ALDEEN: NAFTA & Free Trade

If Texas was a country, it would be the world’s 10th largest economy

By Adryana Aldeen, Senior Correspondent

Texas Insider Report: AUSTIN, Texas — Free trade and NAFTA are touchy subjects. Most conservatives believe that President Trump and his White House advisers should pay attention to other conservatives who are more knowledgeable about the issue of NAFTA and Free Trade. We wish our President would listen to them.

Texas leads the nation in economic growth and international trade. If Texas was a country, it would be the world’s 10th largest economy — a ranking achieved in no small part buy the state’s deep involvement in international trade. Specialization and trade are drivers of modern economies that apply to capital and labor. Local, national and international trade provide the ability for more extensive specialization, and each is an important component of the Texas Economy.

Last week in Austin the Texas for Public Policy Foundation and the Heritage Foundation put together a panel on NAFTA and Free Trade. The panel was moderated by Senior Federal Policy Analyst for the 10th Amendment Action of the Texas for Public Policy Foundation Mr. Drew White.

Panelist were the following:

  • Texas Comptroller Glenn Hagar, who serves as Texas treasurer, check writer, tax collector, procurement officer and revenue estimator.
  • Dr. David Kreutzer, Senior Research Fellow of The Heritage Foundation Institute for Economic Freedom & Opportunity.
  • And Dr. Vance Ginn, Director of the Center for Economic Prosperity & Senior Economist of the Texas Public Policy Foundation

The United States commenced bilateral trade negotiations with Canada more than 30 years ago, resulting in the U.S.-Canada Free Trade Agreement, which entered into force on January 1, 1989. In 1991, bilateral talks began with Mexico, which Canada joined.

The North American Free Trade Agreement (NAFTA) followed, entering into force on January 1, 1994. Tariffs were eliminated progressively, and all duties and quantitative restrictions, with the exception of those on a limited number of agricultural products traded with Canada, were eliminated by 2008. NAFTA also includes chapters covering rules of origin, customs procedures, agriculture and sanitary and phytosanitary measures, government procurement, investment, trade in services, protection of intellectual property rights, and dispute settlement procedures.

Trade is certainly a touchy and complicated issue, but also an issue of great economic importance. Comptroller Hagar noticed that one of the subjects that is often brought up during his trips is Free Trade among the 12 economic regions in the state of Texas. He emphasized that Texas is the 10th largest economy in the world, with great potential should we see an increase of NAFTA. Hagar did a tour of the 29 Ports of Entry in Texas.

Mexico and Canada are half of Texas International trade. While Texas is 9% of the US economy but also Texas or whether pass trough Texas to other states.

Dr. Kreutzer said that we should look at trade in the context of economic freedom. Texas has a lot of economic freedom and the economy is strong. The major exporting partners are the NAFTA partners. Texas has low taxes and this allows people to make decisions about what to do with their money and to decide where and what they want to buy. Kreutzer emphasized that when we look at economic freedom across countries the free market countries are the most prosperous. Not only do we see an increase in the number of jobs, but the quality of jobs has improved.

Dr. Ginn emphasized that NAFTA is not a perpetrated deal. Looking at basic economics in free trade, all partners should have to have benefits. NAFTA is more than 17,000 pages and there are winner and losers through the process of renegotiation.

“Do we want freer trade or less free trade?” he asked. One of the problems is that we have a huge amount of exports and imports. Texas has led the nation for 16 years in a row in free trade. Looking at it, the economist said that-individuals benefit from exchange and we need to find how we can reduce barriers to competitors that have barriers set by government.

Texas has a huge amount of exports and imports. We have even more than California. We are the export leader in technology, not only leaders in oil and gas, but in technology as well. If we move toward a freer trade to grow the economy pie, then more people will have jobs and opportunities. Some people get hurt on the way, but growing the economic pie will bring will bring more opportunity for jobs.

Mr. White asked if the current administration has made mention of “trade deficits”. Comptroller Hagar said we need to look at the end of the day that there have been jobs gain and loses. Texas have benefited more than the 50 states, but overall, the country the economy has grown. During the presidential campaign we heard a lot about jobs going overseas, but if you look at Texas, while jobs in manufacturing went down, the GDP has gone up 86%.

We have winners and losers and carve outs. Should we revaluate? Absolutely. We should renegotiate for the benefit of both partners to make it sample. We have winners, losers and carve outs, and all have to be considered.

The Texas Mexico Trade Coalition has important information for all to see. Its Chair is Eddie Aldrete. He is the senior vice president of the International Bank of Commerce and chairman of the coalition. Mr. Aldrete said,

“The failure to act swiftly will push us into not only the mid-term elections in the United States, but also the presidential election in Mexico. So we need to pass NAFTA on its own merits, on its own time frame.”

Aldrete said that should 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 World City, a Florida-based economics think tank that uses U.S. Census data to track trade patterns. That figure represents a 4.5% increase compared to the same time frame 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.

Canadian and Mexican governments are prepared to be flexible on a U.S. demand that the amount of North American content in autos be boosted to qualify for duty-free status in NAFTA. But Ottawa and Mexico City strongly oppose the proposal that autos produced on the continent should have 50% U.S. content. Differences also remain over how to address the U.S. push for changes to various dispute resolution mechanisms.

Republican Senators just recently condemned President Trump’s decision to impose tariffs on washing machines and solar panels, exposing simmering GOP divisions over international trade that threaten the uneasy alliance between the president and republican legislators.

“I don’t agree with it, I think it’s a bad path to head down,” Sen. Roy Blunt (R-MO) said of the tariff decisions.

“The retaliatory tariff fight is never a good fight and I generally think we need to be more positive about our trade opportunities.”

The legislators said the tariffs could start a trade war that would damage the U.S. economy and threaten jobs, hurting the American workers Trump says he wants to help. The legislators also cautioned the administration to move carefully as it renegotiates NAFTA — including during talks between U.S., Canadian and Mexican trade officials this week in Montreal.

President Trump should stop listening to Steve Miller and began to listen to legislators who understand this issue better than him. I believe he is open to dialogue on the issue but he has to stop listening to those who have advise him since his campaign on the issue.

Senior Correspondent Adryana Aldeen is frequently featured nationally, statewide and locally on Univision, Telemundo, CNN Español, FOX News, ABC, and other media outlets.

Source: Texas Politics

ALDEEN: NAFTA & Free Trade

Leave a Comment