Guest Columnist July 26, 2019OpinionComments Off on Op-Ed: For the future of our Region’s Businesses, Congress Must Ratify the USMCA
To keep our economy growing, Congress must ratify the United States-Mexico-Canada Agreement (USMCA). For over 25 years, the United States, Mexico, and Canada have prospered under the North American Free Trade Agreement (NAFTA).
In addition to helping facilitate trade and business between our nations, NAFTA has empowered our continent to compete with Europe, Asia, and emerging markets the world over. The USMCA is a chance to modernize our continent’s trade agreement, with higher standards, and better policies that will help workers and businesses be even more competitive in the 21st-century economy.
As CEO of the only privately-funded economic development and policy organization that represents three states and two countries along the border, I’ve seen that free trade principles are the foundation of a stable and fruitful relationship with our North American neighbors. The Borderplex region (El Paso, Ciudad Juárez, and Las Cruces, Doña Ana County, NM) is the gateway of trade for the Americas and the fourth-largest manufacturing hub in North America.
In the years that the United States, Canada, and Mexico have operated under clear trade guidelines, exports to Canada and Mexico have tripled, manufacturing output in the United States has more than doubled, and our economy has improved significantly, and that’s no coincidence.
That is why I traveled to Washington, D.C. this past week—to encourage Congress to support the USMCA and build upon the quarter-century-old trade agreement. This bold and improved trade deal will address many of the outdated elements of NAFTA and ensure a level playing field for U.S. manufacturers to participate in international markets.
Notably, the USMCA will bring North American trade policy into the digital age by protecting intellectual property and promoting confidence in each economy’s market. This includes best-in-class protections for patents, trade secrets, trademarks, copyright, and regulatory data—the safety of which has fostered some of the greatest innovations in American history. These new rules will allow the market of ideas to thrive, pushing our communities toward greater innovation and technological improvement.
The USCMA will also allow data to move freely between partnering countries and protect proprietary source code, allowing businesses to focus resources on innovation instead of overbearing data regulation. The deal also contains new chapters on good regulatory practices and technical barriers to trade. These new rules will prevent discriminatory and unfair practices, and they will improve the reliability and accessibility of new markets for businesses in our region and across America.
The reality is, without a modernized trade agreement, Texas manufacturers alone, could face up to $37.3 billion in extra taxes, according to the National Association of Manufacturers. As a result, many manufacturers and businesses would lose sales to our global competitors.
Additionally, the USMCA will help keep the costs of goods and services low. Tariffs are after all nothing more than a consumer tax. An imposition of tariffs, or a consumer tax, will slow the purchases of goods and services, including essential commodities like food, clothing, and transportation.
The next step is congressional action to ratify this critical agreement. We need our U.S. Representatives and Senators in Congress to immediately declare their support and vote to ratify the accord soon. We cannot ignore the economic importance of free trade with Canada and Mexico. The fate of many businesses in the Borderplex region and the nation are on the line.
Jon Barela is the CEO of the Borderplex Alliance based in El Paso, Texas.
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Staff Report May 24, 2019NewsComments Off on Foreign Trade Zone 68 to hold 10th Annual El Paso-Juarez Trade and Industry Summit
The 2019 El Paso-Ciudad Juárez Summit, returns for the 10th year, thanks to the City of El Paso and Foreign-Trade Zone 68
According to city officials, the summit is “a part of the City of El Paso’s strategic goal to cultivate an environment conducive to strong, economic development…[and] will provide local businesses and industry an opportunity to meet together and learn about best practices and trends in international trade.”
The El Paso–Ciudad Juárez Industry Summit will feature speakers including Kathleen Neal, Director of Global Compliance for Regal-Beloit; Jon Barela, CEO of the Borderplex Alliance; and Matt Keats, of Keats Southwest.
The morning will feature two panels who will discuss the opportunities of doing business in the El Paso–Juárez region.
Additionally numerous regional firms, including commercial real estate development companies, logistics providers, manufacturing suppliers, and industry service providers from El Paso and Juárez have signed on as exhibitors and will be on hand to provide key information and resources.
“This event also serves as part of the FTZ 68’s mission to help expedite and encourage foreign commerce, and to support local business and industry in achieving global competitiveness,” officials shared via a news release. “More specifically, FTZ 68 has been eliminating, deferring, and reducing customs duties for worldwide businesses since 1982.”
For those interested in registering for the 2019 El Paso–Ciudad Juárez Industry Summit this event, they can do so online, via this link.
For additional information on the 2019 El Paso–Ciudad Juárez Industry Summit, please call EPIA’s Foreign-Trade Zone office at 212-0480 between 8 a.m. and 5 p.m. or send an email to: firstname.lastname@example.org
WHO: The El Paso International Airport and City of El Paso’s Foreign Trade Zone 68
WHEN: Thursday, May 30, 2019 – 8:30AM -1PM
WHERE: EPWU Tech2O Center, 10751 Montana Blvd.
WHAT: The 10th Annual 2019 El Paso- Ciudad Juárez Trade and Industry Summit
The Texas Tribune August 27, 2018NewsComments Off on U.S., Mexico Reach Partial Agreement to Resolve Trade Conflict, a Step Toward NAFTA Deal
Trump administration officials reached a partial accord with Mexico on the terms of a new North American trade deal, including a provision that would require more auto manufacturing in high-wage factories, according to three people briefed on the agreement.
The deal is the most significant step toward a new agreement since talks with Mexico and Canada began one year ago. But negotiators remain far from finishing their work.
Trump, in a Twitter post on Monday, wrote that a major accord with Mexico could be imminent, writing, “A big deal looking good with Mexico!”
The president was due to make an announcement from the Oval Office on Monday morning. Trump has held formal announcements for incomplete trade deals before.
“We’ve reached an agreement on all the key issues,” one official briefed on the talks said.
But the agreement left unresolved a number of contentious U.S. demands, and Canada, which has not participated in the deliberations for five weeks, must sign on before a new North American trade deal is complete.
