User login

Apparel and Footwear group presses White House not to withdraw from NAFTA

March 2, 2017

The American Apparel & Footwear Association is urging the Trump administration not to begin the renegotiation of NAFTA with the threat of withdrawing from the agreement if U.S. demands are not met.

“I think that as we look at this NAFTA renegotiation that is coming, there should be a basis assumption that starts off that says, ‘what happens if we can’t get NAFTA done, if we can’t get NAFTA change done,’ then we stay back with NAFTA. In other words, there isn’t this threat to withdraw, there isn’t this threat to pull out. That’s not helpful,” American Apparel & Footwear Association executive vice president Steve Lamar said at the organization’s executive summit on March 2. The trade association represents “apparel, footwear and other sewn products companies and their suppliers,” according to its website.

“What we really should be doing is starting from the presumption that this is a good agreement, that this agreement is working,” Lamar added, saying NAFTA supports a significant amount of U.S. jobs.

Lamar also said AAFA has been reaching out to the White House “on the political level” to voice its opinions on NAFTA, as well as other issues including the border adjustable tax contained in the House Republican tax reform blueprint and the outstanding Generalized System of Preferences travel goods issue.

Asked on the sidelines of the event who AAFA had spoken with in the administration, and what the group’s specific NAFTA asks are, Lamar told Inside U.S. Trade that AAFA was talking with “whoever would listen” and is hammering the broad message that pulling out of NAFTA should not be the result of coming up short on the changes the administration wants via renegotiation. Lamar also added that AAFA is still collecting ideas from its members on more technical changes that could be made to NAFTA.

Members of the Senate Finance Committee and House Ways & Means Committee are eager to get the ball rolling on renegotiating NAFTA, but have said they need more details on the administration’s negotiating objectives before diving fully into the formal renegotiation process.

The president is required to outline objectives for NAFTA renegotiations when he triggers a 90-day consultation period with the committees of jurisdiction, which he must do before NAFTA negotiations can officially begin.

Outreach to the administration has been complicated because Trump’s pick for U.S. Trade Representative, Robert Lighthizer, has yet to be confirmed. Lighthizer represented foreign countries while working in the private sector, and statutorily that makes it necessary for the Senate to authorize a waiver for him to be confirmed as USTR. Senate Democrats have tied that waiver to a miners health insurance bill that appears to have little chance of passing, leaving the timing of his confirmation up in the air.

The administration, according to Lamar, has made clear that it is interested in hearing from members of Congress. Lamar accordingly directed the private-sector attendees at the summit to bring their priorities to members and urge them to pass those priorities on to the administration.

Lamar said it is difficult to assess where the White House stands on the issue of border adjustability. AAFA, along with hundreds of companies that rely heavily on imports, have come out strongly against a border adjustable tax.

Rick Helfenbein, president and CEO of AAFA, warned that even if the Senate rejects a House tax reform bill that includes a border adjustable tax, it could re-emerge via reconciliation and be used as a “sacrificial lamb.”

Lamar added that a border adjustable tax would likely be challenged at the WTO and warned that the apparel industry is often the target of trade retaliation against the U.S. Academics have predicted that if the U.S. lost a dispute at the WTO over the border adjustable tax it could be hit with unprecedented retaliation. House Ways & Means Chairman Kevin Brady (R-TX), on the other hand, maintains that the tax will be consistent with WTO rules, although many experts do not see how the policy could be written or implemented in a way that does not run afoul of U.S. WTO obligations. – Jack Caporal (jcaporal@iwpnews.com)

Not a subscriber? Sign up for 30 days free access to exclusive, behind-the-scenes reporting on trade policy in the Biden era.