Texas Businesses Team Up to Defend NAFTA
Texas' largest business associations are joining forces to make sure that proposed changes to U.S. trading relations with Mexico and Canada don't hurt what has become a critical part of the state's economy.
On June 14, the Texas Association of Business, the Texas Business Leadership Council and the Borderplex Alliance — a group of companies that depend on trade with Mexico — will formally launch the Texas-Mexico Trade Coalition to "ensure that the administration and our leaders in Congress understand the importance and positive impact of NAFTA on our economy," according to the group's new website.
Although business groups are busily contacting their representatives about what they'd like to see in an updated North America Free Trade Agreement, Texas may be the only state with a new organization created for that purpose.
"Texas is ground zero, so it makes sense to see the most activity there," says Christopher Wilson, deputy director of the Washington-based Wilson Center.
The move comes amid a darkening attitude in Washington toward existing trade treaties, with President Donald Trump calling NAFTA "the worst trade deal ever," threatening to impose hefty border taxes on businesses that moved across the border and nearly withdrawing from the pact entirely before deciding to renegotiate it instead.
Last month, the just-confirmed U.S. Trade Representative notified Congress that the administration planned to start talks on the deal in 90 days, kicking off a comment period for interested parties to weigh in on how they think NAFTA should change. Texas businesses don't want NAFTA to change much.
"There's one basic principle: 'Do no harm,'" says Dennis Nixon, the CEO of Laredo-based IBC Bank, which has been heavily involved in efforts to safeguard NAFTA on both the state and national levels. "And the second principle is, let's modernize it and bring it into the 21st century, especially regarding technology."
Last week, Nixon participated in a summit of American and Mexican CEOs in Washington at the U.S. Chamber of Commerce, which launched its own bi-national alliance to defend the trade pact. Vice President Mike Pence and Commerce Secretary Wilbur Ross both visited, and Nixon said they reassured the assembled executives that the administration was seeking a deal that was more "fair."
The definition of "fair," however, is very squishy. Although Trump has said that Mexico has "taken advantage" of the U.S. because of Mexico's large trade surplus, many Mexicans consider the deal to have been much more advantageous to the United States.
"We really never thought the challenge was going to come from the U.S., in terms of challenging the NAFTA," says Luz Maria de la Mora, a former trade diplomat from Mexico who now works as a consultant. NAFTA heavily benefited U.S. corn producers at the expense of Mexican farmers, for example, and the gap between U.S. and Mexican wages hasn't shrunk significantly.
Meanwhile, labor groups are also working to push the renegotiation in a direction that would improve wages and working conditions for employees, not just businesses. The AFL-CIO released a list of recommendations this week that includes making labor and environmental protections an enforceable part of the agreement, rather than just as a side annex, as they are today.
Those kinds of changes, however, could require the deal to be approved by Congress, which would be a significant obstacle. It's one that business coalitions are seeking to avoid, Nixon says, by making only small adjustments to address new issues like digital services and data storage.