As U.S. negotiators turn to bringing Canada back into the talks, Canadian Foreign Minister Chrystia Freeland is expected to arrive in Washington later Monday or Tuesday morning. The aim is to have a “handshake deal” among the three countries by the close of business Friday, an official familiar with the talks said.
A spokesman for Freeland said Canada was “encouraged by the continued optimism shown by our negotiating partners” but made clear that a final agreement would require careful review and more discussions.
“We will only sign a new NAFTA that is good for Canada and good for the middle class,” the spokesman said. “Canada’s signature is required.”
If Canada doesn’t sign off, it is unclear what Trump might do, as he has threatened to try to cancel the entire trade pact.
But if Canada does agree to a new deal, it would allow Trump to officially notify Congress that a deal had been reached, starting a 90-day clock under the rules governing the American president’s trade negotiating authority and allowing Mexican President Enrique Peña Nieto to sign the deal before his successor, Andrés Manuel López Obrador, takes office Dec. 1.
López Obrador has been supportive of the negotiations but would be likely to seek changes if the treaty is not completed before he assumes the presidency. His concerns about cementing Mexico’s energy privatization in a new NAFTA were among the final sticking points in the talks.
With only five days remaining for the United States and Canada to iron out their differences, negotiators realize they have exhausted all their wiggle room. “Realistically, it’s certainly tight,” the official said.
Larry Herman, a Toronto trade lawyer and former Canadian trade negotiator, said Canada has “every right” to examine the details of what was agreed to between Mexico and the United States and will then decide how to proceed.
“I think it’s appalling that Canada has been kept at arm’s length from these talks over the past number of weeks,” Herman said.
While Herman said he would expect Canada to resume participation in the talks, “there’s no way a NAFTA agreement can be ready for signature by the end of this month. It’s not going to happen.”
White House officials had insisted that the new NAFTA deal would have to expire after five years, a sunset demand that both Canada and Mexico had rejected in recent weeks. It could not be learned whether Trump administration officials had backed down from this demand or whether it would be part of the final discussions.
Trump has made renegotiating NAFTA a centerpiece of his economic and foreign policy agenda, arguing that the aging trade deal disadvantages American workers by luring U.S. jobs and companies overseas.
This approach has alarmed many Republicans, who support NAFTA’s free trade roots and worried about how Trump’s approach would impact farmers. But Democrats have mostly been split, as some agreed with Trump’s focus on manufacturing jobs but others worried about Trump’s take-it-or-leave-it negotiating style.
Even if Trump cuts a final deal with Mexico and Canada, Congress will likely have to vote to approve any changes.
In an effort to force both Mexico and Canada to agree to a new deal, Trump has imposed tariffs on all steel and aluminum imports from their countries and suggested that he would waive these tariffs only if they make concessions as part of a new trade deal.
Talks have dragged on for months, at times becoming quite personal, particularly when Trump hurled a series of insults at Canada’s prime minister, Justin Trudeau, leading many to believe that a deal would ultimately prove out of reach.
But it was Mexico that offered Trump the best opening in recent weeks.
In recent days, U.S. and Mexican diplomats reached agreement on key elements of a new treaty, including an increase in the percentage of each car — to 75 percent from the current 62.5 percent — that must be made in North America to qualify for duty-free treatment.
The two sides agreed to a provision that would require a significant portion of each vehicle to be made in high-wage factories, a measure aimed at discouraging factory jobs from leaving the United States for Mexico.
Negotiators also resolved a dispute over how to treat cars and trucks produced in Mexican plants that do not comply with the new treaty’s content rules. American companies importing those vehicles will pay a 2.5 percent tariff.
“What most of us are focused on now is: what happens next?” said Dan Ujczo, a trade attorney with Dickinson Wright.
Having resolved their major sticking points with Mexico, the Trumpadministration is now expected to press Canada to accept quickly the consensus terms. But Trudeau, whom Trump criticized in harsh terms following the Group of Seven summit in Quebec in June, does not want to be viewed at home as conceding to the unpopular American president.
“Can we actually get a deal done with Canada when they’re negotiating with a gun to their head and a ticking clock?” Ujczo said. “Canada’s got some choices to make.”
Another long-standing point of contention was the U.S. demand that the treaty sunset every five years unless explicitly reauthorized by the three governments. Business leaders complain such language would make it too difficult to plan future investments.
“The competitiveness of North America will be diminished if companies fear the rules are at risk of constant change,” the Information Technology Industry Council said Friday. “These potential provisions risk jeopardizing the incentives for businesses to innovate, invest, hire, and produce across North America.”
The NAFTA renegotiation has been a rocky one. The president over the past year repeatedly lambasted the original 1994 treaty, calling it a “bad joke” and blaming it for the loss of millions of American factory jobs.
One year ago, U.S. Trade Representative Robert E. Lighthizer kicked off the negotiations by calling for a major overhaul of trade rules to take account of nearly a quarter-century of economic changes and to rectify the imbalance in trade between the United States and its southern neighbor.
Trump, he said, was “not interested in a mere tweaking of a few provisions.”
Though trade deals are complex affairs that typically require years of glacial bargaining, administration officials initially hoped to finish the job by the end of 2017. They failed to meet that ambitious timetable and also blew through revised deadlines for the end of March and late May.
This time, the deadline may be real, given a congressional requirement for 90 days notice of an impending trade deal. If the administration doesn’t formally notify Congress that it has reached agreement with both Canada and Mexico by the end of August, Peña Nieto, the outgoing Mexican president, will not be able to sign it.
Negotiators want to get a deal wrapped up before López Obrador, who might demand additional changes, takes office.
Alan Freeman in Ottawa contributed to this report.
Author: DAVID J. LYNCH AND DAMIAN PALETTA, THE WASHINGTON POST
The following are comments from local, state and national leaders, and groups regarding Monday morning’s North American Free Trade Agreement (NAFTA) preliminary agreement.
Cornyn Statement on U.S.-Mexico Trade Announcement
‘Millions of jobs in Texas depend on an updated NAFTA, and it’s important that we get this right.’
