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Amazon.com, Inc. has a stake in the renegotiation of NAFTA

Amazon CEO Jeff Bezos

The multi-billion dollar Seattle-based electronic commerce and cloud computing company Amazon.com, Inc. has a stake in the renegotiation of the North American Free Trade Agreement (NAFTA).

The Globe and Mail reports, “E-commerce is one of the least-discussed, but vitally important pieces of the NAFTA negotiations.”

What does Amazon want out of the talks?

The Globe and Mail’s national business correspondent Barrie McKenna says, “Higher Canadian duty-free thresholds on cross-border purchases, freer movement of data, harmonization of Canadian and U.S. intellectual property rules, unwinding cultural protections and fewer restrictions on locating data farms in this country for privacy and security reasons. …[Also, raising] the value of goods Canadians can buy online from the United States without paying taxes and duties. The current limit is $20 (Canadian). The Trump administration wants that raised to $800 (U.S.), matching its own threshold and providing a lucrative boost for U.S. online retailers, Amazon among them.”

McKenna adds, “For Amazon and other tech and e-commerce companies, the renegotiation of NAFTA is an opportunity to regain what they lost when Mr. Trump walked away from the Trans Pacific Partnership trade agreement earlier this year. The TPP, which Canada signed, included groundbreaking rules governing e-commerce and intellectual property.”

He highlights, “Since then, U.S. negotiators have quietly placed many of the same TPP provisions back on the table in the NAFTA negotiations. Among other things, the TPP prohibited restrictions on cross-border data flows and limited local data storage rules. The agreement also prohibited forced disclosure of computer source codes, barred new duties on electronic transmissions, extended so-called ‘national treatment’ rules to online services and required member countries to criminalize cybertheft of trade secrets. Some U.S. tech companies are now pushing for rules that go even beyond what’s in the TPP.”

CNN has previously explained, “Mexican shoppers pay a duty if they buy more than $50 of goods from online platforms or from U.S. retailers. Canadians only have to spend about $16 on U.S. goods before incurring a tax on their purchases. The shoppers pay the tax to their home country — Canada or Mexico. …Trump’s trade team says it wants to raise the duty free threshold to $800, which is the same level for Americans buying goods in Mexico or Canada. The idea is to give Mexican and Canadian shoppers a stronger incentive to ‘Buy American’. …Economists say more foreign shopping on U.S. platforms could create American jobs and accomplish one of Trump’s biggest goals: reduce the almost $64 billion trade deficit with Mexico.”

Daniel Schwanen, vice-president of research at the C.D. Howe Institute, says, “[Raising the duty-free threshold to $800 would be] unambiguously good for consumers.” Karl Littler of the Retail Council of Canada says, “[It would make] absolutely no sense, economically, for Canada. It would be a tax incentive for Canadians to shop literally anywhere else but here.”

CNN notes, “Canada, for its part, didn’t want to raise the duty-free level when discussing the Trans Pacific Partnership deal with the Obama administration.”

The next round of NAFTA talks will be in Ottawa on September 23 to 27.