UNITED STATES–MEXICO TRADE FACT SHEET: Rebalancing NAFTA to Support Manufacturing

On August 27, 2018, the United States Trade Representative announced that the United States and Mexico have reached a preliminary agreement in principle, subject to finalization and implementation, that supports North American manufacturing and mutually beneficial trade. The new agreement will create more balanced, reciprocal trade that supports high-paying jobs for Americans and grows the United States and Mexican economies. The new rules for textile products are an improvement, will contribute to the regional textile industry, and parallel the rules of U.S. trade agreements negotiated after the original NAFTA, and, so, in that regard, represent a needed updating of the agreement. NOTE that for now the original NAFTA rules are still in effect and implementing the new rules many take considerable time.

GOODS MARKET ACCESS

New commitments have been included in the Market Access chapter to reflect developments in United States trade agreements that address non-tariff barriers related to trade in remanufactured goods, import licensing, and export licensing.

Key Achievement: Exceeding NAFTA 1.0 and TPP Standards to More Effectively Support Trade in Manufactured Goods

The new Market Access chapter will more effectively support trade in manufactured goods between the United States and Mexico by removing provisions that are no longer relevant, updating key references, and affirming commitments that have phased in from the original agreement.

Specifically, the Market Access chapter:

• Maintains duty-free treatment for originating goods.
• Maintains the prohibition on export duties, taxes, and other charges and the waiver of specific customs processing fees.
• Adds new provisions for transparency in import licensing and export licensing procedures.
• Prohibits Parties from applying: (a) requirements to use local distributors for importation; (b) restrictions on the importation of commercial goods that contain cryptography; (c) import restrictions on used goods to remanufactured goods; and (d) requirements for consular transactions and their associated fees and charges.
• Updates provisions for duty-free temporary admission of goods to cover shipping containers or other substantial holders used in the shipment of goods.

TEXTILES

The new provisions on textiles incentivize greater United States and Mexican production in textiles and apparel trade, strengthen customs enforcement, and facilitate broader consultation and cooperation among the Parties on issues related to textiles and apparel trade.

Key Achievement: Strengthening Supply Chains to Provide New Market Opportunities for the Textile and Apparel Sector

The provisions will:

• Promote greater use of Made-in-the-USA fibers, yarns, and fabrics by:
  
  • Limiting rules that allow for some use of non-NAFTA inputs in textile and apparel trade.
  • Requiring that sewing thread, pocketing fabric, narrow elastic bands, and coated fabric, when incorporated in apparel and other finished products, be made in the region for those finished products to qualify for trade benefits.
• Establish a Textiles chapter for United States–Mexico trade, including textile-specific verification and customs cooperation provisions that provide new tools for strengthening customs enforcement and preventing fraud and circumvention in this important sector.

The new Textiles chapter provisions are stronger than those in NAFTA 1.0 with respect to both enforcement and incentivizing North American production of textiles.