Aerospace Industry Eyes NAFTA Negotiations

 - August 31, 2017, 10:46 AM

Negotiations about the future of the North American Free Trade Agreement (NAFTA) are expected to resume tomorrow in Mexico City, putting at stake the future of trade and manufacturing plans for numerous aerospace companies throughout North America. U.S. President Donald Trump has threatened to withdraw from the agreement, saying negotiations with Canada and Mexico have been difficult. Mexican leaders, meanwhile, reportedly have suggested they would discontinue negotiations if the U.S. withdraws from NAFTA.

The Office of the U.S. Trade Representative in July outlined goals to seek a “a much better agreement that reduces the U.S. trade deficit and is fair for all Americans by improving market access in Canada and Mexico for U.S. manufacturing, agriculture and services.” The USTR noted that since NAFTA was implemented in 1994, the U.S. bilateral goods trade balance with Mexico has gone from a $1.3 billion surplus to a $64 billion deficit. The office said negotiations will center on market access of certain goods, the “digital economy,” subsidies, competitive state-owned operations, restrictions and labor and environmental obligations.

The International Association of Machinists (IAM), which represents workers at a number of U.S. aerospace companies, additionally is pushing for stronger worker protections, claiming, “NAFTA has cost hundreds of thousands of jobs, as U.S. companies shift production to Mexico.” The IAM noted that more than 35,000 aerospace workers are now in Mexico with a much lower wage base and lack of worker protections.

Manufacturers, however, have been generally supportive of NAFTA. The General Aviation Manufacturers Association noted that the agreement has been important for the general aviation industry and supply chain, producing a net positive for the industry and economy.

“Our members are generally in favor of the freest possible flow of people and goods among participating nations, whether it’s NAFTA or a Trans-Pacific Partnership-like agreement,” added the Aerospace Industries Association (AIA). “In the case of NAFTA, Mexico and Canada are two of America’s largest and most important trading partners. Maintaining those trading relationships is a priority for AIA.”

Absent knowledge of specifics of proposals that are on the table, AIA has not taken a position on the negotiations. “We would have concerns about canceling the agreement in the absence of any detail regarding a replacement,” AIA, however, added.

The U.S. had laid out a more aggressive timeline that would have the renegotiation finalized this year, but others expect, given the upcoming Mexican elections, that negotiations could carry into next year.