WASHINGTON – U.S. Senator John Cornyn (R-TX) released the following statement after the President announced a preliminary agreement between the United States and Mexico to update the North America Free Trade Agreement (NAFTA):
“This is a positive step, and now we need to ensure the final agreement brings Canada in to the fold and has bipartisan support. A trilateral agreement is the best path forward, and any modernized agreement should do no harm to states like Texas whose economy has seen the benefits of cross-border commerce. Millions of jobs in Texas depend on an updated NAFTA, and it’s important that we get this right.”
“Terminating NAFTA will have a real life, long lasting impact on farmers, ranchers, manufacturers, energy producers, small business owners in Texas. It generates $112 billion in exports for our state annually with 1 million jobs in our state connected to trade with Mexico alone.”
Texas Farm Bureau statement on trade deal with Mexico
The following statement regarding the announcement of trade progress with Mexico can be attributed to Texas Farm Bureau President Russell Boening.
“Today’s announcement is the type of news that Texas farmers and ranchers have been waiting to hear. Texas Farm Bureau is encouraged by the news of a new trade deal between the U.S. and Mexico.
“Our state’s trading relationship with Mexico is very important to Texas agriculture and to the overall health of our Texas economy. While we await details of the new trade agreement with Mexico, we’re pleased to see progress on actual trade agreements and not the escalating nature of retaliatory tariffs.
“The North American Free Trade Agreement has benefitted U.S. agriculture, and we hope this new deal promotes even more trade with our neighbor to the south. We hope Canada comes to the table soon and joins this agreement or enters into a new agreement with the U.S. on its own.”
Borderplex Alliance CEO Statement on Preliminary NAFTA Deal
Borderplex Alliance CEO Jon Barela released the following statement today in reaction to the United States and Mexico reaching a preliminary agreement to revise NAFTA:
“NAFTA has been an unqualified success for the U.S., Mexico, and the Borderplex region. More than 5 million American jobs depend on trade with Mexico. In Texas, an estimated 380,000 jobs depend on trade with Mexico. In New Mexico, 36,200 jobs, and in the Borderplex region, nearly 1 in 4 jobs depend on cross-border trade with Mexico. A successful ratification of a new NAFTA will solidify the Borderplex region as the 4th largest manufacturing hub in North America. NAFTA is essential to the economic competitiveness of North America, the dynamism of our region, and economic growth for our three great nations. As we await details on the terms of the deal, I remain cautiously optimistic about the prospects for modernized and strengthened NAFTA.”
The North American Free Trade Agreement (NAFTA) was the predominant subject during the keynote address of Wednesday’s U.S.-Mexico Border Summit at the El Paso Convention Center.
Former Mexican President Ernesto Zedillo addressed the hundreds in attendance about the current relationship between the two countries and the Trump Administration’s expressed desire to end the NAFTA agreement.
“This is not ‘business as usual’ for our relationship. It’s always bound to be complex and challenging, but for the most part in previous administrations there was a lot of effort put into mutual respect and understanding,” Zedillo stated.
Prior to being elected as Mexico’s President in 1994, Zedillo, obtained his master’s and PhD degrees from Yale University in economics. He went on to serve with the Bank of Mexico and was named deputy-secretary of Budget Control. Zedillo led the PRI party’s macroeconomic approach to government.
NAFTA was negotiated by President George H.W. Bush and ratified in 1994 by President Clinton. For the most part, most economists agree that the agreement has been beneficial to the U.S. and say withdrawal or renegotiation of the agreement would negatively impact the United States economy, but more so Mexican economy.
“Is this going to be the end of the world?” Zedillo asked the audience. “No, I think it would be bad and uncomfortable for Mexico, but I think there are ways we can compensate if NAFTA is destroyed by the U.S. Government.”
During the 30 minute speech, Zedillo did not once address President Trump by name, instead, preferring to use the term “The American Executive.”
He is not the first former Mexican President that appears to have bad blood with the current administration. Vicente Fox, who succeeded Zedillo as Mexico’s President in 2000 has famously argued on Twitter with Trump’s insistence that Mexico was going to pay for the wall between the two countries.
Wednesday’s summit, which was hosted by the Borderplex Alliance, also featured other round tables and breakout sessions which included political and economic leaders from both sides of the border. The event is held annually to discuss issues facing the Border region.
Author/Photographer: Andra Litton – Special to the El Paso Herald-Post
The Texas Tribune July 10, 2018NewsComments Off on “No Question, it’s Going to Hurt”: Trump Trade War with China Worries Texas Agriculture
There’s a Chinese proverb: Sow melons, reap melons. Sow beans, reap beans.
In other words, expect tit for tat.
President Donald Trump — and by extension many of the nation’s farmers — is seeing that lesson in action after he launched a bevy of tariffs against China on Friday, prompting the People’s Republic to retaliate with its own tariffs on imports from the United States. Among those American goods are some key Texas exports, including cotton, corn and sorghum. Some of the Chinese goods targeted in Trump’s tariffs are vital parts for Texas’ agriculture industry, such as livestock equipment.
“No question, it’s going to hurt,” said Gene Hall, a spokesperson for the Texas Farm Bureau.
Throughout his presidential campaign and since he was inaugurated, Trump has threatened to amp up protectionist measures on the world’s second-largest economy. It was a campaign issue that resonated with many Trump voters, including many Texas farmers.
“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” Trump tweeted in April. “Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”
On Friday, the United States levied tariffs on $34 billion worth of Chinese goods. China responded with its own tariffs on $34 billion in U.S. exports.
The Chinese Ministry of Commerce called the United States a “typical trade bully” set on igniting the largest trade war in history and violating World Trade Organization agreements.
“Instead of serving the interests of U.S. companies and people, the move will prove to be counter-productive and damaging,” the Chinese commerce minister said in a statement.
For Texas farmers, the trade war plays havoc with their bottom line. Tens of billions of dollars of goods trade between China and Texas each year. Texas exported $42 billion in goods to the country in 2017, second only to Mexico.
