U.S. Rep. Kevin Brady recently joined business and trade leaders in Dallas to champion the unparalleled success of the North American Free Trade Agreement to the Texas and U.S. economies. Unfortunately, on the heels of recent negotiations by leaders from Canada, Mexico and the United States — and despite continued leadership from Brady, his Texas colleagues in the U.S. House and Texas Sens. John Cornyn and Ted Cruz — there is a real possibility that the critical pact will be terminated.
Given NAFTA’s major role in expanding economic opportunity for vital U.S. economic sectors – including agriculture, energy and manufacturing in the Lone Star State – Texans should hope that the trilateral agreement does not deteriorate in the worthwhile process of modernizing it. Privately owned freight railroads – a primary means for transporting goods throughout the continent – will do their part to ensure we do not lose NAFTA.
The evidence is clear: The U.S. Chamber of Commerce estimates that nearly 14 million jobs depend on trade with Canada and Mexico, while trade between the three countries exceeds $1.3 trillion annually. That is more than $3.3 billion per day.
A 2016 report from the U.S. International Trade Commission found that bilateral and regional trade deals like NAFTA save at least $13 billion in tariffs annually, massive savings enjoyed by American consumers. A NAFTA withdrawal would cost the average American household at least $650 per year due to increased prices and lower wages, according to a January report by Trade Partnership Worldwide.
The impact in Texas, the top export state in the country, is particularly compelling. The agricultural and food sector alone produced $11.3 billion in exports, with $4.7 billion – 42 percent – of these going to Canada and Mexico. New data suggests this economic activity supports 3.7 million Texas jobs earning $160 billion in wages.
Factor in other key sectors that rely on our North American neighbors for most exports – for example, automobile parts, plastics and computer equipment – and it is easy to see why Texas is invested heavily in preserving the free flow of goods across continental borders without steep tariffs. An economy without NAFTA would put a staggering 970,000 jobs at risk in the state, according to data from the U.S. Chamber.
Railroads, including Fort Worth-based BNSF, have invested massive sums of private capital – including $100 billion in the past four years alone – to facilitate much of this activity. Today, trade accounts for at least 42 percent of rail carloads and intermodal units — and roughly 50,000 U.S. rail jobs are directly associated with international trade.
We believe strongly that today’s sophisticated supply chains cannot be uprooted overnight, which is why we are supporting our customers dependent on trade. Controversial changes, such as the possibility for mandated renegotiation every five years, will only cause market uncertainties to the detriment of the U.S. economy. Put simply, less trade means fewer jobs and less revenues for a host of industries, which means a weakened U.S. economy.
Texas Gov. Greg Abbott recently wrote to the Trump administration, noting, “NAFTA has enabled growth and economic stability not only for our state, but also for the nation as a whole, and for our neighbors to the north and south as well.” He couldn’t be more correct.
The railroad industry stands united with Texas and its trade-dependent economy to preserve the benefits of NAFTA. We hope policymakers hear our calls.
Hamberger is president and CEO of the Association of American Railroads.