Broad Business, Industry Support for NAFTA and Free Trade

Mark Green
Posted September 22, 2017

U.S. businesses and industries continue to press the case for preserving and strengthening NAFTA provisions that have supported U.S. trade with Canada and Mexico. A number of business and industry sectors joined an API-hosted conference call with reporters to underscore the need for ongoing negotiations between the U.S., Canada and Mexico to sustain treaty features that foster North American trade, including North American energy integration.

API President and CEO Jack Gerard said this integration has benefited the U.S., noting that our country exported more than 500 million barrels of refined petroleum products to Canada and Mexico last year – making them our two largest export markets for those products:

Gerard:

“NAFTA has helped North America rise by allowing for the more efficient flow of energy, capital and talent between countries. It has also helped to make Mexico, the U.S. and Canada more energy secure by reducing reliance on outside energy sources. Some estimates show the U.S., Canada and Mexico could supply virtually all of our liquid fuel needs from right here in North America by 2020. And it has been critical in facilitating North American energy integration, which enhances U.S. energy security, supports millions of American jobs in the oil and natural gas industry, contributes to the U.S. economy, and helps make energy more affordable.”

Also participating on the call: Cal Dooley, American Chemistry Council (ACC); Donna Harman, American Forest & Paper Association; Kenneth E. Bentsen Jr., Securities Industry and Financial Markets Association; Linda Dempsey, National Association of Manufacturers (NAM), Jonathan Gold, National Retail Federation; and Rob Mulligan, U.S. Council for International Business.

Much of the discussion focused on keeping and strengthening NAFTA’s Investor State Dispute Settlement mechanism (ISDS), a neutral, international arbitration procedure that protects U.S. companies against abuses of due process. It is not, as some have asserted, an unprecedented right to challenge the sovereignty of foreign governments. Rather, ISDS provides U.S. companies with fair and equitable treatment for their investments abroad. A couple of highlights:

NAM’s Dempsey:

“Although you’ve had state-to-state dispute settlements in the numerous agreements … in which the United States has investor stakes, it’s never been used. … It’s hard for the government as a whole to bring a case on an individual investment. It’s much easier to bring a case on a class of goods being denied access or facing higher tariffs or barriers. So investor-state, which was developed decades ago and is in over 3,000 instruments around the world and as I said, more than 50 in the United States, has been that critical failsafe to ensure that investors that have put their properties on the line, supporting and benefiting the United States while doing so, have that failsafe is a foreign government seizes their property or mistreats them.”

ACC’s Dooley:

“It is even more important that we see ISDS be clarified in terms of how it pertains to the energy sector in Mexico, in order to contribute to the [North American] region becoming the world’s leader in terms of energy production, which contributes to even greater economic security in North America and also contributes to greater international security.”

Gerard said NAFTA is foundationally, a guarantor of North American trading opportunity – one that benefits consumers in all three countries through market efficiencies resulting in more affordable energy. NAFTA also supports U.S. jobs – especially the refining sector, as he mentioned above – by securing access to markets for U.S. products. Gerard:

“We view an important principle here. When you think about NAFTA … as a free-trade opportunity, you want to encourage the free flow of goods back and forth. … Within that NAFTA context we need to think more about how we benefit the American consumer. From an energy standpoint you benefit the consumer by allowing the free trade and free flow of goods and services.”

Gerard said NAFTA features that advance U.S. competitiveness should be preserved in any modernizing of the agreement:

“We believe our U.S. interests can compete with anybody in the world as long as the rules are fair, they’re balanced and they’re protected … We’re anxious to compete. We believe that within this NAFTA framework that we’re talking about we should do everything we can to encourage that.”