Opportunities NB Webinar

Discussion on the new US Administration & the Next 100 Days.

LA / NY / SF / DC / arentfox.com

Briefing for New Brunswick Exporters

Shifting Tides – 2016 Election Effects and US

Trade Policy

Birgit Matthiesen

Arent Fox LLP Washington DC

The Administration’s Trade Agenda

Withdrawal from the TPP

– TPP minus the US?

Re-negotiation of the 1994 NAFTA

Review of other US FTA’s e.g. KORUS

Strong import enforcement of existing

agreements, including ADD and CVD

– Steel and aluminum 232 investigations

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NAFTA Timelines

May 18, 2017 – USTR sends formal notice to

Congress (90 calendar days begin)

June 12, 2017 – USTR request for public comments

end date

June 27, 2017 – US ITC hearing (public)

July, 2017 – USTR holds “substantive meetings” with

Congress on NAFTA objectives and strategy

July 2018 – Mexican Presidential elections

July 2018- Trade Promotion Authority Expires

August 17, 2017 – Negotiations could begin

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The field so far

Mexico well ahead in terms of consultation

with their domestic industry

United States has most transparent (and

ambitious) negotiating strategy

Canada has launched public consultations but

negotiating objective unclear

– Comment period ends July 18th

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Re-Negotiating the 24 Year Old NAFTA

US Negotiating Objectives –

1. Increase US production and Jobs

2. Decrease US trade deficits with Canada and

Mexico

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1. Increase US Jobs

Tighten NAFTA rules of origin

Focus on NAFTA enforcement/verification

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2. Decrease Trade Deficit

Where the US imports more than it exports creating a trade

imbalance

Historically, Canada and MX have contributed to US trade

deficits

Particularly Mexico and manufactured inputs

Globally, automotive parts

– Germany

– Japan

– South Korea

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Re-Negotiating the NAFTA

Ross on trade deficits –

“There are two types of trade deficits – blameless deficit (where US has no self-sufficiency, e.g. energy) and blameful deficit where trading partners sending to the US products not fairly traded”.

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NAFTA Rules of Origin - What Might Change

• RVC thresholds

• For the auto sector: Tracing – Elimination of the “Free

Pass”

• Inclusion of electronic components on tracing list

• Inclusion of steel and aluminum on tracing list

• Inclusion of all products on tracing list

• Promotion of High Tech work in NAFTA countries –

factoring in R&D costs

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After Negotiations End

Congress must approve via Implementation

Legislation

Presidential Proclamation authority

Legislative amendments

Proposed rules, public comment periods

Modified Tariff Schedules

– new rates and new rules

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Ross on NAFTA import enforcement

“[t]here is not much point going through all the

trouble to make an elaborate trade agreement if

you’re not going to enforce it and really get the

benefits of it that you bargained for”.

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Developing an Action Plan

• Assess your exposure and reliance on NAFTA

• Who or what groups in your company determine NAFTA

qualification of your product(s)?

• Which specific rules of origin do your company rely on

and are they understood and substantiated?

• Do you periodically review this assessment?

• Do you have the necessary resources? Support from

company departments? Utilization of NAFTA expertise?

• Whether the NAFTA rules of origin change, this is an

opportunity to conduct an assessment

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What will all this mean for New Brunswick

Exporting Sector?

Changes in the NAFTA rules could bring

changes in cross-border supply & sourcing

– Possibility of fewer supplier choice

A period of business uncertainty

Heightened scrutiny at the border and beyond

– Resource intensive, expensive and risk exposure

Increased need for internal communication

– From procurement office to the General Counsel

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Buy America

US domestic steel industry voice in DC and

this Administration

Possible (probable?) that US Buy America (n)

requirements are expanded

– Definition of “domestic” (mined and poured?)

– Expansion of agency requirements

– Expansion of federal agency with BA

– Expansion to Sub-federal agencies

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Border Tax and US Corporate Tax Reform

Likely on the Congressional “back burner”

Some described BAT on “life support”

– Difficult to predict but unlikely in 2017

Some action however on US corporate tax

reform

– Possibly actual legislation

– Lots to watch – repatriation of foreign profits.

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Where I can be reached

Birgit Matthiesen

Director, Canada- U.S. Cross Business Affairs,

Arent Fox LLP

703-303-8413

or

birgit.matthiesen@arentfox.com

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Questions?

Thank you for attending

Tel: 1.506.453.5471

Toll free: 1.855.746.4662

Email: info@onbcanada.ca