To Promote Competitive Manufacturing in NAFTA Don't Forget about Services
November 9, 2017
This week, I participated in two panel discussions, one hosted by the Georgetown and the other by Washington International Trade Association, on the ongoing NAFTA negotiations and the future of the agreement. Withdrawing from the North American Free Trade Agreement would represent a deeply damaging loss for American businesses, workers, and the economy as a whole.
While discussions on trade have recently focused largely on goods or manufacturing, it’s critical that we also consider the significant contribution of services. In a modern economy aided by supply chains that span borders and fueled by data and the digital economy, services enable every other sector, from manufacturing to agriculture. Services represent a core strength of the U.S. economy and are critical in supporting U.S. competitiveness.
The United States exported $88 billion in services to Canada and Mexico last year, supporting 587,000 high paying jobs. The North American supply chain underpins manufacturers’ ability to efficiently produce goods, increasingly with the help of both external services like logistics and insurance, and services embedded within manufactured products like data analytics or R&D.
U.S. services companies often must operate in close proximity to their customers, and can also be highly regulated, meaning they must invest in local establishments to do business. These investments and the business they produce amount to hundreds of billions of dollars in sales, and create thousands of American jobs supporting foreign operations.
Likewise, the United States benefits from over $450 billion in investment from Canada and Mexico. These investments, and the growth and jobs they provide, wouldn’t be possible without the investment protections in NAFTA. Without the agreement, these gains would be in serious jeopardy if they didn’t disappear completely.
While the consequences of NAFTA withdrawal are enormous, the current negotiations do offer a much-needed opportunity to modernize the agreement. Adding provisions covering digital trade and e-commerce, including financial services in benefits given to other services industries, and updating delivery services, customs and trade facilitationwould go a long way to increasing the efficiency and competitiveness of American producers in global markets.
- Christine Bliss, CSI President