Government Affairs

“What Are the Odds” NAFTA Renegotiations Impact Corporate Immigration?

This article originally appeared on https://blog.newlandchase.com.

It has been republished here with permission from Newland Chase, A CIBT Company. 

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As NAFTA negotiators continued high-level meetings this week in Washington, U.S. President Donald Trump once again raised the protectionist specter of immigration issues derailing the ongoing efforts by the United States, Canada, and Mexico to update the 25-year-old North American Free Trade Agreement (NAFTA). In his most recent salvo this week on NAFTA and immigration, the President tweeted:

“Mexico, whose laws on immigration are very tough, must stop people from going through Mexico and into the U.S. We may make this a condition of the new NAFTA Agreement. Our country cannot accept what is happening! Also we must get Wall funding fast.”

But does NAFTA and the current renegotiation talks really have anything to do with immigration? What are the odds that the current renegotiations will end in a tightening of workforce mobility for companies operating in the U.S.?

While NAFTA is first and foremost a free trade agreement, it does contain provisions dealing with immigration. In the United States, NAFTA serves as the current basis for four vital aspects of mobility applicable to workers and business travelers from Canada and Mexico:

  • Treaty National (TN) Visa for professionals,
  • Permissible activities for business visitors,
  • Intracompany transfers (ICTs) of employees to U.S. locations, and
  • Traders and Investors.

However, the Trade Facilitation and Trade Enforcement Act of 2015 (commonly referred to as the “customs act”), enacted after the original adoption of NAFTA, now prevents new provisions on immigration to be a part of any future trade agreements. Therefore, contrary to one interpretation of the President’s tweet, any renegotiated NAFTA will not contain restrictions on current immigration routes, new immigration quotas or limitations, or commitments on enforcing illegal immigration laws, border security, or funding of border walls. Any such agreements on immigration could only be made as “side agreements” made as conditions for signing a new NAFTA.   

The greatest risks of the current NAFTA negotiations for corporate immigration are then essentially:

  1. NAFTA is amended and the current provisions on immigration (TN Visas, international business activities, ICTs, trade and investors visas) are eliminated or curtailed in some manner – or
  2. Renegotiations fail and the U.S. walks away from NAFTA altogether, thus eliminating the current NAFTA immigration provisions.

Up to this point in the negotiations, #1 appears to be not even on the table. Thus far, talks have been dominated by auto content, trade dispute resolution, government procurement, fruit and milk import restrictions, and a five-year “sunset clause” – with no mention of immigration by any of the three sides.

So what are the chances that #2 rears its ugly head and the U.S. walks away? Not likely. At this point, we believe current conditions favor a tentative revised NAFTA agreement by the three sides sometime before July 1. With Mexican President Enrique Pena Nieto facing a tight election on July 1, and Trump and congressional Republicans facing the possibility of losing the House of Representatives in mid-term elections in November, motivation is high for the U.S. and Mexican leaders to cut some kind of a deal soon and claim a win. Introducing immigration into the negotiations at this late stage seems contrary to the interests of both.

Trump continues to hint that things are going well and a deal could come quickly, but is then also quick to posture that he is willing to “walk away” unless he gets what he wants. At this point, the only “odds maker” willing to go on record has been Mexican CCE business chamber trade head, Moises Kalach, who this week optimistically set the odds at a 75 percent chance of “reaching a deal soon”. While the writer of this blog hesitates to put the odds of an agreement this Summer that high… given a straight-up wager, I’d put my money on a renegotiated NAFTA (with no changes to immigration) sometime in May “to win”.

The second most likely scenario is… that there are just too many outstanding issues and not enough time before July 1… and negotiations are put on hold till early in 2019. Recall that there is currently no “sunset clause” in NAFTA and the current agreement (and its immigration provisions) continue as long as negotiations are ongoing or fail with no agreement and no party formally withdrawing from NAFTA. Either way, it’s still “a win”, albeit a potentially temporary one, for international business and corporate immigration. “No deal” is always better than a “bad deal”. Keep reading this blog, and Newland Chase will continue to keep a close eye on NAFTA and report on this and other important developments potentially impacting corporate immigration for our clients.

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This blog was prepared by the Knowledge Management team of Newland Chase. It is informational only and is not intended as a substitute for legal advice based on the specific circumstances of a matter. Readers are reminded that immigration laws are fluid and can change at a moment’s notice without warning or notice. Please reach out to your Newland Chase contact should you require any additional clarification or guidance.
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