NAFTA Discussions Leave Multinationals in Mexico Uncertain

Oscar Caicedo
August 2, 2017

The first talks on renegotiating NAFTA begin this month, and with continual discussions of a U.S.-first trade agenda, multinational companies with operations in Mexico are left uncertain on what these talks might entail. While no one knows exactly where these negotiations may land, multinationals should have some answers by the end of 2017, as all parties involved have agreed to an aggressive discussion schedule.

NAFTA – the free trade agreement between the United States, Canada and Mexico that facilitates the cross-border transfer of goods and services – was a major platform when President Trump was campaigning. He criticized the agreement for leading to job losses and a $63 billion trade deficit with Mexico, so no doubt will enter the negotiations with a strong hand.

In fact, the administration recently published its goals for the negotiations, including

  • “reciprocal and balanced trade,” which CNN Money reports could open the possibility of tariffs and quotas
  • “trade remedies,” which CNN cites as a potential protectionist strategy that could include tariffs
  • higher labor standards
  • stronger environmental laws, which coupled with changing labor standards, could make Mexico a more expensive place to operate
  • improved protections for intellectual property rights

 

Several industries stand to benefit from a new NAFTA, according to the Harvard Business Review. Ecommerce, for example, was just laying its roots when NAFTA emerged in 1994, and under the current agreement, taxes kick-in after only a $50 online purchase, limiting cross-border e-commerce transactions. Additionally, technology and innovation focused industries, like Health IT and pharmaceuticals, argue that intellectual property protections and enforcement of regulatory standards aren’t currently strong enough. Multinational manufacturers, with their complex supply chains, however, have the most to lose under a renegotiated NAFTA, as new tariffs or quotas could significantly impact operations and/or profit margins.

The discussions begin on August 16, and Reuters reports that U.S. officials aim to have the talks completed this year.

We’ll be watching the negotiations carefully in the coming months. Will you? Tell us what you expect on Twitter.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Oscar Caicedo

Share This Post

Sales & Use Tax United States
August 22, 2019
Benefits of Sales Tax Automation Software and Deployment Options

You operate a lean tax compliance and reporting team. Maybe your company has reduced staff over the past 5-10 years while continuing to grow its business through organic means as well as merger and acquisition.  But now your staff of 10 is down to four or five. What was once a manageable manual process of […]

Tax Information Reporting United States
August 19, 2019
Negative Reporting – What If I Have No Records to Report?

If you have no new unclaimed property records for a particular state this filing year, does that mean you are off the hook? Well, not necessarily.   Most states want you to file with them each year. If you’ve reported in the past, they want to hear from you even in the years when you […]

Tax Information Reporting United States
August 19, 2019
To Aggregate or Not to Aggregate – There Is No Question – Not

Article written By Bill Dadmun, Records and Receipts Manager, State of Virginia   How many of you use the aggregate function when reporting?  Does it make your life easier?  Listen to this scenario and tell me if it sounds familiar.   You get a call from someone that is due $49.95 from a credit balance.  […]

Tax Information Reporting United States
August 19, 2019
Reciprocal Filing – Why You Should Proceed with Extreme Caution

This isn’t the first time I’ve blogged about the dangers of reciprocal filing, but I feel like it is a topic worth covering again for those who may have missed it. Reciprocal or exchange filing means reporting records to a state even though the last known addresses for the records are not in that state. […]

Tax Information Reporting United States
August 19, 2019
Demystifying Codes for Unclaimed Property Compliance

Have you ever been confused about which property code to use for a certain type of property? We have all been there. NAUPA, the National Association of Unclaimed Property Administrators, has a list of standard codes that you can view here starting at the bottom of page 23.   Each code is made up of two alpha […]