With NAFTA, Mexico and the U.S. Build Things Together
April 25, 2017 | Will Hurd, Contributor
Since NAFTA was signed 24 years ago in my hometown of San Antonio, U.S. trade with Mexico and Canada has more than tripled, and it is no question that Texas has benefited the most. With easy access to two of the busiest U.S. ports of entry via land and sea - Laredo and Houston - it is no surprise that Texas exported more than any other state in 2014, almost $300 billion-worth to countries worldwide. Across the U.S., all but ten states depend on Canada or Mexico as their largest export markets.
While "free trade" has been blamed for job losses in many areas of the nation, as of 2014, nearly five million jobs across the U.S. depend on trade with Mexico. These jobs are not just in Texas. In 2015, Mexico was the top first or second export destination for 30 out of 50 states.
The trade partnership with Mexico is the lifeblood of many communities along the Texas-Mexico border, including El Paso, Del Rio and Eagle Pass. Take for instance Laredo, the sixth largest metropolitan port complex in the U.S. by value. NAFTA is responsible for 99 percent ($121 billion dollars) of the trade that flows through each year. These goods, more than half of all U.S.-Mexico surface trade, flow straight up and down the NAFTA superhighway of Interstate 35 to San Antonio and beyond. In 2015, Texas-Mexico trade amounted to approximately $94.5 billion, making Mexico Texas' largest trading partner, surpassing the next four largest combined - Canada, Brazil, China and South Korea.
Contrary to recent rhetoric, exports are not the only component of trade that grows our economy. Imports create jobs too. And it is often difficult to calculate true imports vs. exports because so many goods cross our border multiple times as they are manufactured in steps. For example, 40 percent of the content that we import from Mexico was originally made in the U.S. This means that materials from the U.S. were sent to Mexico to be assembled, and then back to the U.S. to be packaged, and so on. We do not just sell goods to each other, we jointly produce them.
Economic growth results each time foreign - or originally domestic - goods cross our borders. These imports require logistics specialists, trucking, manufacturing and retailers to get to market, and many of these companies are headquartered along the NAFTA superhighway in San Antonio, and employ thousands of my constituents.
Imports also keep consumer prices low for Americans, as goods are produced more efficiently elsewhere. The basic principles of economies of scale and specification keep the cost of beer, TVs, computers and clothing low for hardworking families, so they can keep more money in their pockets.
Of course, there are areas in which we can increase exports, such as domestic farming and ranching, for example. The U.S. continues to lead the world in agricultural production, but the majority of the world's consumers and the highest growth markets exist outside of our borders. In order to grow our economy, we cannot just buy American; we have to sell American to the world.
I will be the first to admit that a lot has changed in the last two decades that we did not consider when we signed NAFTA. Domestic oil production has skyrocketed and we now live in a digitized world. As the largest beneficiaries of NAFTA, Texans have the opportunity to modernize the trade arrangement, to keep up with the 21st century economy. Let us start talking about regulatory cooperation in the energy sector, updating intellectual property rights and cross-border data flows and lowering barriers to agricultural exports.
Trade has been good to Texans, and we have a responsibility to set the record straight: the US, Mexico and Canada are not competitors, but partners who build things together. It is time to work with our neighbors as strategic partners so that we can modernize NAFTA together.