By Stephen Barlas
Look for some intra-U.S. manufacturing industry fireworks as the North American Free Trade Agreement (NAFTA) renegotiations get underway, as they did in mid-August.
One of the key areas the Trump administration wants to address is “rules of
origin,” which allow both Canada and Mexico to block imports of some U.S.-manufactured products. These rules of origin provisions also allow Canada and
Mexico to use, to an extent, non-NAFTA sources for products exported to the U.S.
During the first six months of the Trump administration, the debate has been
about “Buy American.” In particular, the White House has called for publicly
funded infrastructure projects in the U.S. to have a high level of U.S.-sourced
components. Now the debate is shi;ing to “Sell American,” which is calling for
a closer look at whether Canada and Mexico are using NAFTA rules to block imports of U.S.-manufactured products and cheating on their duty-free exports
here, costing U.S. manufacturers sales in this country.
Read more from Stephen Barlas at www.thefabricator.com/author/stephen-barlas
Manufacturing sectors differ over NAFTA rules of origin
Some want complete rewrite of the requirements,
others suggest proceeding with caution
For the most parts, products of all kinds flowing from and to the three countries are not subject to tari;s. What does impact trade across borders, however,
are rules of origin. For example, U.S. line pipe manufacturers argue the rules
create the potential for Mexican producers of line pipe to use dumped and subsidized imported steel to Mexico to produce line pipe that then can enter the
U.S. without any assessment of duties.
The U.S. team charged with NAFTA renegotiating responsibilities seeks to update and strengthen the rules of origin provisions to ensure that the benefits of
NAFTA go to products genuinely made in the U.S. and North America. In other
words, they want to make it harder for products to travel duty-free within the
three countries if too much of the product is sourced outside the three countries.
But there are conflicting views among U.S. manufacturers on whether changes
to the rules of origin are advisable. Line pipe manufacturers are all for changes.
Meanwhile, the National Tooling and Machining Association (NTMA) and Precision Metalforming Association (PMA) express some hesitancy. They acknowledge that the rules of origin levels set in the Trans-Pacific Partnership (TPP)
Agreement likely contributed to its downfall. They believe that in TPP negotiations, the U.S. acquiesced to levels way below those expected. However, both
NTMA and PMA warn that an update of NAFTA should not go too far in the opposite direction, increasing content requirements to counterproductive levels.
AdvaMed, which represents medical equipment manufacturers, is opposed
to rules of origin changes in NAFTA. More stringent criteria, coupled with strict
application of content requirements, can adversely a;ect a company’s ability to
sell products in the NAFTA markets, according to association o;icials. Additionally, stricter criteria is also believed to be particularly problematic for companies that source multicomponent products in the NAFTA region.
DOE Rules Affect Steel Sheeting for Walk-in Freezers
Manufacturers of walk-in cooling freezers will have to comply with new energy-saving requirements in the next few years. That means considerable changes to
the insulation they use in those products, and in turn may change the manufacturers’ sheet metal requirements.
To bring products into compliance with standards, the Department of Energy
(DOE) expects the industry to incur total conversion costs of $18.7 million. That
breaks down to $14 million in product conversion costs for redesign, testing,
and labeling and $4.7 million in capital conversion costs, which cover investment in tooling and machinery necessary to update condensing system production equipment for models that do not meet the required e;iciency levels.
Some of the larger manufacturers of these products are Traulsen, Lennox,
Hussmann, Manitowoc, Rheem, and Emerson. Numerous niche manufacturers
will be a;ected as well.
National Tooling and Machining Association, www.ntma.org
Precision Metalforming Association, www.metalforming.com
U.S. Department of Energy, www.energy.gov
The U.S. team charged with NAFTA renegotiating
responsibilities seeks to update and strengthen the rules
of origin provisions to ensure that the benefits of NAFTA go
to products genuinely made in the U.S. and North America. See us at FABTECH