Cotton is the state’s 10th largest export. Nearly half of the U.S. cotton exported to China comes from Texas. Soy is a smaller market for Texas but China is the state’s largest international soy customer. Texas exports about $157 million worth of corn a year, making it the 13th largest exporter of the crop in the country, though U.S. corn exports to China have dropped precipitously over the past few years due to increased regulations on the Chinese side.
Wesley Spurlock, a corn farmer in Stratford and chairman of the National Corn Growers Association, said the weeks of talk of a trade war had already hurt Texas farmers. The prices of corn and soy have both decreased by around 15 percent since mid-May. The price of cotton has decreased by over 11 percent since mid-June. Spurlock credits those declines with the threat of tariffs, a situation that could be exacerbated with their enactment.
Dee Vaughan, a corn and cotton farmer from the Panhandle, said even the threat of tariffs has caused shipping companies to be more hesitant buying his crop. Prices had already been low going into the spring, he said, though farmers were “cautiously optimistic” about this year’s revenues. But “simply because of the uncertainty, if nothing else, all the rhetoric that’s going on” for the past few months has been keeping farmers worried that they’ll be able to make fewer sales.
“You couldn’t pick a worse time for agriculture to be in a trade dispute,” said Hall, the Texas Farm Bureau spokesperson pointing to a 50 percent decline in agricultural income since 2013. He said the farm bureau always supports negotiating trade disputes over gratuitous tariffs — but thatmany farmers hope the president’s actions will force China, which has historically acted in ways that have harmed Texas agriculture, to the negotiating table.
“There is some patience in the agricultural community for what the president’s doing, but there is some angst as well,” Hall said.
As China’s middle class expands and demand for protein grows, soy has become essential in providing feed for the country’s growing beef industry, Spurlock said. China imports more than half of American soybeans, and the United States is the second-largest soy exporter to China, representing about 34 percent of the country’s soy imports. Spurlock fears the new tariffs will push Chinese consumers to look to other producers to get their soy, such as Brazil, which already accounts for more than half of all soy imports in China.
The tariffs will also make agricultural equipment more expensive, but Spurlock said those rising costs are more ofan inconvenience than a damning new expense. Vaughan echoed that sentiment, saying he is more concerned about not being able to sell his crop than the rising cost of farm equipment since he doesn’t need to buy equipment very often.
Though the agriculture industry will face a bitter few months with rising costs and damaged competitiveness, Spurlock said he hopes the tariffs work to improve and smooth trade between the United States and China, whose byzantine bureaucracy makes penetrating the market slow and cumbersome. If the tariffs work to bring China to the table to expedite trade allowing corn to become a major export to China, Spurlock said the United States could become the world’s leading food producer.
But when asked if he is optimistic the tariffs will work, Spurlock said, “I have to be optimistic.”
Disclosure: The Texas Farm Bureau has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
This week is deemed National Agriculture Week and we in the 23rd District of Texas are certainly grateful for the hard work of farmers and ranchers year-round.
Folks in the agriculture industry toil around the clock to produce goods that we consume every day from the clothes on our backs to the food on our tables. The industry supports more than 3.75 million Texas jobs paying $160 billion in wages and we simply cannot overstate its importance on our economy.
Many folks aren’t aware of the benefits of trade for Texas agriculture. In 2016, Texas exported $11.3 billion in total food and agriculture goods, and more than 40 percent went to NAFTA partners. While there’s no question that we need to modernize NAFTA to account for evolving industries and emerging technology, scrapping the deal altogether would be particularly harmful for Texas farmers and ranchers.
For example, one sector that benefits immensely from trade with our Northern and Southern neighbors is beef. Texas cattlemen and women sell roughly $338 million in beef to Mexico every year – approximately 35 percent of all American beef and veal exports are to Mexico alone. Similarly, total US beef exports to Canada and Mexico have almost tripled since NAFTA was signed.
This is why Texas raises more calves than anywhere in the United States and is the 14th largest cattle producing region in the world. Without unfettered access to Mexican and Canadian markets, Texas’ $10.5 billion beef industry would take a major hit.
Our cotton growers have also benefitted tremendously from free trade with Mexico and Canada. Mexico is a reliable and important market for U.S. cotton fiber, buying one million bales each year. Mexico is also our country’s second largest cotton textile and apparel market, buying fifteen percent of the nation’s total exports.
Likewise, Canada and Mexico accounted for almost 20 percent of U.S. fresh fruit exports and roughly 65 percent of fresh vegetable exports, totaling $7.2 billion. Unsurprisingly, when Mexico applied temporary tariffs to some of our produce in 2009, those industries lost $65 million that season. For Texas farmers, this demonstrates the direct correlation between free trade and economic growth.
In a lecture in 1970 when he won the Noble Prize, agronomist Norman Borlaug said, “Civilization as it is known today could not have evolved, nor can it survive, without an adequate food supply.” In my district, over 9,000 farms and ranches employing thousands of hard-working people ensure our civilization is continuing to evolve.
In order for them to continue this vital task they need access to new markets, which is why I will continue to advocate for a modernized NAFTA. Agriculture is critical to our economy and its critical to our survival.
We should all have the backs of the hardworking folks that do this noble work.
A former undercover CIA officer, entrepreneur and cybersecurity expert, Will Hurd is the U.S. Representative for the 23rd Congressional District of Texas. In Washington, he serves on the House Permanent Select Committee on Intelligence, as Vice Chair of the Maritime and Border Security Subcommittee on the Committee for Homeland Security, and as the Chairman of the Information Technology Subcommittee on the Oversight and Government Reform Committee.
What do you call the facilitation of $2 million of goods and services across our borders every minute? In Texas, we call it NAFTA.
In Texas, more than one million jobs, and fourteen million nationwide, depend on trade with Mexico and Canada.
Many of these Texas jobs are in the 23rd Congressional District. These jobs feed families in El Paso, San Antonio and everywhere in between. They include manufacturing, logistics, agriculture and energy. They fuel our local economies in West Texas, along the Rio Grande and all the way up I-35’s NAFTA superhighway.
