We Negotiated NAFTA Before E-commerce — Here Are Three Ways to Modernize It
Senior Vice President, Global Borders Policy, UPS
Every day, three percent of global GDP — and six percent of U.S. GDP — moves through UPS’s international network. That means we see first-hand what works and what doesn’t when it comes to fueling cross-border commerce. As the U.S. Administration looks at ways to modernize the North American Free Trade Agreement (NAFTA) in the coming months, we recognize that — though it has created a platform for many U.S. businesses to reach new markets — there are ever-widening gaps between the commitments in NAFTA and the demands of modern, cross-border trade.
E-commerce, in particular, is a growing phenomenon that should play a considerable role in informing the future blueprint for North American commerce and customs rules. In 2016, global e-commerce reached nearly $2 trillion, of which North America constituted $423 billion — more than the total value of all U.S. exports to Canada in 2016. For each of the last several years, e-commerce has consistently grown above 14%, meaning that American businesses, particularly small and medium-sized enterprises, have much to gain by making it easier to move goods between the United States and our two largest commercial partners and export markets.
The e-commerce ecosystem depends on important commercial players such as search engines, retail websites, online marketplaces for entrepreneurs, financial services providers, and express delivery companies. Ideally, these services combine to form a seamless, end-to-end experience for the seller and any consumer making a purchase online. This seamlessness is even more critical when it comes to cross-border e-commerce, because the system depends on countries’ embracing rules and regulations that foster harmonious operation of all elements, not merely the logistics of moving goods into Canada or Mexico.
With this larger picture in mind, UPS recommends modernization of NAFTA within three critical areas:
1) Market Access — safeguarding U.S. businesses’ access to Canadian and Mexican markets, particularly for integrators like UPS who facilitate end-to-end shipments, which drives U.S. exports.
2) Customs Modernization — ensuring that the ambitious, high-standard policies the U.S. adopts are harmonized across, and recognized by, Canada and Mexico to grow U.S. exports.
3) Security — strengthening national security by pushing the border as close to the origin of a shipment as possible, and ensuring that shipments are evaluated before reaching U.S. soil.
With improvement in these three areas, a modernized NAFTA can contribute to a comprehensive competitiveness strategy for American exports, workers, and businesses. UPS hopes the Administration considers these recommendations as it formulates its blueprint for the future of NAFTA.
We look forward to working with the Administration and other key stakeholders throughout the course of the negotiations in the hopes of reaching a modernized final agreement as soon as possible.
Want to know more? Find UPS’s full list of recommendations submitted to the U.S. Trade Representative’s Office here.
 eMarketer.com: Worldwide Retail Ecommerce Sales Will Reach $1.915 Trillion This Year
 DigitalCommerce360.com Five Years of E-Commerce Growth