President Trump followed through on his promise to renegotiate the North American Free Trade Agreement when he signed a new agreement with Mexico and Canada in November.
In the coming weeks, his administration will present the new pact to Congress for a vote. The International Association of Drilling Contractors urges Congress to swiftly pass the new pact, as Texans have a lot to gain from ratification of the deal. The U.S.-Mexico-Canada Agreement is a huge win for the Lone Star State’s workers, especially those who work in the energy sector.
The oil and natural gas industry is a critical component of Texas’ economy. Last year, the industry directly employed more than 352,000 Texans. And across the nation, the oil and natural gas industry adds $1.3 trillion to the economy each year.
Texas firms owe much of their success to trade with Canada and Mexico. Since NAFTA took effect in 1994, Mexico has become a major importer of American liquefied natural gas. Canada purchases close to 60 percent of American crude exports and 20 percent of our jet fuel exports.
In fact, Texas exported more than $24.3 billion worth of petroleum, coal, oil and natural gas products to Canada and Mexico in 2017.
USMCA will build on NAFTA’s successes and create new jobs, lift wages and reduce Texans’ energy bills. For energy consumers, the new pact continues to prohibit tariffs on raw and refined oil and natural gas products, keeping current energy bills stable. New tariffs mean higher energy bills for every household.
USMCA also preserves an important legal provision that protects American companies from exploitation by foreign governments. Called the “investor state dispute settlement” system, this part of USMCA is essential for energy companies that do business abroad. Without it, companies are at a disadvantage in foreign courts, as they undoubtedly would favor their own country and national government. Look no further than what happened in Venezuela in the last decade when that country nationalized oil production.
Venezuelan officials seized the assets of more than 60 oil and oil services companies, many of which were headquartered in the United States.
America is already the world’s top energy producer — thanks in large part to Texas — and production will continue surging in the years ahead.
The U.S. Energy Information Administration predicts that U.S. natural gas production will outpace domestic consumption by 2021. Thanks to USMCA, we’ll be able to sell our excess natural gas to our Canadian and Mexican neighbors, thereby creating more jobs for Americans in Texas and across the country.
NAFTA was a big boon for Texas’ energy sector. USMCA will bring even greater prosperity to this vital industry and its workers, so long as Congress ratifies the deal.
Jason McFarland is president of the International Association of Drilling Contractors in Houston.