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NAFTA Renegotiation Policies That Will Strengthen North America

April 12, 2017
by Matthew Rooney and Brian O'Donnell
The administration’s promised action on NAFTA will likely begin this year. The Bush Institute's policy recommendations for strengthening North American economic competitiveness are a good reference point for what ideas should be brought to the table.

A recently-leaked draft from the U.S. Trade Representative’s office indicates that an official letter to Congress regarding the North American Free Trade Agreement is imminent. When the letter is sent, it will trigger a statutorily required 90-day window before the Trump administration can begin renegotiations with Canada and Mexico.

Given the leak, the administration’s promised action on NAFTA will likely begin this year and is shaping up to have important implications on the future of North American economic competitiveness. In light of this, the Bush Institute’s policy recommendations for strengthening North American economic competitiveness are a good reference point for what ideas should be brought to the table.

REFORMING THE U.S. PRESIDENTIAL PERMIT PROCESS

Currently, building infrastructure across our borders requires a political determination by the State Department that inevitably leads to a lobbyist-and-consultant battle. The results favor the best-connected and best-funded projects instead of the projects that will increase productivity and competitiveness the most. A reform would reduce the cost of developing cross-border infrastructure, make U.S. manufactured goods more globally competitive, and secure manufacturing jobs.

ENCOURAGING PRIVATE CAPITAL TO INVEST IN CROSS-BORDER INFRASTRUCTURE

There are constraints on federal spending in all three countries that keep some value-adding projects from being completed. Establishing a North American border infrastructure bank to drive a market approach to planning, financing, and coordinating border projects would fill the spending gap.

This kind of approach has been used around the world and would prove effective by synthesizing the best thinking on infrastructure needs, deploying innovative lending instruments to help minimize project risk, and reducing time and resource inefficiency.

PROMOTING A REGIONAL APPROACH TO WORKFORCE DEVELOPMENT STANDARDS AND CERTIFICATION

Varying standards across borders raise the costs of recruiting and training. Using private sector leadership to develop higher standards can drive down these costs and raise productivity, making goods more competitive and jobs more secure.

Expanding access to common technical credentials for frontline work in manufacturing and logistics would enable workers to seek the best opportunities, establish recognizable training criteria, improve the “brand” of technical careers, and strengthen ties among training and certification bodies.

STRENGTHENING COOPERATION ON REGULATIONS

Better cooperation on product regulations can lower production costs and eliminate or prevent differing standards that affect health and safety. These efforts would strengthen competitiveness and secure manufacturing jobs in the region.

ENSURING CONSISTENCY OF SAFETY STANDARDS IN THE EXPLORATION, PRODUCTION, REFINING, AND DISTRIBUTION OF ENERGY

As North America continues to benefit from its boom in the energy industry, common standards can help reduce costs, boost production, and increase productivity. Supporting them with infrastructure expansion can also help preserve the advantages of trade with Canada and Mexico while enhancing the efficiency of energy movement through the region.

Addressing these issues is essential to improving the competitiveness and performance of all three of the North American economies. A renegotiation of NAFTA that supports robust value-adding policies can be an asset to the growth and prosperity of the United States, Canada, and Mexico.

Matthew Rooney is director of the George W. Bush Institute’s Economic Growth Initiative and Brian O’Donnell is an intern in the Economic Growth Initiative.

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