Washington D.C. – U.S. Sen. Jeff Flake (R-Ariz.) today continued his NAFTA4AZ initiative with a letter to U.S. Trade Representative Robert Lighthizer highlighting Arizona’s priorities for the upcoming negotiations to strengthen and modernize the North American Free Trade Agreement (NAFTA).

“I join many in urging your negotiating team to take whatever steps are necessary to ensure a positive outcome that continues to facilitate considerable economic benefits for Arizona and the country,” wrote Flake. “My hope is that the modernization process yields a vibrant and modernized trade agreement and continues the agreement’s rich history in producing cross-border trade benefits.”

On May 31, 2017 Flake launched NAFTA4AZ to engage Arizonans in the effort to highlight NAFTA’s critical role in supporting jobs, opportunity, and economic growth in Arizona. The initiative enabled Arizonans to submit their unique NAFTA-related experiences, ideas, and comments directly to Flake.

Full text of the letter is included below, and a signed copy is available here.

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Dear Ambassador Lighthizer:

In anticipation of the negotiations related to the modernization of the North American Free Trade Agreement (NAFTA) beginning in earnest, I write to offer views toward ensuring a positive outcome as a result of the upcoming process.

As you know, NAFTA has facilitated significant gains in Arizona’s economic prosperity since its implementation in 1994.  Comments submitted from various stakeholders to both your office as well as to mine highlight in great detail what are viewed as useful changes to NAFTA.  In addition, there is concern that some changes to NAFTA could be detrimental to the continued economic gains that NAFTA enables.  As you prepare for the start of negotiations with Canada and Mexico, I hope you will take into consideration some of the comments raised by Arizonans.   

Trilateral Structure

• The “Summary of Objectives for the NAFTA Renegotiation” suggests that the administration seeks to preserve the trilateral structure and reciprocal market access of NAFTA.  This posture should be maintained throughout the process. 

Digital Trade & Intellectual Property

• The promotion of e-commerce and digital trade in goods and services in a modernized NAFTA is important to Arizona and to the United States.  To that end, USTR should seek to ease foreign barriers to the free flow of data to allow the full benefits of end-to-end data infrastructure. 
• Many stakeholders suggest that requirements for data to be stored locally should also be eliminated, including requirements for a product, service, or their components or inputs, to be sourced domestically or for its intellectual property be developed domestically.
• USTR should seek to improve the intellectual property protections that protect from unlawful infringement. This will help address the ongoing problem of intellectual property counterfeiting seen at Arizona’s Nogales port of entry. 

Agriculture

• Mandatory country-of-origin labeling (MCOOL) is considered to have raised consumer costs, harmed the Arizona cattle industry, and is thought to undermine American trading power.  Given these concerns, USTR should be wary of efforts resurrect MCOOL.
• Arizona agriculture contributes more than $17 billion to the state.  Maintaining market integration for agricultural products in a modernized NAFTA is vital.  
• Efforts towards updating and making more efficient the regulatory regime for the meat and livestock industry would be viewed as positive. These efforts could include expanding the “trusted trader” program to reduce border restrictions on companies frequently engaged in trade, allowing border inspections to take place at cold-storage units in the country of destination, and allowing facilities to host onsite inspection house operations regardless of their proximity to the border. 

Trade Remedies

• The USTR seeks “a separate domestic industry provision for perishable and seasonal products in AD/CVD proceedings.”  This objective has raised concern among stakeholders that changing anti-dumping laws to benefit one industry could come at the expense of another if, as expected, retaliatory action is targeted at a completely different industry.
• Creating such a trade remedy for a regional industry will invite similar actions from U.S. trading partners and could lead to a reduction in U.S. exports of produce. Any modernization of NAFTA should take into account what is best for American business and consumers, not specific regional U.S. industries.

Rules of Origin

• The administration’s negotiating objectives include an effort to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America,” and to “ensure the rules of origin incentivize the sourcing of goods and materials from the United States and North America.” Arizona is a part of highly-integrated supply chains, such as the North American vehicle production system, that have benefitted from NAFTA’s rules of origin.
• These integrated supply chains are highly complex and provide benefits to both employees and consumers on both sides of the border; USTR should take great care to avoid any disruption. 

Infrastructure & Transportation

• While the agreement itself should not address infrastructure investments or trusted trade and traveler programs, adequate infrastructure is critical to ensuring the safe and efficient flow of goods across the border. A modernized NAFTA could help bring needed infrastructure improvements to both sides of the border by developing a framework in which the three partner countries jointly develop border infrastructure to reflect rising trade volumes.
• Trusted traveler programs like SENTRI and NEXUS should be expanded to improve the flow of traffic from point-of-origin to destination.
• NAFTA should continue efforts to reduce wait times at the border by expanding the successful unified cargo inspections process to both northbound and southbound cargo at additional ports of entry.

Investor-State Dispute Settlement

• The original NAFTA includes an investor-state dispute settlement (ISDS) enforcement mechanism that provides individuals, non-profits and businesses the ability to seek neutral enforcement if their overseas property is confiscated or treated unfairly. 
• There are stakeholders that believe the upcoming negotiations provide an opportunity to expand access to ISDS to cases of investment contract breaches and to update ISDS to ensure intellectual property has the same level of protections. 

More than one quarter of global gross domestic product is derived from US, Canada, and Mexico, NAFTA’s combined markets. Your office received more than 12,000 comments during the open comment period related to modernizing NAFTA, a number indicative of NAFTA’s importance.  I join many in urging your negotiating team to take whatever steps are necessary to ensure a positive outcome that continues to facilitate considerable economic benefits for Arizona and the country.  My hope is that the modernization process yields a vibrant and modernized trade agreement and continues the agreement’s rich history in producing cross-border trade benefits.  Toward that end, I hope you find these comments useful. 

I look forward to engaging in close and timely consultation with you, including meeting with you and having access to pertinent documents, as these negotiations proceed.  In addition, I request that you provide me with regular updates as often as possible as negotiations progress.

 

Sincerely,

JEFF FLAKE
United States Senator

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