Many folks don’t realize the magnitude of the impact that NAFTA has had on our economy. Since it was signed into law in San Antonio 24 years ago, America’s trade with Mexico and Canada has more than tripled. US-Mexico trade alone increased more than 280 percent between 1993 and 2016.
In 2015, Texas-Mexico trade amounted to approximately $94.5 billion, making Mexico Texas’ largest trading partner, surpassing the next four largest combined – Canada, Brazil, China and South Korea. And it’s paid off. With a $1.6 trillion GDP, if Texas was its own country, we’d have the tenth largest economy in the world.
But exports are only one piece of the pie. Imports create jobs too. In the last decade and a half, over 70 percent of imports from Mexico were intermediate goods, meaning, they weren’t finished and ready for market when they came into our country. They still required additional parts, assembly, transportation, and packaging.
Sometimes we think of imports and exports as static numbers, when in fact, goods often go back and forth across the border multiple times as they are produced. Another example of this is that forty percent of U.S. imports from Mexico were originally made in the U.S. – demonstrating further that the U.S., Mexico and Canada are actually building things together.
Lately, NAFTA has gotten a bad rap, because like all other 24-year-old business deals, it needs to be modernized to keep pace with policy changes, evolving industries and emerging technology. For example, in 1994, commercial use of the internet was not taken into account during negotiations. Neither was the ability for the U.S. to export crude oil or the natural gas discoveries in the Eagle Ford, Permian and Delaware Basins in Texas.
These are opportunities for us – and all Americans – to win big with NAFTA 2.0.
NAFTA is the lifeblood of many communities across TX-23 but there are areas where we can strengthen it. This week, I’ll be spending time with business owners and operators in Del Rio, Ciudad Acuña and Eagle Pass before heading up to Montreal for the next round of NAFTA discussions.
I look forward to witnessing how modern-day goods are jointly-produced, transported and eventually available to consumers worldwide. As we enter the next round of renegotiations, I will be there to remind our neighbors to the North and South about the tremendous impact that NAFTA has had on South and West Texas communities, and what we have to lose if negotiations fall flat.
A former undercover CIA officer, entrepreneur and cybersecurity expert, Will Hurd is the U.S. Representative for the 23rd Congressional District of Texas. In Washington, he serves on the House Permanent Select Committee on Intelligence, as Vice Chair of the Maritime and Border Security Subcommittee on the Committee for Homeland Security, and as the Chairman of the Information Technology Subcommittee on the Oversight and Government Reform Committee.
The Texas Tribune January 11, 2018NewsComments Off on In Texas and Beyond, Some Watch Mexican Presidential Campaign with Free Trade Concerns
CIUDAD JUAREZ, Mexico — On a recent evening in this sprawling border city’s downtown, Alfredo Santiago treated passers-by to an electric, instrumental version of Santana’s cover of “Oye Como Va,” the famous Tito Puente standard. That was before he launched into the unmistakable riffs of ZZ Top’s “La Grange.”
It was just another day’s work for Santiago, 65, who started playing guitar for money when he was no longer able to work in the construction industry, where he toiled for decades. He likes his current gig, he said, but it’s also the only way he can make a living these days. On a good day, he said, he’ll collect about 100 pesos.
That’s one reason why, like the rest of his fellow Mexicans, Santiago is now paying closer attention to the field of candidates vying to become Mexico’s next president, who will be chosen July 1. Santiago said he’s more concerned about the country’s economy than security, although the latter is a close second.
He’s pulling for former Mexico City Mayor Andrés Manuel López Obrador, or AMLO, as he’s known in this country. A poll conducted last month showed the outspoken populist and candidate for the National Regeneration Movement, or MORENA, with an 11-point lead over the Institutional Revolutionary Party, or PRI’s, Jose Antonio Meade. President Enrique Peña Nieto, also a PRI member, cannot run again because of term limits.
Some business leaders in Mexico, Texas and elsewhere in the United States are nervous about what a potential victory by López Obrador could mean for international trade, the bread and butter for several border economies. Texas is Mexico’s No. 1 trade partner. From January to November of 2017, the Laredo and El Paso customs districts saw $270.2 billion and $85.5 billion in two-way trade with Mexico, respectively, according to WorldCity, a Florida-based economics think tank that uses U.S. Census data to track trade patterns.
“He has tapped into a growing nationalist sentiment in Mexico, perhaps due to President [Donald] Trump’s rhetoric [about Mexico],” said Jon Barela, the CEO of the Borderplex Alliance, a nonprofit focused on promoting business and economic development in Ciudad Juárez, El Paso and New Mexico. In September, Barela compared López Obrador to former Venezuelan dictator Hugo Chávez, a socialist and American adversary who was highly critical of U.S. economic and foreign policies.
Obrador has initially said the North American Free Trade Agreement is a bad deal for Mexico and called for the delay of talks to rework the trade pact until after the Mexican elections. When coupled with the anxiety that Trump’s view of NAFTA has caused some Texans, the Mexican elections have sounded alarm bells for border industries who have thrived since the pact’s inception in the early 1990s.
“I do think if he wins, it will be a very different presidency and administration, and it will be one that fundamentally questions Mexico’s model of the last three decades,” said Shannon O’Neil, the vice president, deputy director of studies, and Nelson and David Rockefeller senior fellow for Latin America Studies at the Council on Foreign Relations, a think tank. “And that’s a model that’s very closely tied to Texas and to trade back and forth with Texas, to companies that exist on both sides of the border — that is a model that he will question.”
Barela said he was encouraged by recent statements the front-runner has made on NAFTA, indicating he’s softening his stance and open to a dialogue on the trade pact.
According to his campaign platform, López Obrador acknowledged that NAFTA was important to the Mexican economy and “a demonstrated useful instrument” Politico reported.
“There’s a long time between now and the Mexican election, but I am hopeful that should he be elected that a level of pragmatism certainly would be in order,” Barela said. “He seems to have tempered some of this remarks on free trade.”
