Improve NAFTA, but don’t do away with it

Best way to a bright energy future for all Americans is to maintain agreement that expands energy integration

On Tuesday, Energy Secretary Rick Perry, his Canadian counterpart James Carr and Mexican counterpart Pedro Joaquín Coldwell met in Houston to discuss how to improve what is already a major success story — the productive integration of the North American energy market. With major efforts underway to modernize the North American Free Trade Agreement, the message going forward must be that the best way to ensure a bright energy future for all Americans is to maintain an agreement that strengthens and expands, rather than undermines, our three nations’ energy integration.

Over the past 20 years, trilateral trade in crude oil, natural gas, refined petroleum products and electricity has made North America a global energy powerhouse, one likely to reach energy self-sufficiency as early as 2020. North American energy exports support 10.3 million Americans working in the natural gas and oil industry. Free trade of refined products with Canada and Mexico supports 107,800 direct refinery jobs across the United States, many of them in Texas.

While advances in technology, infrastructure and transportation have all played a role in the success of the this energy region, it is clear that the 23-yearold NAFTA accord was the key policy catalyst. The agreement’s tariff, regulatory and investment provisions have been a great boon to the energy sector. And, in laying the groundwork for more streamlined trade, NAFTA prompted efficiencies that drastically reduced energy costs for consumers and created greater demand in all three countries.

The integration of this energy region is only part of the NAFTA story. During the last two decades, overall U.S. trade with Mexico and Canada has more than tripled. International trade supports more than 1 million jobs in Texas, and exports to our NAFTA partners account for almost 50 percent of Lone Star state exports. In fact, Houston is the largest exporter of any metropolitan area in the country, exporting in 2015 more than $97.1 billion in goods.

Countless Texas jobs are indirectly supported by the wider trade in goods, services and energy throughout North America sparked by NAFTA. Consider, the hundreds of railcars and trucks that transport fuel, petrochemical products and energy-related equipment each day between the three countries. Or the thousands of workers across the U.S. who provide an array of professional services, from construction to engineering to accounting services, which in turn help make U.S. energy producers among the most successful in the world. All of these workers have benefitted from NAFTA’s facilitation of cross-border trade and reduction of regulatory burdens.

The energy sector will benefit from continued and improved trilateral energy collaboration that enhances competition in global energy markets. But this expansion will only be possible if the agreement is revised and improved so that companies in all three countries can rely on a stable framework for business.

Unfortunately, faced with the opportunity to improve and modernize NAFTA, the Trump administration’s signal that it wants to make the agreement more restrictive — or to withdraw entirely — threatens to move energy trade in the wrong direction. It leads to the question of whether the administration has fully weighed the consequences of these actions.

A more restrictive deal will stifle industry progress, while withdrawal would increase cross-border transactions by reintroducing tariffs. It would remove protections for U.S. energy companies in competition for contracts or investing in Canadian and Mexican energy markets. And it would stymie new efforts on regulatory cooperation.

Worst of all, it will put at risk hundreds of thousands of energy, transport and service jobs in Texas, and across the country.

Competitiveness is the key to prosperity. Globally competitive economies grow faster and create more jobs. For the United States, the first step should be to strengthen, not undermine, the relationships that spurred development of one of the most prosperous commercial regions in the world. Competition is vital throughout our economy. Nowhere is that more so than in the sector vital to our energy future.

Countless Texas jobs are indirectly supported by the wider trade in goods, services and energy throughout North America sparked by NAFTA.