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

Houston Chronicle - - OUTLOOK - By Car­los Gutierrez Gutierrez is for­mer U.S. Sec­re­tary of Com­merce. He cur­rently chairs the Na­tional For­eign Trade Coun­cil and the Al­bright Stone­bridge Group.

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.

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