But O’Neil said that might have more to do with messaging and a more sophisticated campaign style than when López Obrador ran for the presidency in 2006 and 2012.
“He has some people around him who have a different communication style, and he’s set out a proposal that’s more broad,” she said. “But when you see him out on the stump, he really hasn’t changed.”
Meanwhile, Meade, who was polling at about 20 percent, is considered the candidate that would keep Mexico’s current economic policies largely unchanged. That’s why O’Neil thinks Texas business and political leaders might pull for him or Ricardo Anaya, a former National Action Party, or PAN, leader who has aligned with the center-left Party of the Democratic Revolution, or PRD. Anaya is also supportive of Mexico’s current institutions and was polling at 19 percent. Two other major candidates — Margarita Zavala, the wife of former President Felipe Calderón, and Nuevo Leon Governor Jaime “El Bronco” Rodríguez — polled at 10 and 2 percent, respectively.
“I think the challenge Meade has is that PRI legacy, and it’s a legacy of increasing violence, it’s a legacy of high-profile corruption,” O’Neil said.
Meade, a former economic and foreign affairs minister, is a familiar name in Texas political circles. In 2015, he visited Austin and met with Gov. Greg Abbott, where the two talked about several issues, including security, trade and infrastructure.
O’Neil said Meade could have momentum because he isn’t an elected official. But as the PRI’s current choice, he must also push back against that party’s legacy of corruption and ineffectiveness in combating violence, she added.
For Santiago, the street musician, the violence and the PRI’s inability to effect change on that issue is a reason he’s aligning himself with the populist candidate.
“It’s gotten better, but not by a lot,” he said. “It’s been a disaster” overall.
Once known as the deadliest city in the world, Ciudad Juárez has enjoyed some relative calm since a cartel war was responsible for the deaths of more than 10,000 people from 2008 to 2011. But 2017 was the deadliest year since 2012, with more than 770 homicides, and 25 people were murdered in just two days there last week.
That failure to sustain peace in the country will ultimately be part of current President Enrique Peña Nieto’s legacy, said Vanda Felbab-Brown, a a senior fellow in the Center for 21st Century Security and Intelligence in the Foreign Policy program at Brookings Institute. And that could sink that party’s chance at re-election.
“The Peña administration failed fully in its key security promises,” she said. “One must say [it failed] in all of its promises regarding security.”
Though El Paso remained one of the safest cities in the country during the mayhem across the Rio Grande, it didn’t stop people who didn’t know any better from assuming the violence was spilling over into Texas, Barela said. He’s always worried about what a repeat scenario could mean for investment in Texas.
“I think people are frankly fed up with a lot of talk and no action when it comes to the violence and the threats of violence [in Mexico],” he said. “And because of violence, businesses people are sometimes skeptical to invest in our region.”
O’Neil said that with so many candidates, the eventual winner could only need to secure about 30 percent of the vote, as only a plurality is needed to win the office.
“That isn’t much of a mandate,” she said.
Read related Tribune coverage:
A number of Texas-based business groups have teamed up to prevent a reversal of the good trade relations with Mexico that Texas has enjoyed since the North American Free Trade Agreement went into effect 23 years ago. [Full story]
Agriculture Commissioner Sid Miller on Thursday left the tough talk on immigration in Austin while he held a historic press conference on one of the country’s busiest international bridges to Mexico. [Full story]
WASHINGTON – On Tuesday, U.S. Senator John Cornyn (R-TX) discussed the importance of modernizing the North American Free Trade Agreement (NAFTA) as the fourth round of negotiations between the United States, Mexico, and Canada come to a close.
Excerpts of Sen. Cornyn’s remarks are below:
“Today is the fourth of seven rounds of negotiations on the North American Free Trade Agreement. Trade has always been an important element in our economy, and certainly in my state, in Texas. We know that just between the United States and Mexico, that bilateral trade supports five million jobs. Between Canada and the United States, that bilateral trade supports eight million jobs in the United States.”
“So while we are working hard to pass pro-growth tax reform, which will allow American families to keep more of what they earn and improve their standard of living, we’re also looking to modernize these existing trade agreements to add to the growth of our economy and jobs right here in the United States.”
Guest Columnist June 28, 2017OpinionComments Off on Cornyn Urges USTR to Strengthen Agricultural Trade in NAFTA Negotiations
WASHINGTON — On Wednesday U.S. Senator John Cornyn (R-TX) joined a bipartisan letter to U.S. Trade Representative Robert Lighthizer, urging him to strengthen agricultural trade as the Administration prepares to begin negotiations to update the North American Free Trade Agreement (NAFTA).
“As Senators representing states with significant agricultural exports, we appreciate the careful approach the administration is taking to strengthen the NAFTA agreement, while ensuring that no changes are made that could result in harm to U.S. agriculture,” Sen. Cornyn and others wrote. “We look forward to working with you throughout the congressional consultation process to ensure that NAFTA continues its substantial economic contributions to U.S. farmers and ranchers and to the growth of our agricultural economy.”
Last month, the Trump Administration notified Congress of its intent to open negotiations with Canada and Mexico with respect to NAFTA.
The notification triggers a 90-day consultation period under the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA), and the Administration is required to provide specific negotiating objectives at least 30 days before any negotiations begin.
Since NAFTA was signed into law in 1993, Canada and Mexico have been two of the top five destinations for U.S. agriculture products. Last year, the two countries accounted for 28 percent of the value of total agriculture exports from the United States.
Since NAFTA’s enactment, livestock and meat exports to Canada have doubled and agriculture commodity exports to Mexico have increased significantly. South Dakota’s exports to Canada and Mexico have increased by $1.2 billion (969 percent) since NAFTA went into effect in 1994.
In addition to Sen. Cornyn, the letter is signed by Sens. Roy Blunt (R-Mo.), John Boozman (R-Ark.), Steve Daines (R-Mont.), Joni Ernst (R-Iowa), Deb Fischer (R-Neb.), Jeff Flake (R-Ariz.), Chuck Grassley (R-Iowa), John Hoeven (R-N.D.), Johnny Isakson (R-Ga.), Pat Roberts (R-Kan.), John Thune (R-S.D.), Claire McCaskill (D-Mo.), Jerry Moran (R-Kan.), Rob Portman (R-Ohio), Mike Rounds (R-S.D.), and Thom Tillis (R-N.C.).
