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

As vice president of strategy and operations for VAT Americas, Oscar Caicedo sets market and product direction across continuous transaction controls, reporting and tax determination. In this role, he leads groups of dedicated subject matter experts across the Americas region. Oscar brings more than a decade of experience leading consulting and implementation teams focusing on data integration and regulatory requirements. He is an industry recognized expert in digital transformation and electronic tax solutions. Prior to Sovos, Oscar spent more than four years at Invoiceware, which was acquired by Sovos in 2016. Oscar has managed complex implementation projects for many of the world’s most recognizable brands. He holds a Bachelor of Business Administration degree in business economics from Georgia State University.
Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

North America ShipCompliant
June 18, 2021
How to Streamline Your Wine Shipping With UPS and FedEx

Wineries that use FedEx or UPS to print shipping labels for beverage alcohol packages can integrate with ShipCompliant to streamline the fulfillment process. This means: No more typing addresses to print labels One click can pull all shipment information from ShipCompliant into FedEx or UPS –  your labels are ready to print Tracking numbers sync […]

EMEA Tax Compliance VAT & Fiscal Reporting
June 17, 2021
Poland VAT Reporting: Draft Amendments to JPK_V7M/V7K Published

In Poland, the Ministry of Finance proposed several changes to the country’s mandatory JPK_V7M/V7K reports. These will take effect on 1 July 2021. The amendments offer administrative relief to taxpayers in some areas but create potential new hurdles elsewhere. Poland JPK_V7M and V7K Reports The JPK_V7M/V7K reports – Poland’s attempt to merge the summary reporting […]

North America ShipCompliant
June 17, 2021
Can Retailers Do Direct-to-Consumer (DtC) Wine Shipping?

The demand among retailers and consumers for interstate direct-to-consumer (DtC) wine shipping is growing, further bolstered in the wake of the COVID-19 pandemic. Retailer DtC shipping is allowed in just 15 states and the District of Columbia, but retailers still saw significant increases in online orders and DtC shipping in the past year. But what […]

EMEA VAT & Fiscal Reporting
June 16, 2021
VAT Trends: A Shift Toward Destination Taxability for Certain Cross-Border Transactions

As detailed within our annual report VAT Trends: Toward Continuous Transaction Controls, there’s an increasing shift toward destination taxability which applies to certain cross-border trades. In the old world of paper-based trade and commerce, the enforcement of tax borders, between or within countries, was mostly a matter of physical customs controls. To ease trade and […]

EMEA Latin America Mexico VAT & Fiscal Reporting
June 15, 2021
Understanding Mexico’s Carta Porte Supplement

On 1 May 2021, the Mexican tax administration (SAT) released one of the most important updates to the electronic invoicing system of the country since 2017. The update was about the new Bill of Lading Supplement (locally known as Suplemento de Carta Porte) that should be added as an annex to the electronic invoice (CFDI) […]