With representatives from Mexico, Canada, and the United States currently meeting in Montreal for the sixth round of negotiations on the North American Free Trade Agreement (NAFTA) reforms, major differences remain, and the March deadline is approaching fast. With its sprawling transnational network predicated on free trade, FedEx is following the developments closely, especially regarding the growth of the digital economy and e-commerce, and the free movement of data across borders.
With a reworked trade deal all but certain, FedEx is using the opportunity to support amendments that take into consideration the increasingly digital nature of our economy. “NAFTA gives us the opportunity to enact modern rules that protect the flow of this data across borders,” said FedEx Express’ managing director, legal, trade and international affairs, Ralph Carter.
Carter and his team are advocating for simpler, more open trade rules that reduce barriers and help FedEx customers expand their international business.
FedEx wants Mexico and Canada to raise their “de minimis” levels – the value below which a good enters a country without being charged duty. In the U.S., goods valued below US$800 enter duty-free. But in Mexico, the limit is about $50, and in Canada goods over $15 are subject to charges. That means Canadian residents are charged duty and taxes on very low-priced e-commerce products from the U.S. or Mexico, putting retailers from other NAFTA countries at a disadvantage.
While many in the logistics industry resisted efforts to change NAFTA, which has generated trillions of dollars in trade, the industry is now pivoting towards reform, hoping to improve on the existing framework.