As you prepare to begin negotiations to update the North American Free Trade Agreement (NAFTA), we write to emphasize the economic significance of agricultural trade between the United States, Canada, and Mexico and the critical role that NAFTA plays in the trade relationships.
NAFTA has been an important trade agreement for the United States for more than 20 years. While we strongly support continued participation in the agreement, we also support the administration’s effort to review and strengthen NAFTA. Given the significance of agricultural products in U.S. exports, we request that you avoid any revisions to NAFTA and other previously negotiated trade agreements that would diminish the opportunities for U.S. farmers and ranchers to export their products, particularly given the current depressed state of the agriculture economy.
Since NAFTA was signed into law in 1993, Canada and Mexico have been two of the top five destinations for U.S. agriculture products. Last year, the two countries accounted for 28 percent of the value of total agriculture exports from the United States. Since NAFTA’s enactment, livestock and meat exports to Canada have doubled and agriculture commodity exports to Mexico increased significantly. The longstanding trade agreement between the three countries has proven to be an important success within the agriculture industry.
As Senators representing states with significant agricultural exports, we appreciate the careful approach the administration is taking to strengthen the NAFTA agreement, while ensuring that no changes are made that could result in harm to U.S. agriculture. We look forward to working with you throughout the congressional consultation process to ensure that NAFTA continues its substantial economic contributions to U.S. farmers and ranchers and to the growth of our agricultural economy.
The Texas Tribune June 16, 2017NewsComments Off on Texas Business Groups are Banding Together to Keep NAFTA Strong
Despite uncertainty on how the Trump administration will renegotiate the United States’ role in the North American Free Trade Agreement, two-way trade between Texas and Mexico has continued to flourish since the president was sworn in in January.
Now, a number of Texas-based business groups have teamed up to prevent a reversal in that trend by making sure the state has a seat at the table now that Trump has told Congress his administration would begin renegotiating the 23-year-old trade deal between the U.S., Mexico and Canada.
Representatives from the Texas Association of Business, the El Paso-based Borderplex Alliance and the Texas Business Leadership Council announced on Thursday the creation of the Texas-Mexico Trade Coalition, a binational group of business interests that seeks to keep Mexico Texas’ No. 1 trade partner.
Coalition members said time isn’t necessarily on their side if they want to preserve the benefits and job growth NAFTA has brought to Texas and beyond.
“The failure to act swiftly will push us into not only the midterm elections in the United States but also the presidential election in Mexico,” said Eddie Aldrete, senior vice president of the International Bank of Commerce and chairman of the coalition. “So we need to pass NAFTA on its own merits, on its own timeframe.”
Aldrete said that will include working to amend the current agreement instead of overhauling it completely.
Texas has more to lose than any other state on the country’s southern border if NAFTA is reworked in a way that decreases trade between the two countries. From January to April of this year, more than $178 billion in two-way trade has passed through ports in the United States and Mexico, according to WorldCity, a Florida-based economics think tank that uses U.S. Census data to track trade patterns. That figure represents a 4.5 percent increase compared to the same timeframe in 2016.
About $94 billion of 2017’s trade has passed through the Laredo customs district, with another $29.5 billion passing through the El Paso customs district. The ports of Houston and Port Arthur are also in included in Mexico’s top 10 trading partners, ranking fifth with $6 billion and eighth with $1.95 billion, respectively.
Jeff Moseley, the CEO of the Texas Association of Business, said revamping NAFTA only makes sense because of how much industry and commerce has changed since pact went into effect in 1994.
“The document, as it was pulled together 23 years ago, did not contemplate that we would have so much development in technology,” he said. “It didn’t contemplate that the Mexican Constitution would have been amended to allow for energy exploration. So there are new opportunities to bring forward.”
Moseley added he was reassured the federal government would listen to stakeholders on the ground after he met with U.S. Secretary of Commerce Wilbur Ross, who said he’d take a “do-no-harm” approach.
But business leaders are also careful not to assume the United States has complete control over the negotiations. Just last month, Mexican Secretary of Economy Ildefonso Guajardo said the country could look to expand trade with China if the United States insisted on trade policies that were not mutually beneficial, CNBC reported. The Mexican government could also explore expanding trade with South American countries as another option.
“It’s always a concern. It’s always out there as a potential threat to our economic interest in the United States,” Aldrete said of Guajardo’s comments. Asked if he thought if the Mexican secretary spoke more out of a sense of national pride, Aldrete said it didn’t matter.
“Whatever his motivation was, it certainly got the attention of a lot of people in the business community to then turn around and push our own administration to focus on the timeline and move quickly,” he said. “From a logistical standpoint, Mexico and the United States would prefer to do business with each other.”
Disclosure: The Texas Association of Business and Texas Business Leadership Council have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors is available here.
Read related Tribune coverage:
After a trial balloon went over poorly with Congress, Trump told foreign leaders he won’t end the trade agreement just yet. [link]
Despite all the time Donald Trump spent bashing NAFTA while running, border leaders hope he’ll soften his stance as campaign trail rhetoric cools. [link]
U.S. Senator John Cornyn (R-TX) today released the following statement after the Administration notified Congress of its intent to renegotiate the North American Free Trade Agreement (NAFTA):
“NAFTA is vitally important to the state of Texas, with free trade adding billions of dollars to our economy annually,” Sen. Cornyn said. “We have a great opportunity to improve and modernize this landmark agreement. By updating NAFTA, we can address modern-day challenges without sacrificing economic prosperity. I look forward to working with the President and community leaders in Texas to ensure any updates made are in the best interest of my state, and the many farmers, ranchers, and job creators whose livelihoods depend on this vital agreement.”
