Press Room

What Happens When There Is NO NAFTA In 2017?

Written by: Tim Golden

The 2016 U.S. election brought changes that were predicted by few. Now the future of U.S. immigration will be left to unpredictable mechanics of U.S. policy set to begin after president-elect Trump’s inauguration on January 20, 2017. Nonetheless, we offer broad practical effects of a potential U.S. withdrawal from the North American Free Trade Agreement (NAFTA). The one certainty is that for over twenty years NAFTA has become interwoven within the three economies. NAFTA has deep bonds throughout the three countries including shared labor and trade. NAFTA is the operational framework for one of the largest single markets in the world, and it won’t be easily interrupted.

The Trump campaign has discussed interest in renegotiation not elimination of NAFTA. As such, we will be able to monitor those potential negotiations, and advise on potential changes as they progress. Temporary tariffs or targeting of industries have a long history as political negotiation tactics. While U.S. withdrawal from NAFTA is the extreme, several facilities for entry into the U.S. for Canadian and Mexican nationals would be affected:

  • Elimination of the professional work-authorized category TN1 and TN2 for Canadians and Mexicans respectively. These professional positions are a key benefit of NAFTA, allowing degreed and professional employees to work across all three countries;
  • Visa exempt status for Canadian nationals would potentially be withdrawn through the elimination of NAFTA. Currently Canadians are visa exempt for a variety of temporary U.S. statuses including: schooling, employment, and recreation. This allows immediate access upon presentation of application materials, proof of status, and a passport. NAFTA is the framework under which this privilege is structured;
  • In-person processing of work authorization will likely come to an end. This convenience enjoyed by Canadian applicants prior to entry to the U.S. is also part of NAFTA. TN1 applications along with intracompany transfers for international organizations (L-1) may currently be submitted and processed in-person. Approval and work authorization is then granted by U.S. Customs and Border Protection personnel. It provides a cost-effective immediacy valued by U.S. and Canadian companies. NAFTA makes that possible.

Other non-NAFTA solutions are less convenient for Mexicans and Canadians, and those solutions will probably require a preliminary processing of a travel visa to accompany status. In essence, if the U.S. withdraws from NAFTA, the former NAFTA partners would assume similar status to other international travelers to the U.S. As discussed supra, international transferees for a commonly-owned company would remain an eligible classification for Canadians and Mexicans, TN1 and TN2 applicants could find some equivalency in the H-1B program, and the investor/trade programs (E visa) are tied to NAFTA but would likely be reconfigured to each country. There are limitations amongst those solutions and the withdrawal of NAFTA would undoubtedly do damage to the relationship amongst the three countries.

More specifically, the E program is a good solution potentially for Canadian-owned and Mexican-owned companies that seek to send Canadians and Mexicans respectively, but it involves preliminary infrastructure with the U.S. Consular Services. In addition, if H-1B is the only option, it is important to know that due to oversubscription, the H-1B petitions by employer need to be developed in early 2017 for a critical filing date of April 1, 2017.

Overall, speculation is what we are left with after some campaign promises. The prospect of country-to-country, non-NAFTA, trade agreements on an individual basis amongst the three countries is a possibility left to the unpredictable means of legislation. We will see very soon what the future holds for NAFTA in 2017, and we are here to provide strategy and guidance as that future unfolds.