Chemical industry weighs in as Trump vows to rewrite Nafta

US president Donald Trump has called the North American Free Trade Agreement (Nafta) a ‘terrible deal’ for the US, repeatedly stating that he wants to renegotiate the treaty as soon as possible, and the North American chemical industry has seized the opportunity to call for updated regulations.

The American Chemistry Council (ACC), Chemistry Industry Association of Canada (CIAC), and Mexico’s Asociación Nacional de la Industria Química (ANIQ) have released a joint statement outlining the industry’s priorities for a potential renegotiation of Nafta.

The three organisations said that Nafta has provided enormous benefit for the chemical sectors in Canada, Mexico and the US over the past two decades, expanding the region’s economic growth, creating jobs, and enhancing North American competitiveness in the global market.

Trade in chemicals between Nafta countries has risen from $20 billion at the treaty’s inception in 1994 to $63 billion in 2014, according to industry figures. Accounting for inflation, this means the value of goods traded between the countries has almost doubled in that period.

The ACC, CIAC and ANIQ say Nafta’s effectiveness in reducing barriers to trade has directly enabled the chemical industry to have an ‘oversized share of economic activity’ in North America, including trade in energy products like natural gas, which is key to chemical production.

Burdensome barriers

The trade groups argue that Nafta could confer even greater benefits to the North American chemistry sector if its underlying regulatory, customs, transport, and communication practices are modernised. They also want to update the treaty with ‘enhanced regulatory cooperation commitments’ from Canada, Mexico and the US, for example better agreement on classification and labelling procedures in all three countries, as well as an effort to harmonise their processes for approving new chemicals.

However, concerns have been expressed from various quarters that free trade agreements could be used to legally challenge regulations in areas like environmental protection or chemical safety, on the basis that they hurt industry profits.

Under Nafta, private companies have sued governments over laws that threaten their expected revenues, and Canada has already lost at least two key cases under the treaty.

There is still time for interested parties to weigh in. US Commerce Secretary Wilbur Ross recently indicated that the Trump administration probably won’t begin ‘real’ negotiations to overhaul Nafta until later this year.