Trade deal helps Texas, but add Canada, too
Texas workers celebrating Labor Day got some potentially good news from the renegotiated trade deal between the United States and Mexico, but members of Congress from Texas must read the fine print. Texas will probably be affected by this agreement more than any other state because we have so much trade with Mexico. That’s all the more reason to vet it carefully during the approval process — and make sure that Canada is included later.
Even though Canada doesn’t have a lot of trade with Texas now, that could change if the Keystone XL pipeline is ever finished. It would bring Canadian oil to refineries in Port Arthur and Houston, either for processing here or export. Either option boosts the economy of Southeast Texas.
The pipeline is less important now with the surge in domestic oil production, but that picture could change in five or 10 years. What matters is that Canada has a resource it wants to sell (tar sands oil in the Alberta province) and the U.S. has refineries that can process it. If the pipeline’s path can overcome objections in Nebraska, it could be finished soon. The southern half of it, from Oklahoma to the Gulf Coast, has been operational for years.
The first part of renegotiating NAFTA was significant. Texas does more trade with our southern neighbor than any other state, and not so coincidentally, has the longest border, 1,254 miles. While our country as a whole has a trade deficit of $63 billion with Mexico (small for the size of our economy), Texas has a surplus of $8.5 billion. That supports a lot of jobs and tax revenues in Texas, and state officials should make sure it continues.
None of this can be taken for granted. The agreement with Mexico must be approved by both countries before a new Mexican president takes office on Dec. 1, or it might have to be renegotiated. It was hard enough to revise NAFTA once, and a second effort might not succeed.
The next Mexican president, Andres Manuel Lopez Obrador, is just as skeptical of foreign trade deals as President Trump, even though Obrador is a leftist and Trump is a Republican. Yet most economists agree that NAFTA has benefited all three countries over the past 24 years with more trade that helps all of them, even if some jobs have moved from one side of the border to another.
As is so often with these trade agreements, citizens of one country tend to discount the benefits they receive (export jobs or cheaper consumer goods) while complaining about factors like that which help another country.
And as the Mexican economy has improved, fewer Mexicans feel compelled to emigrate to the United States (legally or illegally) in search of better paychecks. Immigration is also a major concern of Trump’s, and he can do something about it by concluding this renegotiation with Mexico, and then bringing Canada aboard.
All three countries seem close to a final deal. Strong political leadership can nail it down for the benefit of consumers and workers in all three nations.