FTC Offers NAFTA Progress Report

The NAFTA Free Trade Commission (FTC) met recently in Mexico City, Mexico and agreed to a number of measures to reduce transaction costs, facilitate access to information, and eliminate barriers to trade. The FTC’s stated goal is to make North America “one of the most economically competitive regions in the world.”

Reducing or eliminating unnecessary transaction costs entails entering into bilateral mutual recognition agreements (MRAs). One of these the FTC discussed involves establishing procedures for NAFTA countries accepting test results from laboratories or testing facilities when assessing conformity of telecommunications equipment. This will allow a manufacturer to test a product only once and then have the test results accepted in other NAFTA countries. Target for concluding this MRA is May 2011. Other areas for further collaboration will follow.

The FTC also discussed updating the NAFTA rules of origin to reflect current sourcing and production patterns. This would allow more goods to qualify for duty-free treatment under the NAFTA. Simplifying NAFTA rules of origin would also reduce transaction costs. The FTC announced that the Working Group on Rules of Origin (WGRO) has reached preliminary agreement on a fourth set of changes to the NAFTA rules of origin.

“We will each undertake our respective domestic procedures for consultation, and we will aim to implement these changes in 2011,” the committee announced in a joint statement. “We have instructed the WGRO to begin work on technical rectifications to align the NAFTA rules of origin with the updated tariff schedules that will result from the 2012 amendments to the nomenclature of the Harmonized System. We have also directed the WGRO to explore the possibility of implementing a fifth set of changes to the NAFTA rules of origin.”

Environmental sustainability was also on the FTC’s agenda. An ad hoc working group of senior trade officials will work closely with their counterparts in the North American Commission for Environmental Cooperation (CEC) to identify areas of collaboration, such as trade flows of used electronics in North America, green buildings and greening North America’s transportation corridors.

“The ad hoc working group has already provided valuable input on changes to the rules of origin,” the FTC reported. “We are pleased to announce that goods that have a positive impact on the environment are part of this set of changes to the NAFTA rules of origin.”

On the manufacturing front, the North American Steel Trade Committee (NASTC) is identifying barriers to intra-NAFTA trade in this sector, including permit requirements. The FTC noted that Canada recently removed the fees for its steel import permits, and continues to focus on the ongoing implementation of a more streamlined import monitoring system, which will improve regulatory efficiency at the border.

There has also been progress in enforcing intellectual property rights via the Anti-Counterfeiting Trade Agreement (ACTA). The FTC announced that negotiations closed in November, and it anticipates enforcement to gain strength.

During their November meeting the FTC also discussed ways to help small- and medium-sized enterprises (SMEs) in North America take advantage of export opportunities. Many options are spelled out in “Opportunities for Small- and Medium-Sized Enterprises in North America,” a publication designed to answer fundamental questions about starting to export. It will soon be posted to the website of the Office of the U.S. Trade Representative.

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