The North American Free Trade Agreement should be modernized and strengthened, rather than scrapped, speakers representing the three countries said in a panel discussion in Houston on Tuesday.
The 24-year-old treaty has been a hot-potato issue for the Trump administration, as President Trump has frequently threatened to walk out on the agreement if current negotiations don't go to his liking, while some of his staunchest allies, including Republican members of Congress and representatives of the energy industry, have called for reforming, rather than abandoning, the deal.
NAFTA negotiations have proceeded slowly over a period of months with a number of bumps in the road along the way.
Speaker of the House Paul Ryan warned that any deal would have had to be presented to Congress by last Thursday in order for Congress to vote on the treaty. That deadline passed with no deal on the table.
"It is my hope that it will all work out and come out OK in the end. How long that takes, it will take as long as it takes," said Vasken Khabayon, acting consul general of Canada said on the sidelines of the panel discussion.
While oil and gas industry groups have expressed concern over some aspects of the negotiations, Khabayon said the original treaty, which went into effect in 1994, did not focus on the same crossborder energy issues seen in North America today.
"NAFTA Chapter 6, which deals with energy, was originally negotiated so that the US could have access to Canadian energy, oil in particular. At that time the US was not the great energy producer that it once was," he said.
However, in the current economic environment, the US has become a major exporter of crude oil, natural gas and other hydrocarbon products to its trading partners in North America and around the world, he said.
CANADA OPPOSES PUTTING STEEL INTO NAFTA
Another issue of particular concern for the gas pipeline industry has been the Trump administration's proposal to impose tariffs on imported steel from some countries. This issue has been a thorny one for Canada, which accounts for 40% of imports of steel into the US.
Khabayon said US trade negotiators had wanted to include discussions over steel imports in the NAFTA talks, but the Canadian government opposed that proposal because trade in steel was not in the original NAFTA agreement. "We see the steel and aluminum tariffs as a separate issue," he said. "Our government has been saying we will not address steel tariffs directly in the negotiations."
The panel also addressed the potential impact that upcoming elections in Mexico might have on NAFTA talks. Oscar Rodriguez, consul general of Mexico, assured the audience that the energy reforms, which the Mexican government put in place three years ago, would continue unabated regardless of which party got into power following the elections in July.
"The reforms in Mexico were done with the support of all the parties. Nobody is saying they're going to throw out the reforms," he said.
Rodriguez said that the reform of the energy industry in Mexico has been a boon for that nation's economy, bringing in $162 billion of new investment. "Nobody is going to go against success," he said.
MEXICO FAVORS INVESTOR PROTECTIONS RESISTED BY TRUMP ADMINISTRATION
Addressing another concern expressed by the US oil and gas industry, Rodriguez said Mexico had created a number of institutions to protect foreign investment from government seizure as has been seen in other Latin American countries. US-based energy and manufacturing interests have lobbied the Trump administration to retain and strengthen investor-state dispute settlement (ISDS) provisions in NAFTA.
In fact, Rodriguez said while the Mexican government favors retaining the investor protection provisions in the agreement, US trade negotiators have sought to weaken or remove those same protections.
Vance Ginn, director of the Texas Public Policy Foundation, said that were the US to withdraw from NAFTA, it would result in the loss of 14 million jobs. The alternative to NAFTA would likely be more regulation and trade barriers that would stymie the free flow of goods across North America, he said.
