NAFTA is not a “bad deal,” it is simply an old one

Photo by Reynaldo Leal

“America first’ does not mean America alone.” Those were the words from President Donald Trump during his address at the World Economic Forum in Davos, Switzerland last month.

On the campaign trail and throughout his first year in office, President Trump repeatedly said the North American Free Trade Agreement (NAFTA) was a “bad deal” for the United States. As America’s largest exporter, Texas knows that NAFTA — America’s most valuable free trade agreement — is not a bad deal, it is simply an out­dated deal. Undoing it would jeopardize nearly one million Texas jobs and the loss of billions of dollars in economic production.

Congress recently passed the most comprehensive update of America’s tax code since the Reagan Administration. The tax rules of 1986 were inadequate for American companies competing in a 2018 economy. We fell behind other industrialized nations that reformed their tax codes to attract business, investment and most importantly, jobs. It’s the same with America’s trade policy. The policies negotiated for NAFTA a quarter-century ago are inadequate for a 21st century economy.

The United States economy is on the rise. We’ve had three consecutive quarters of at least three percent GDP growth, which hasn’t happened since 2014, coupled with the highest consumer confidence and lowest unemployment in 17 years. Now is the time to keep the pedal down on the American economy, not to slam on the brakes. Constant threatening to pull out of NAFTA causes uncertainty for job creators — uncertainty that limits their willingness to invest in their workforce, expand their operations and contribute to a growing economy.

Effective trade policies create a two-way street benefiting Texans on a daily basis. The lower prices of everyday goods allow the budgets of American families to go farther. In return, our local industries and their desirable “made in America” products have a larger customer base to sell their products.

Texas has a long history of successful trade relationships because of its immense resources. Industries in Texas exported over $111 billion to Canada and Mexico in 2016. At nearly $20 billion, we are the second-largest exporting state to Canada, behind only Michigan. Mexico is our largest trade partner, with 40 percent of Texas exports going to our southern neighbor. In the North Texas communities I represent, $37 billion of economic activity comes from the Dallas-Fort Worth International Airport; its freight operations are a significant component of import-export transactions.

The North American market is vital for job creation and a healthy, diverse Texas economy. Medium and small businesses are able to be large sellers to consumers in other countries. Over 39,000 exporters in Texas are in that small or medium-sized category.

Our state is also home to 63 Fortune 500 companies that provide livelihoods to hundreds of thousands of Texans. A strengthened, modernized agreement between Canada, Mexico and the United States is crucial to those companies expanding, creating new jobs and providing careers for future generations of Texans.

After the most recent round of NAFTA negotiations in Montreal, the House Ways and Means Committee met again with United States Trade Representative Robert Lighthizer. As part of my position on the committee and member of its Trade Subcommittee, I continue to communicate how important and beneficial our trade partnerships are for my constituents and how harmful unpredictability is for employees and employers throughout Texas.

The seventh round of trilateral negotiations is underway in Mexico City. In order to avoid the job-killing result of ending NAFTA, we need to do away with the uncertainty and solidify this North American partnership. Elected officials in Texas at every level continue to implore the Trump Administration to improve on the successes of the agreement and modernize it where necessary. In this global economy, America first does not mean America alone.

Kenny Marchant

U.S. Representative, R-Coppell