gave formal notice to Congress that they intend to begin discussions on NAFTA as soon as possible. Under US Law, Congress must be given a minimum of 90 days to consider this information, meaning that negotiations could begin as early as mid-August.

Developing formal objectives for NAFTA renegotiation

Notice has also been sent to US private industry and other parties that may be impacted by NAFTA renegotiation, requesting comments on negotiating priorities in advance of a public hearing on the matter, which is scheduled for June 27.

Although lacking in specificity regarding the scope of discussion, the hearing notice specifically references the following topics as being open for comments:

  • Rules of origin and origin procedures
  • Issues relevant to small and medium sized businesses
  • Environmental concerns
  • Labour and employment issues
  • Government procurement
  • Competition and investment issues
  • Digital trade and intellectual property
  • Barriers to trade, trade remedy and trade facilitation

The negotiating priorities set through the consultation process must be made public at least 30 days prior to the beginning of negotiations.

Target industries and areas of concern for cross-border business

With the appointment of Ribert Lighthizer as United States Trade Representative in early May, it was only a matter of time before the process began in earnest. Canadian Foreign Affairs Minister Chrystia Freeland has expressed the federal government’s eagerness to get the ball rolling on renegotiation. The Mexican government has indicated its desire to conclude formal talks before their upcoming presidential election next year, so there may be some urgency to moving things forward.

Although the US Administration has not set out any specific goals for NAFTA renegotiation, it is highly likely that industries such as lumber, dairy and poultry will be on the table. Given the amount of discussion by the president about protecting US manufacturing, there is also likely to be pressure to amend NAFTA’s rules of origin provisions, especially as they relate to the quantity of non-NAFTA inputs permitted in NAFTA qualified products.

Responsive tax advice for cross-border businesses

Although no public consultations have been announced yet in Canada, companies with an American presence should consider reaching out as part of the US consultation period to outline their experience with NAFTA. Once discussions begin, it is likely that things will progress quickly.

With the outcome of these negotiations so uncertain, it is crucial to have knowledgeable experts on hand to address legal and accounting issues as they arise.

The team at Feigenbaum Tax Law has extensive experience dealing with US-Canadian trade and corporate law, and are available to discuss the possible implications of NAFTA renegotiation on your business. To make an appointment, contact us online, or call our office toll free at (877) 275-4792.

Tagged: NAFTA