During the fifth round of talks regarding the renegotiation of the North American Free Trade Agreement (NAFTA), which were held in Mexico City from November 17-21, 2017, the United States Trade Representative (USTR) published its updated negotiating objectives. In the area of industrial goods, USTR expanded on the Trump Administration’s goal of “greater regulatory compatibility” by specifically enumerating the following areas: pharmaceuticals, medical services, cosmetics, information and communication technology equipment, motor vehicles, chemicals, and energy efficiency. Further, USTR calibrated negotiating objectives with respect to digital trade, investment, intellectual property, agricultural goods, government procurement and small and medium-sized enterprises.
Following the fifth round of negotiations, NAFTA negotiators reportedly “completed a sectoral annex on energy efficiency standards” in the context of an intersessional round of talks held in Washington D.C. in mid-December. It is unclear at this point, however, whether a full energy chapter will be sought in addition to this sectoral annex. While negotiations are not being conducted publicly, press reports indicate that if the Parties decide to move forward on an energy chapter, a proposal could be circulated at the next negotiating round.
In related news, the Energy Subcommittee of the U.S. House Committee on Energy and Commerce held a public hearing in mid-December regarding “The Impacts and Future of North American Energy Trade.” Hearing witnesses included representatives from the U.S. Chamber of Commerce’s Global Energy Institute and the American Fuel & Petrochemical Manufacturers. The witnesses made policy recommendations regarding potential modifications regarding cross-border energy trade in North America. First, with respect to trade in hydrocarbons (including natural gas, crude oil, and refined oil products), a revised NAFTA should eliminate all quantitative restrictions and tariffs on imports and exports. Second, regarding electricity and hydrocarbons, the goal should be to increase the number of physical cross-border interconnections to enable greater exchanges of power between countries. Lastly, a modernized NAFTA should also prohibit local content requirements and harmonize energy-related standards and regulations.
The sixth round of negotiations will be held in Montreal, Canada, from January 23-28, 2018. We will provide further updates on energy-related aspects of the NAFTA renegotiations in future editions.
