International Trade

Postcards from Texas Part III

San Antonio, TX is older than the United States itself. It is the site of the Alamo and a River Walk that rivals the one in Paris. Despite all that, some folks choose to call it “NAFTA City”. The North American Free Trade Agreement has had that much of an impact on the storied city where it was signed. It has helped the citizens of Old San Antone get new jobs and make a load of money—today, “NAFTA City” is the fastest growing major urban area in the U.S.

All of Texas has fared well since NAFTA was signed a quarter-century ago. Texas is the largest exporter in the United States, and Mexico is its largest trading partner with $93 billion in annual exports to the nation to the south. Most of these exports come in the form of electronics, transportation equipment and oil and natural gas—exports that built a new Texas where Dell Computers and Texas Instruments are as important to the economy as the oil wildcatters and cattle barons of old. Agriculture and oil still play major roles of course, and they too have benefitted from market access under NAFTA. According to the ALEC publication Rich States, Poor States, Texas was first among all states in economic performance last year—and the 190,000 jobs supported by exports to Canada and Mexico helped Texas achieve that ranking.

U.S. Trade Representative Robert Lighthizer expects NAFTA renegotiation to begin in earnest on August 16. Apparently, the agreement has been assessed and found wanting by the new administration. President Trump has been caterwauling and pounding the table about NAFTA (“the worst trade deal in the history of the world”) for a long time now, as a candidate and as chief executive. For a short while in April, the President chewed on pulling out of the agreement altogether but eventually chose the wiser path of renegotiation. NAFTA is showing its age, and there are things that could stand improvement, such as digital commerce and telecommunications. The watchword on everyone’s breath has been “modernization”—just updating the agreement.

In an April Texas Lyceum poll, 43 percent of Texans supported NAFTA, compared to only 24 percent who opposed the agreement. Of course, Texans have always had a free trading nature, whether driving great herds of cattle to better markets in Kansas or illegally crossing the border from Mexican Texas to Louisiana in the 1830s to sell crops in New Orleans.

My father, a sixth generation Texas cattle rancher, stands among the minority opposed to NAFTA—not because it promotes free trade, but because trade isn’t free enough. He had this to say:

I’m glad the president is renegotiating NAFTA. I want fair trade, but fair trade is free trade. I’m a small time operator, so it is hard to compete with these nationally-owned, subsidized companies from other countries, like Brazil’s JBS. They’d fail if they weren’t propped up by the Brazilian government, legally and illegally. I want to sell cattle here, there, Mexico, Timbuktu. But I can’t compete over there because of tariffs and state-subsidized businesses in other countries and because they aren’t held to the same safety standards in country that I am. I hope that the NAFTA renegotiation gets rid of that.

Safety standards for food, known as Sanitary and Phytosanitary (SPS) measures, are a chief concern for many American beef exporters, but ranchers (and other businesses) in Texas want more access to markets in Canada and Mexico, not less.

Texans understand that fair trade is free trade. NAFTA ought to be modernized to reflect the not inconsiderable changes that have taken place over the last 25 years – it shouldn’t be scrapped. Davy Crockett once said of Texas, “I do believe it is a fortune to any man to come here”. That is still true today – and the North American Free Trade Agreement has a lot to do with that.

In Depth: International Trade

International trade creates and supports millions of American jobs that offer higher than average wages and drive economic growth. As a testament to the strength of American entrepreneurship, the vast majority of U.S. exporters are not large corporations but small to medium-sized enterprises. Those that doubt the power of global…

+ International Trade In Depth