The top executive of United Parcel Service Inc (UPS.N) said early this week he is optimistic the U.S., Canadian and Mexican governments can successfully renegotiate NAFTA, and said not having a free trade agreement in place would not be good for the three countries’ economies. “I‘m still optimistic, but I think we’re going to have to go through some difficult times just because each of the countries has issues specific to them,” UPS CEO David Abney told Reuters.
If a renegotiated treaty stimulates the economy, creates jobs and levels the playing field for the United States “then the North American market as a whole will be much stronger than without a free trade agreement,” he said. “Not having a free trade agreement would not be something we feel anyone would benefit from,” Abney added. Last week, trade ministers from the United States, Canada and Mexico wrapped up a contentious round of talks on the North American Free Trade Agreement dominated by aggressive U.S. demands.
They agreed to extend the talks into the first quarter of 2018. Republican U.S. President Donald Trump, who made trade a centrepiece of his 2016 presidential campaign, has repeatedly threatened to terminate NAFTA if Mexico and Canada refuse major changes. UPS is the world’s largest package delivery company and favors modernizing NAFTA, including adding provisions for e-commerce and clarifying rules for small businesses to operate across borders. “The supply chains are heavily intertwined between these three countries and I believe there’s a deal to be had that would be a win-win- win,” Abney said. UPS would like tax reform proposals that Republicans plan to steer through Congress to focus on cutting the effective corporate tax rate to 20 percent, and eliminating loopholes and tax breaks.
Atlanta-based UPS has had an effective tax rate of 34 percent for the last three years and has not benefited from loopholes or special preferences, Abney said. “If we’re talking about a 20 percent tax rate, then we wouldn’t have to hold our hands out looking for any kind of special benefit,” he said. “We would rather see that than a 25 percent rate with some loopholes in there that wouldn’t affect us much anyway.” UPS would also like to be able to repatriate foreign earnings to invest in its network without paying a penalty, he said. Abney spoke to Reuters while attending a celebration for Detroit-based driver Tom Camp, who has driven 55 years without an accident, a UPS record. The 77-year- old former Marine has driven 1 million miles and delivered 5 million packages.