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“First, do no harm,” the famous line in physicians’ Hippocratic Oath, should be applied to the renegotiation of the North American Free Trade Agreement.
With the first formal talks in the renegotiation of NAFTA set to begin in mid-August, San Antonio and Texas have a significant stake on the table. The trade agreement has been a boon for our city and region.
Even dedicated free-traders recognize the merits in updating the 1994 agreement to reflect the arrival of the internet era and other changes in the business environment, such as Mexico’s energy reform.
The renegotiations were launched by President Donald Trump, a vigorous NAFTA critic, but that does not mean that the process can’t produce a modernized and improved agreement. And the agreement clearly has important benefits worth saving.
San Antonio business leaders, including the San Antonio Chamber of Commerce and the San Antonio Hispanic Chamber of Commerce, the Free Trade Alliance, and others are playing an active role to push the renegotiation toward a positive outcome.
The Hispanic Chamber’s recent written submission proposing negotiating objectives to the Office of the United States Trade Representative Robert Lighthizer touched on the crucial point. The chamber “proposes protecting the United States and Mexico trade positions as a central element of any efforts to renegotiate, reform, or modernize NAFTA,” the submission stated.
I couldn’t agree more.
The document noted that Texas exports an estimated $56.9 billion worth of goods and services to Mexico annually. The chamber also noted that about 6,500 Mexican-owned companies are doing business in the U.S. Those businesses provide 120,000 jobs and generate $52 billion in the U.S. economy.
Texas imports to Mexico, the state’s largest trading partner, have increased 236% in the NAFTA era, according to a report by Federal Reserve Bank of Dallas.
For San Antonio, NAFTA’s impact is particularly significant. A recent analysis by the SABÉR Research Institute concluded that NAFTA created 63,204 direct jobs in the San Antonio economy, and when multiplier effects are considered, the number of NAFTA-related jobs jumps to 135,311 “earning incomes of $7.2 billion.”
The analysis found that the most jobs were created in the professional services, education, and health sectors in San Antonio, with each those groups gaining more than 12,000 positions. Trade, transportation, and utilities each gained more than 9,000 jobs in San Antonio through NAFTA.
Not all areas of the nation have fared as well as San Antonio and Texas. But as the SABÉR analysis, conducted by Steve Nivin and Belinda Roman, stated, “It appears that NAFTA has generated net positive job gains, although there are some mixed results.”
If critics hope to revive manufacturing jobs by increasing trade barriers, they are way off base. “Much of the decline in manufacturing can be explained by automation,” the Dallas Federal Reserve report states.
And it is important to remember that U.S. trade with Canada has tripled since NAFTA was signed. Notably, San Antonio now has a nonstop flight to Toronto. The health of the trade relationship with our neighbor to the north merits attention, too.
Updates to address changes in the business and trade landscape during the 23 years that NAFTA has been in effect are warranted.
But any action that brings tariffs or new barriers to trade will be damaging to San Antonio and Texas. Negotiators should keep the health of the border region’s economy in mind when they consider changes in the agreement.
And when the deal is done and new agreement is reached, it would be appropriate to sign the updated agreement in San Antonio, where the original NAFTA was signed more than two decades ago and where strong support for the free-trade breakthrough has never waned.