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 agreement.

The FTAA should include mechanisms aimed at preventing countries from replacing falling duties with new non-tariff barriers.

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 worth pursuing.

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 seminars.

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 delays.

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 management.

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 related charges.

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 compensation.

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 nations.