A successful modernisation of the free trade agreement could provide positive impetus for investments by German industry in North America. There are 5.800 enterprises with German capital within the NAFTA area. The renegotiations must primarily take account of changes such as the digitalisation of trade.

“The North American Free Trade Agreement is extremely important for German industry. In 2015, about 5,800 enterprises with German capital were operating in the NAFTA region. Successfully modernising NAFTA could provide positive impetus for investments by German industry in Canada, Mexico and the US,” said BDI Director General Joachim Lang in Berlin regarding the renegotiation of the NAFTA agreement between Canada, Mexico and the US.

The BDI Director General appreciates that countries should want to review their trade agreements. “The aim of overhauling the agreement must be to take account of changes such as the digitalisation of trade and new kinds of value chains,” said Lang. But he insists that the new deal should at least maintain the current degree of market liberalisation. “The aim must not be to curb cross-border trade by introducing new barriers.”

Many of the German enterprises operating in Canada, Mexico and the US serve markets across North America. The division of production network is especially close between Mexico and the US. “The automotive industry in particular benefits from the zero duties under NAFTA,” explained Lang.

North America is the second largest target region for German direct investment after the European Union. “The US government, too, should see it as a top priority to keep the NAFTA market open and to continue dismantling the remaining barriers for trade and investment,” urged Lang. Over two thirds of the exports of German enterprises in Mexico are estimated to go to Canada and the US.

Source: BDI

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