U.S. Representative Will Hurd released the following statement regarding the Administration’s notification to Congress of their intent to renegotiate the North American Free Trade Agreement:
“Trade is the lifeblood of many communities in my district, including El Paso, Del Rio and Eagle Pass. The U.S., Mexico and Canada are not competitors, but partners who build things together. It is now more important than ever that we strengthen our relationship as allies and partners, so we can work together to increase economic opportunities on both sides of the border,” said Congressman Will Hurd.
“I believe we have a real opportunity to modernize and improve North American Competitiveness in the rest of the world through an upgrade of the North American Free Trade Agreement (NAFTA). I look forward to working with my colleagues and counterparts to develop mutually beneficial policy that strengthens the economy and keeps Americans safe.”
When looking for a model economy, Washington would be wise to look no further than Texas. The “great American jobs machine,” as we’re affectionately known, has been the economic engine that pulled our country out of the recent recession, singlehandedly adding more than one million jobs to the American economy. In fact, if Texas were its own country, we would be the 10th largest economy in the world.
Now, with pro-growth Republicans in control of Congress and the White House, leaders are beginning to consider proposals to lift our economy out of a sluggish recovery. But as we work together to jumpstart our factories and farms across the country, let’s keep in mind what my state has gotten right.
Trade has been a cornerstone of the Texas economy, with no partner more important than Mexico.
As our largest export market, Mexico has an extraordinary economic relationship with Texas. Trade with our southern neighbor supports hundreds of thousands of jobs in my state and provides more goods at a better price for Texas families. More than a third of all Texas merchandise is exported to Mexico – meaning our farmers, ranchers and small businesses have found no shortage of customers south of the border too.
This explosion in trade for our state has catapulted Texas to the top of exporting states in the country for more than a decade now. Thanks to trade pacts like the North American Free Trade Agreement (NAFTA), goods and services flow more freely among the three North American countries, growing jobs across Texas and stretching paychecks further. This isn’t just true for Texas. A majority of exports coming from Michigan and Ohio, for example, are bound for our NAFTA partners too.
Trade in Texas – specifically along our Southern border with Mexico – doesn’t just work in theory. It’s the reality on the ground too. Last week I led a congressional delegation to the border to see this economy in action. We visited the Pharr International Bridge in the Rio Grande Valley – a bridge that facilitates about $30 billion in trade a year. We also visited Laredo, a port that handles about a third of all international trade in Texas, with 14,000 trucks passing through daily. In other words, the Texas border serves as a major gateway for agriculture and manufactured goods trade. It moves more freight along its 1,200-plus miles of southern border than any other border state. And this trade in turn fuels economic growth and vitality across the region and the entire country.
But like anything that’s dated, there’s room for NAFTA to be improved. It’s now more than 20 years old. Texas and the United States as a whole would benefit from a revised agreement that makes trade freer and fairer. By fixing NAFTA, we can address modern-day challenges and preserve and protect America’s unrivaled stability and prosperity into the next century.
Consider the nation’s energy landscape. It has changed dramatically since the trade deal was hammered out in the 1990s. With the recent lifting of the U.S. crude oil export ban and Mexico’s energy reforms, a renegotiated deal should account for regulatory cooperation and capacity-building provisions that promote investment and the free flow of American energy, particularly a streamlined approval process for LNG exports. There’s room to bring the services trade into the 21st century, strengthen intellectual property rights and eliminate non-science barriers to trade, too.
As the administration and Congress look to improve existing trade deals, such as NAFTA, we would also be wise to focus on strengthening the Southern border. The president has made no secret of rightly prioritizing our country’s safety. Securing the border is an essential part of that equation.
But as we do, we must be quick to engage community leaders and business-owners along the border. Yes, they want security and protection. But they also know that key to the success of Texas and the nation has been the cultivation of an environment that can manage the demands of high-volume trade. That means keeping legitimate trade and travel flowing, while simultaneously screening criminal elements and contraband to keep them out. In other words, the border ecosystem demands a careful balance.
It’s our job to consider how to gain complete control of the border, while equipping our Customs and Border Patrol agents with the resources they need to keep our economy up and running. That way, everyone can benefit from access to markets on the other side.
Texas – where taxes are low, regulations are sensible and trade is encouraged – has proven time and again that we’re a blueprint for growing the national economy. In my state, border security, trade and the economy are intimately connected. So as Congress considers whether to revisit agreements like NAFTA and how to best secure the border, we must take great care to advocate for smart policies that drive growth here at home and enhance our partnerships abroad.
Senator John Cornyn, a Republican from Texas, is a member of the Senate Finance, Intelligence, and Judiciary Committees. This column originally appeared in Politico Magazine and is reposted with permission.
Staff Report December 21, 2016NewsComments Off on UTEP Report: Trade Ambiguity Triggers Lower Mexico Economic Forecast
The potential disruption in trade relations between the U.S. and Mexico was among the reasons why economists who monitor Mexico’s business cycle developments have lowered their 2017 projections of gross domestic product, according to UTEP’s Border Region Modeling Project.
“The Trump Effect” is the title of the fourth quarter Mexico Consensus Economic Forecast that reports a GDP growth rate projection of 1.4 percent, 90 basis points lower than the 2.3 percent rate predicted in September 2016.
The projection includes a climb in the short-term 28-day treasury certificates (CETES) interest rate to 5.9 percent in 2017, while the nominal peso per dollar exchange rate will average P/$20.70 next year.
“Currency market erosion of the peso usually translates into greater direct foreign investment in maquiladora-related manufacturing in Ciudad Juárez,” said Tom Fullerton, Ph.D., director of the BRMP and professor of economics.
“It is not clear, however, that such a dynamic will materialize next year due to Trump administration suspicions about international trade impacts on the national economy. Any investments in export-oriented manufacturing in Ciudad Juárez are also accompanied by additional warehousing and transportation investments in El Paso,” Fullerton Added.
This quarterly report is published by the BRMP, a research unit within Department of Economics and Finance in the College of Business Administration at The University of Texas at El Paso.
The report synthesizes macroeconomic forecasts from nine prominent banks, universities and other U.S. and Mexican institutions.