The possibility of a contentious renegotiation of NAFTA is presenting multinational companies operating in Mexico with uncertainty, according to Antonio Martinez writing today in the Harvard Business Review. He says that with the confirmation of Robert Lighthizer as United States trade representative, his firm, Frontier Strategy Group (FSG), expects formal talks to begin in late August or early September after the required 90-day waiting period. He writes, “Both Canada and Mexico are hoping that adjustments to the trade agreement will deepen integration rather than promote protectionist economic policies; the Trump administration has provided conflicting signals over what kind of measures it will pursue.”
Focusing on the electronics industry, IPC-Association Connecting Electronics Industries says the Trump administration has an opportunity to strengthen the U.S. and global economy as it begins work to modernize NAFTA. The organization recently submitted comments to the U.S. Trade Representative on the upcoming negotiations.
“It is vital for IPC members and our members’ customers that a free flow of goods continues between the United States, Canada, and Mexico,” says the group’s letter to the Trump administration. “Our members operate in a global economy, and the reduction of trade barriers and opening of markets will allow them to be more competitive and contribute to the growth of the U.S. economy.”
With respect to NAFTA, IPC suggests four priorities, including fully opening markets in Canada and Mexico; protecting intellectual property rights; providing for better customs and trade facilitation; and reducing tariffs.
Martinez writing at HBR cites potentially more restrictive rules of origin as a key matter of concern for multinationals—especially manufacturers in the automotive sector. “More companies are concerned that their current supply chain would be more vulnerable to unilateral protectionist measures, such as lower standards for import safeguards,” he writes.
Martinez says multinationals are pushing for minor tweaking or a modernization of NAFTA, with process improvements and better border infrastructure. In addition, he says, companies in innovation-driven industries like medical-device manufacturers support greater standardization across borders.
“The bottom line is,” he says, “multinationals will not know what will be in the final agreement for years.”
