WASHINGTON — President Obama’s reiteration of a commitment to seek changes in the 15-year-old North American Free Trade Agreement left importers and domestic textile producers concerned about the potential impact it could have on $14.4 billion worth of three-country apparel and textile trade.
“With a NAFTA agreement that has labor provisions and environmental provisions as side agreements, it strikes me if those side agreements mean anything, then they might as well be incorporated into the main body of the agreement so that they can be effectively enforced,” Obama, making his first foreign visit to Ottawa on Thursday, said at a news conference with Canadian Prime Minister Stephen Harper. “So, I raised this issue with Prime Minister Harper. It is my hope that as our advisers and staffs and economic teams work this through, that there is a way of doing this that is not disruptive to the extraordinarily important trade relationship that exists between the U.S. and Canada.”
Harper, whose government has raised alarms recently over the U.S. turning protectionist, said he was willing to work with Obama on possible changes to NAFTA.
“President Obama and I did have a good discussion of his concerns,” Harper said. “Our position is that we’re perfectly willing to look at ways we can address some of these concerns, which I understand, without opening the whole NAFTA and unraveling what is a very complex agreement.”
Stephen Lamar, executive vice president for the American Apparel & Footwear Association, said Obama’s comments imply a number of things. “He’s implying a renegotiation. He’s implying there are problems now and he’s implying the problems are not cosmetic.”
Lamar also said it is unclear whether Obama has had the same conversation with Mexico.
“If you’ve got a renegotiation of the agreement, you have to envision that everything is on the table, not just labor and environmental provisions, but, for example, rules of origin for textiles and apparel with respect to Canada and with respect to Mexico,” Lamar said. “It may be that the conversations with Mexico and Canada could yield a very limited approach to how to renegotiate, but you can bet that Canada and Mexico have a whole slew of things they would like to see changed in a 15-year-old agreement.”
David Spooner, an attorney with Squire, Sanders & Dempsey and a former assistant secretary of commerce for import administration, said any type of renegotiation or incorporation of labor and environmental standards could create new levels of more stringent enforcement mechanisms, including higher tariffs.
U.S. apparel importers maintain a significant amount of production in Canada and Mexico, both of which are in the top 10 apparel and textile suppliers to the U.S. But shipments from both countries have been in a downward spiral in recent years as production shifted.
Cass Johnson, president of the National Council of Textile Organizations, said the volume of trade covered by NAFTA makes it important to the textile industry and it seems unlikely the Obama administration would jeopardize it.
Erik Autor, vice president and international trade counsel for the National Retail Federation, said labor and environmental standards have been included in the main body of trade deals since NAFTA was enacted.
“It doesn’t make a substantive difference, frankly,” said Autor.
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