For more than three decades, American, Mexican and Canadian businesses have relied on and benefited from NAFTA.
MORE than any other trade agreement, the North American Free Trade Agreement (NAFTA), has positively affected the lives of so many Americans.
Trade with our northern and southern neighbors is the reason a grocery shopper in Iowa can buy raspberries year-round. It is the reason last year the U.S. shipped $1.2 billion worth of dairy products to Mexico, up from just $124 million in 1995, supporting countless American jobs. And it is the reason Mexico and Canada are America’s No. 1 and No. 2 largest trading partners.
Nearly every sector of the U.S. economy — as well as American workers and consumers — have been beneficiaries of NAFTA.
This success includes manufacturing. On average, of the goods that are imported from Mexico into the United States, 40 percent of their content comes from the United States.
At a recent hearing I chaired before the Trade Subcommittee of the Ways and Means Committee, Cummins CEO Tom Linebarger emphasized the importance of NAFTA to manufacturing, using the example of the Ram truck. After NAFTA went into effect, Cummins Engines began manufacturing engines for Ram at its plant outside of Columbus, Indiana. From there, Cummins exports those engines to Mexico, where Chrysler finishes the assembly and ships the finished product back to the United States and around the world. This cost-effective, efficient supply chain is the reason behind Ram’s profitability and has created hundreds of jobs since the mid-1990s. Over the past four years alone, Cummins has hired nearly 100 more workers at its Indiana plant.
Ram’s story is not unique, and other American manufacturers have thrived under NAFTA, creating more jobs here at home. Our agriculture sector has also benefited enormously from NAFTA. For example, our pear and apple exports increased by 70 percent to Mexico after NAFTA eliminated Mexico’s 20 percent tariff on these products. And our services sector has flourished, allowing the United States to enjoy a consistent trade surplus of over $27 billion with Canada and nearly $8 billion with Mexico.
But there is still room for these sectors to expand and to create more American jobs.
When NAFTA’s signatories laid down ink in 1994, they did not know that the 10,000 websites and two million dial-up computers in place then would swarm to today’s 45 billion Web pages and roughly four billion internet users. They also could not predict how new regulations and changing economies would affect the cross-border flow of goods and America’s interests. Times have changed, and NAFTA must be updated to reflect today’s world.
The first round of NAFTA negotiations between the U.S., Mexico and Canada taking place in Washington, D.C., is an opportunity for the administration to do just that. Our negotiators must modernize the agreement for the digital age and improve many provisions to benefit American workers, farmers, businesses and consumers.
But while improving the agreement, the administration must keep the following negotiating standards in mind.
First, the existing NAFTA structure must be preserved and the prevailing “do no harm” mantra upheld. This means companies must be able to maintain their supply chains and tariffs must not increase. Entire sectors of the American economy have been built upon the agreement as it stands, and any disruption could result in a devastating loss of U.S. jobs.
For over three decades, American, Mexican and Canadian businesses have both relied on and benefited from NAFTA. This cohesion has allowed North America to strengthen its economic dominance throughout the globe, giving our entrepreneurs a competitive edge over other countries like China and lowering prices for our consumers. When North America wins, America wins.
Second, Congress must continue to be a partner in the negotiations. Congress has the responsibility to regulate foreign commerce. The administration must honor this constitutional duty through close consultation with Congress throughout the negotiation process as required by U.S. law. Members of Congress have the responsibility to represent their constituents, so they have strongly held views and expertise on trade. Engaging with Congress will help the administration create the best agreement possible for the United States and avoid the pitfalls that, in part, prevented the Trans-Pacific Partnership agreement from crossing the finish line during the Obama administration.
If we do this the right way, a modernized NAFTA will not only strengthen American industries and create jobs here at home, but it will serve as a model for other high-standard trade agreements that will allow American farmers and exporters to reach the 95 percent of consumers outside our borders.