May 23, 2003
FTAA - COMMITTEE OF
GOVERNMENT REPRESENTATIVES ON THE PARTICIPATION OF
IN RESPONSE TO THE OPEN AND ONGOING INVITATION
Scott Otteman — Director, International Trade Policy
National Association of Manufacturers
Submission of the
FTAA Committee of Government Representatives
on the Participation of Civil
April 29, 2003
The National Association of
Manufacturers (NAM) represents 14,000 companies with manufacturing
operations in the United States, including 10,000 small and medium-sized
firms. The NAM urges the negotiators engaged in the historic enterprise of
creating the Free Trade Area of the Americas (FTAA) to take its views into
account with respect to the following aspects of the negotiations.
The FTAA should comprehensively
eliminate tariffs on substantially all trade. The removal of tariffs
should be as front-loaded as possible. As many entire sectors as possible
should have their duties immediately removed upon entry into effect of the
The FTAA should include mechanisms
aimed at preventing countries from replacing falling duties with new
RULES OF ORIGIN AND ORIGIN
Rules of origin will determine which
goods exported from one FTAA country to another qualify for FTAA tariff
preferences. We seek origin rules that are objective, transparent, easy
and inexpensive to administer and comply with, yet sufficiently stringent
and enforceable so as to optimally preserve benefits for company
operations and workers based in the Americas.
1) The ultimate goal of FTAA
negotiators should be to create a single, uniform set of FTAA origin
rules that eventually will completely replace sub-regional origin rules
for the purposes of determining eligibility for preferential tariffs.
Creating hemisphere-wide origin rules that overlay the multiple sets of
already-existing sub-regional rules merely adds another layer of
complexity to doing business in the Americas. An FTAA that complicates
rather than simplifies the conduct of business in the region is not
2) In creating the new uniform
FTAA origin rules, efforts should be made to limit the negative impact
on companies that have made investments and developed trading
relationships based on the assumption of the permanency of sub-regional
origin rules, such as those in effect under the NAFTA. Special, early
attention must be given by government origin-rules experts - in
coordination with industry specialists - to determining how origin rules
can best be applied during the FTAA transition period to avoid
disruptions in trade patterns and confusion over which rules apply.
3) To help expand the potential
benefits of the FTAA, consideration should be given to providing
significant technical assistance to help small and medium businesses
learn how to apply the FTAA’s rules of origin. This could include a
centralized web site, web-based learning, and national outreach
4) Tariff shift rules to determine
origin are simpler and facilitate compliance better than content
calculation approaches. We believe that the tariff shift system has
particularly proven itself in the existing NAFTA rules, and believe that
the FTAA should adopt an origin-rule system that builds on and improves
on the approach used within NAFTA. We do not favor value tests, since
they can be excessively influenced by minor changes in production
process and input values, and are difficult to predict due to
fluctuation in exchange rates and factor prices. If value tests cannot
be avoided, we do not favor tracing, which can require complex and
costly accounting procedures.
5) As it will help make the FTAA
truly a force for economic integration, cumulation should be allowed for
purposes of establishing hemispheric origin.
6) A consistent and standardized
approach in determining origin, marking, and labeling requirements for
hemispheric products is an absolute necessity. Such consistency would
benefit all hemispheric producers by facilitating understanding by
Customs officials and expediting the clearance of imports without undue
There should be consistency in
import clearance procedures, including valuation, throughout the FTAA, and
ideally the WTO. Standardizing these processes, including as they affect
software, would benefit all hemispheric producers by expediting import
clearances, reducing cycle time, and offering greater predictability in
how products are valued for customs purposes.
The NAM strongly supports continued
implementation of the already-agreed, customs-related measures aimed at
lowering the cost of doing business in the hemisphere. These measures
included provisions for temporary admission; expedited procedures for
express consignments; facilitative measures for low value shipment
transactions; provision for electronic data exchange; establishment of
codes of conduct for customs officials; and implementation of risk
However, we note that these
so-called “business facilitation” commitments are not binding and
specifically exclude requirements to modify domestic legislation.
