North American Free Trade Agreement
AF&PA supports the North American Free Trade Agreement (NAFTA) with Canada and Mexico. NAFTA has provided significant economic gains for our industry and workers by eliminating duties on our industry’s products and creating a more integrated North American market. In 1993, the year before NAFTA went into effect, U.S. pulp and paper exports to NAFTA countries were $3.2 billion, or 36 percent of the industry’s global exports. In 2017, that amount rose to $9.6 billion or 45 percent of our industry’s total pulp and paper exports. For pulp and paper, exports to the NAFTA countries support 52,000 direct and indirect American jobs, many located in rural areas.
We support the improvement and modernization of NAFTA, specifically changes that create more open markets and better rules that support our industry’s exports, the exports of customer industries and strengthen North American investment and supply chains. The renegotiated agreement should maintain common rules and commitments among the three NAFTA countries. We do not support separate bilateral trade agreements with Canada and Mexico that would create greater inefficiencies in the North American market.
AF&PA Priorities for NAFTA Renegotiations
- Maintaining open access for our industry’s exports to Canada and Mexico: Mexico has negotiated free trade agreements with more than 40 countries and is negotiating a free trade agreement with the European Union. As a result, it is critical for the U.S. pulp and paper industry to preserve tariff-free access to the Mexican market to compete with suppliers from some of these countries. If the U.S. withdraws from NAFTA, Mexican tariffs on paper products would rise to the country’s generally applied rate of 5-10 percent, but also could rise to as high as 30-35 percent bound rate, putting at risk a large portion of the $4.3 billion in our industry’s exports to that country.
- Retaining strong investment protections: NAFTA should preserve access to the existing investor-state dispute settlement mechanism (ISDS) so that U.S. companies with investments in Canada and Mexico can have access to neutral arbitration should the host country seize the investor’s property without just or fair compensation. ISDS cannot overturn U.S. laws or regulations and does not infringe on U.S. sovereignty. The U.S. government has never lost an ISDS dispute.
In one case, a paper company’s only recourse to challenge the expropriation of property by a Canadian province was to seek redress using ISDS. After lengthy negotiations, the Canadian government agreed to a $130 million settlement with the company in 2010.
Including strong language on combatting illegal logging and associated trade: Currently, NAFTA has only a side agreement on environmental cooperation that does not deal specifically with sustainable forest management or illegal logging. We seek language in the NAFTA Environment Chapter committing the three governments to combat illegal logging and associated trade, with specific attention to preventing transshipments from third countries. AF&PA supports text from the Trans-Pacific Partnership addressing sustainable forestry and committing parties to take appropriate measures to combat illegal logging and trade in illegally obtained forest products.
- Raising standards with transparent, science-based regulatory practices: The three parties should adopt measures that align their respective regulations without reducing the level of health, safety and environmental protection (this should apply to chapters on Technical Barriers to Trade and Sanitary and Phytosanitary Measures). This means a higher level of cooperation and coherence among regulatory agencies, including sharing of test data, technical and scientific information, regulatory impact analyses, risk assessments, as well as cooperation on implementation and enforcement, and the elimination of duplicative testing, certification and inspection requirements. NAFTA governments also should collaborate closely when addressing regulatory developments at the international level.
AF&PA is committed to work with the administration and Congress to ensure that a modernized NAFTA preserves and improves the market access that has benefitted our industry and workers.