Takeaway: The Future of the North American Free Trade Agreement

Stability, job creation at the heart of trade agreements

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David Wilkins, former U.S. ambassador to Canada; Nadia Theodore, Canadian consul general; Remedios Gómez Arnau, Mexican consul general; and Tim Rogers, CFO of Continental Automotive. Photo provided

By Danielle Besser, public relations manager, Upstate SC Alliance

What: NAFTA Panel Discussion, presented by the World Affairs Council Upstate and the Clemson University Canada Center and Office of Global Engagement
Where: Clemson ONE Building, 1 N. Main St., Greenville
Who Was There: 115 business and community leaders and individuals with an interest in international affairs
Feature presentation: A panel featuring Mexican Consul General Remedios Arnau, Canadian Consul General Nadia Theodore, former United States Ambassador to Canada David Wilkins, and Tim Rogers, chief financial officer of Continental Automotive

Despite your vehicle’s country of origin, it’s likely that its components have traveled across national borders up to eight times before you have the chance to test-drive it.

“You really cannot talk right now about an American car or a Mexican car; you better talk about a North American car,” said Remedios Gomez Arnau, Mexican consul general, speaking in an April 30 panel discussion on the North American Free Trade Agreement (NAFTA).

The event, presented by the World Affairs Council Upstate (WACU) in association with the Clemson University Canada Center and Office of Global Engagement, centered on the 1994 trade agreement.

The talk was moderated by Jason Zacher, senior vice president for business advocacy with the Greater Greenville Chamber of Commerce. In addition to Arnau, panelists included Nadia Theodore, Canadian consul general; David Wilkins, a Clemson University trustee and former U.S. ambassador to Canada; and Tim Rogers, chief financial officer of Continental Automotive.

Rogers expanded on Arnau’s statement that vehicle components are world travelers.

“Some parts go back and forth across the border eight times. It’s true,” Rogers said. “We experience it, and all of automotive suppliers experience it. You know, you fabricate a part here; you send it to Mexico for a value-add. It comes back to another supplier outside of our company for another value-add, then goes back to Mexico for something else, then comes back here; finally, it’s exported back to Mexico where the original equipment manufacturer [OEM] is located.”

An Automotive Manufacturer’s Take

While tires come to mind when you hear “Continental,” the company manufactures electronic automotive components like radios, brakes, and lane departure warning systems.

Within the NAFTA region, the company has more than 300 locations with more than 80 distribution or manufacturing sites and more than 50,000 employees. In South Carolina, the company employs 1,600.

“We support free trade; we think NAFTA is a really wonderful thing. We’ve been establishing a footprint in NAFTA for over 25 years that makes us globally competitive and competitive within the region,” Rogers said.

Long-term stability and a steady regulatory environment are what companies depend upon, as they are planning investments and job creation on 20- and 30-year horizons, Rogers added.

A Call for Modernization

Wilkins — who formerly served as the U.S. ambassador to Canada — offered insights into the trade agreement’s history and its renegotiation process.

Currently, negotiations between trade officials are underway, with a number of deadlines factoring into negotiations: a July 1 presidential election in Mexico, the United States midterm elections, and looming trade issues with China.

Once a deal is reached, each member country must seek approval from its governing bodies. Within the United States, the Office of the United States Trade Representative must submit the agreement to Congress on fast-track legislation, where a simple majority is required for approval.

“NAFTA has always been a pretty easy punching bag,” Wilkins said. “It’s not perfect, and it needs to be updated, but I think it did live up to the objectives of the original negotiation.”

Since its enactment, trade between the three member countries has quadrupled, boosting economic growth, creating jobs, and lowered consumer prices, he added. The agreement was written before the rise of e-commerce and online communications, however, realities of the modern business environment that should be reflected in the agreement, Wilkins said.

“When NAFTA became a reality in 1994, emails were still a new thing, no one ever heard of a blockchain, never heard of a tweet,” he said. “Getting your news fast meant the guy who delivered your morning newspaper didn’t oversleep the night before.”

About People at the Core

In looking at the agreement’s future, Theodore said, it’s important to consider its original goals: to provide the stability that allows companies to create jobs, and to ensure North America is poised for success in an increasingly global economy.

“The whole point of trade and trade agreements is really about setting up a framework so that companies can help create jobs so that people, communities, and families can be better off,” Theodore said.

Theodore expressed optimism that the renegotiation will be a success for all parties, and that the countries will continue their relationship as “friends, partners, neighbors, and allies” who benefit from affiliation.

“South Carolina and Greenville is a very good case study, because you see Greenville and Greer being known as cities of the world, as international cities,” she added. “And that is because you have companies in automotive and aerospace that are really coming and investing in the state and in the cities. And a large part of why they are coming is to take advantage of the North American Free Trade Agreement and the supply chains that have been created due to the agreement that allows them to source parts and components for their things at a cost that allows them to produce a product at a price that consumers will buy, and at a quality that consumers have come to rely on.”

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