We recommend that additional
business facilitation provisions be incorporated into the FTAA agreement
itself. These provisions should expand and deepen the initial package of
customs measures to include measures that require legislative approval and
would be implemented by a specified deadline. The NAM specifically
advocates that the FTAA contain binding obligations requiring national
customs offices to:
1) Immediately implement a
two-step entry process that separates the release of merchandise from
final payment of duty. Such procedures contemplate the use of financial
guarantees for duty payment, time targets for release of merchandise,
and final computation of duty obligations following release.
2) Establish an advance-rulings
regime and institute a process for reviewing and appealing decisions.
3) Eliminate all non-tariff
charges not dedicated to offsetting the cost of processing imports on
goods traded within the hemisphere. These include consular fees and
4) Prohibit export and import
price requirements, import licensing conditioned on the fulfillment of a
performance requirement, voluntary export restraints and discriminatory
export taxes not allowed under the WTO.
5) Establish simple procedures for
the temporary admission of goods related to business travel.
6) Permit duty-free entry of
commercial samples and advertising materials.
7) Implement meaningful and
enforceable transparency provisions for both import licensing procedures
and for imposing any fees in connection with importation or exportation.
Along with slower staging of import
sensitive products, NAM believes that a safeguard system is necessary to
assure weaker sectors in FTAA countries that they will be given the
opportunity to adjust.
In this regard, we favor the type of
safeguards currently applicable under NAFTA, which allows for restoration
of MFN duties and no non-tariff measures to deal with problems where NAFTA
imports are a substantial cause of serious injury. WTO rules that allow
for global relief above MFN levels when third country imports cause the
problem would be left intact as well. Both systems require adjustment and
TECHNICAL BARRIERS TO TRADE
The use of standards and technical
regulations, including marking and labeling requirements and conformity
assessment procedures should be implemented in ways that would facilitate
trade for hemispheric manufacturers. The NAM urges that all steps possible
be taken so that technical measures are not employed as barriers to trade.
In the NAM’s experience the cost of these measures bears particularly
heavily on smaller firms, and failure to simplify technical measures and
seek maximum harmonization disproportionately hurts producers in smaller
1) With respect to
industrial standards and conformity assessment, FTAA negotiators should
select a number of product areas for initial discussion on hemispheric
wide harmonization, mutual recognition or equivalency.
2) The NAM endorses full
acceptance and implementation of the WTO Agreement on Technical Barriers
to Trade as a prerequisite to FTAA membership. All hemispheric
manufacturers would benefit by further steps in the FTAA that would move
governments in the direction of eliminating and preventing unnecessary
technical barriers to trade in the hemisphere.
3) The FTAA should clarify how the
WTO TBT agreement can best be interpreted. A TBT-plus approach that
provides more precise guidance should help address at least two critical
ensure transparency and due process in national and regional
standards-setting bodies, so that these principles can subsequently be
advocated by the hemisphere on a global basis.
- To ensure that standards applied by
Americas-based companies internationally, if different from other
international standards, are given comparable consideration as an
acceptable standard in this hemisphere.
4) The NAM endorses identifying
products and sectors where hemispheric agreements covering mutual
recognition, harmonization and equalization would be appropriate.
Moreover, manufacturers should not have to wait until the conclusion of
the FTAA before these are negotiated.
5) Similarly, manufacturers should
not have to wait until the conclusion of the FTAA for its members to
agree to the elimination of redundant testing and certification of
Information Technology and other products. There are many ways to
provide the appropriate level of conformity assessment that minimizes
delays and duplication while maintaining adequate protection of safety,
health, and the environment. These include (but are not limited to):
Supplier’s Declaration of Conformity, third party certification, and the
IECEE CB Scheme.