NAFTA: Ten Years Later
by Andrew Rudman
Office of the Western Hemisphere, Market Access and Compliance
Since
its implementation on January 1, 1994, NAFTA has been more successful
than even the most optimistic analysts had predicted. Trade between
the United States and Mexico has nearly tripled. The United States
now trades more with Mexico in a day than with Paraguay in a whole
year, more in a week with Mexico than with Chile in a year, and
more in a month with Mexico than with all of the Mercosur countries
in a year. In addition to the increased volume and diversity of
trade among the NAFTA partners, the economies of Canada, Mexico,
and the United States are more closely integrated than ever before,
and the private sector is responsible for much of this integration.
As we look forward to the next decade of NAFTA, it seems appropriate
to ask, "What comes next?"
Following
the free trade agreement, some might expect the next step to be
a customs union along the lines of the European Union, requiring
the three NAFTA countries to surrender autonomy in several key policy
areas, including labor and immigration. While the political climate
at this time does not appear to support such a bold step, integration
within North America will continue to evolve. Sectoral integration,
enhanced public-private sector partnerships, and greater policy
coordination will all require our attention, even in the absence
of an official governmental decision.
NAFTA
Certificate of Origin Tool
The International Trade Administration has
developed an on-line tool to help U.S. exporters in filling
out the North American Free Trade Agreement (NAFTA) Certificate
of Origin. The agreement provides important benefits for U.S.
goods that are exported to our NAFTA partners, Mexico and Canada.
NAFTA-qualifying goods (goods with sufficient North American
content) are eligible for lower tariff rates than non-NAFTA
goods. The NAFTA Certificate of Origin is used to show customs
officials that your product is entitled to preferential tariff
rates under NAFTA.
Because filling out the NAFTA certificate can be difficult,
the Trade Information Center and the ITA Office of the Chief
Information Officer have cooperated in developing this interactive
tool to provide U.S. exporters and manufacturers with line-by-line
instructions and detailed descriptions of terminology on the
certificate. Through the Trade Information Center's on-line
NAFTA pages, users of the NAFTA tool are also directed to help
in determining Harmonized System numbers, given guidance on
establishing preference criteria and finding rules of origin
and other NAFTA information, and provided with examples of how
products may qualify for preferential tariff treatment. The
NAFTA certificate can be filled out on-line and saved for later
use.
The NAFTA Certificate of Origin tool can be found on-line through
www.export.gov
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INDUSTRY
ADAPTATION
Since NAFTA's implementation, two sectors in particular have taken
advantage of tariff provisions to create economies of scale within
each market. While integration in the automotive industry predates
NAFTA, the tariff elimination schedule contained in the agreement
promoted far more extensive expansion of cross-border production
in all three countries. In 2002, U.S. shipments of new passenger
vehicles and light trucks to Mexico, for example, were 38 times
greater than such shipments in 1993. The integration of automotive
industries is so complete that there are few if any cars produced
in the United States that do not contain Mexican or Canadian parts.
The steel sector also has made use of NAFTA to integrate North American
markets. Not only has the industry developed production patterns
to maximize the advantages of the North American market, but it
also has begun to speak with a single voice when dealing with the
various governments. North American steel producers share common
concerns and objectives and have worked to influence policy decisions
within the region. Governmental cooperation in the OECD steel talks
is but one example of this coordinated approach. In fact, in December
2002, the three governments issued a "NAFTA" statement—the
first such statement in the history of NAFTA. More recently, the
NAFTA Free Trade Commission announced the formation of a North American
Steel Trade Commission that will provide opportunities for industry
to meet jointly with government officials.
As mentioned previously, the private sector is behind much of the
integration in these and other sectors. NAFTA implementation created
the conditions for integration, but governments cannot mandate it—rather
it must come from the U.S., Mexican, and Canadian private sector.
The U.S.-Mexico Partnership for Prosperity (see page 19) is one
initiative that fosters integration within North America. It is
hoped that this bilateral, largely government-driven partnership,
can be expanded to include Canadian participation and would ideally
evolve into a private sector-led endeavor.
A third area of regional integration is in policy. As the economies
of the United States, Mexico, and Canada continue to integrate,
policy decisions facing the three governments should increasingly
converge. For example, the need to identify new markets for our
"joint" exports will lead to the promotion of North America
as one export source, as a producer of high-quality goods and services.
This just makes sense from both policy and business perspectives.
Over the next decade and beyond, through the continued integration
of our economies and the promotion of a common vision, other nations
will learn to see North America as a single trading partner, which
in turn will bring our countries even closer together.
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