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Reichert Opening Statement at Hearing on the Modernization of NAFTA

July 18, 2017

WASHINGTON, D.C. – House Ways and Means Trade Subcommittee Chairman Dave Reichert (R-WA) today delivered the following opening statement at a Subcommittee hearing on the modernization of the North American Free Trade Agreement (NAFTA).

CLICK HERE to watch the hearing.

Remarks as prepared for delivery:

“Since its entry into force in 1994, the North American Free Trade Agreement, or NAFTA, has transformed the U.S. and North American economy. It has reduced barriers to our exports and allowed American businesses to sell their goods and services more freely and competitively to markets around the world. NAFTA has given us a huge advantage in creating an integrated production base and supply chain. For example, we have improved our competitive edge against China because we can take advantage of our trading partners’ role in the production process. We have done so while creating good jobs here in the U.S. across all three sectors – agriculture, services, and manufacturing.

“NAFTA has benefited my home state of Washington, in particular. Our businesses have exported more than $134 billion in goods to Canada and Mexico since 1994 supporting jobs in communities around Washington. Because of the elimination of Mexico’s 20 percent tariff on apples and pears through NAFTA, our exports of these products have increased by 70 percent to Mexico. Now, each year about 15 percent of apples from the Pacific Northwest are destined for Canada and Mexico. Moreover, consumers across Washington and the country are able to save costs when they purchase goods from Canada and Mexico.  

“Despite its success, NAFTA was negotiated more than two decades ago, when the economic landscape looked very different. In 1994, the digital economy was in its infancy, Mexico had yet to undertake significant legal and regulatory reforms, and the North American supply chain had not yet fully developed.

“Today’s challenges require new rules, not only to reduce tariffs on our exports but to remove non-tariff barriers as well. And I am pleased that the Administration’s NAFTA negotiating objectives, which were released yesterday, set a high and ambitious bar to address many of these challenges head on. 

“Red tape and burdensome customs procedures, the expansion of forced localization requirements and restrictions on the flow of cross-border data, and inadequate rules governing e-commerce are just some of the problems Washington’s businesses are facing in today’s digital economy.  

“Our farmers and ranchers are fighting against the adoption of arbitrary sanitary and phytosanitary restrictions not based on science and the use of geographic indicators as a form of protectionism. For our dairy producers, we must address Canada’s dairy policies, including the National Ingredient Strategy, which constrain our producers from exporting to Canada and around the world.

“The need for modern trade rules is clear – particularly in light of our withdrawal from TPP earlier this year. We must continue to lead in setting the high standards needed for today’s economy. 

“Today we will hear directly from U.S. companies across all sectors about the specific issues they face, how NAFTA has worked for them, and how NAFTA can be improved to grow American exports and create more jobs here at home. We will explore important questions like how NAFTA can better address distortions created by state-owned enterprises? How can we help our technology sector continue to thrive and lead the world in innovation? What challenges do our small businesses face because of overly burdensome customs procedures or outdated de minimis thresholds? How do we ensure that Mexico applies the benefits of the Information Technology Agreement to U.S. producers? And we must be sure to enforce new and current rules and provisions through effective dispute settlement provisions, including the proven tool of investor-state dispute settlement. 

“It is important that we get this right. 

“A modernized NAFTA agreement will serve as a template for future agreements with our trading partners – particularly in the Asia-Pacific region, where our withdrawal from TPP has left an urgent void.    

“Finally, it is vital that any transition to an improved NAFTA be seamless. Canada and Mexico remain our number one and three trading partners – two of our closest allies. We will break down the remaining barriers in Canada and Mexico, but we must also preserve the good that NAFTA has done in enhancing U.S. strength and increasing the competitiveness of the North American trading bloc as a whole against the rest of the world.   

“When North America wins, America wins.”