NAFTA Renegotiations Set to Transform Supply Chains

Supply chains could find themselves facing a complete transformation when parties from the U.S., Canada and Mexico meet this August to renegotiate the North American Free Trade Agreement (NAFTA). It was one of President Trump’s major campaign promises, and this week, U.S. Trade Representative Robert Lighthizer sent letters of intent to renegotiate the agreement.

Firms have spent more than two decades adapting to the first deal, which went into effect back in 1994, and there is some concern that this one will change business just as dramatically. At the same time, however, the move puts an end to speculation that President Trump might choose to leave the agreement entirely.

Despite the reservations, most parties agree that the agreement is in need of modernization. Amending it could end up taking several years, and supply chain managers need to stay on top of the issues and the timeline every step of the way so that new risks and opportunities can be addressed swiftly.

Long Process Awaits

Stakeholders such as American farmers, workers, businesses and ranchers will be consulted as officials outline the negotiation objectives. A notice will be published on the Federal Register by the USTR to request public input. This is expected to attract comments from state delegations, congressional leaders, industry associations and chambers of commerce.

After that, the USTR is required to publish a list of the negotiating objectives. This will be followed by several rounds of talks and consultations with stakeholders.

Leaked letters have provided some hints of what to expect in the negotiations. It looks like new provisions could be in the cards addressing regulatory practices, intellectual property rights, customs procedures, and state-owned enterprises. Other possible negotiating objectives could include digital trade, rules of origin, government procurement, and e-commerce.

These changes are likely to have a significant impact on supply chain managers. Procurement professionals must contend with the changes to rules of origin and any “Buy American” sourcing rules, while logistics managers will need to get on board with changes to rules governing cross-border freight and automated customs environments. Meanwhile, operations managers will need to navigate increased scrutiny when it comes to intellectual property.

This blog post was based off of an article from Supply Chain Dive. View the original here.

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