Support US energy trade by approving USMCA
© Getty Images

Winning on trade looks like this:

ADVERTISEMENT

For these reasons and more, Congress should approve the U.S.-Mexico-Canada Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA). From an energy standpoint, the case for USMCA approval is strong.

This agreement – as NAFTA did before – would support U.S. natural gas and oil (see here and here) by fostering a fair, level playing field for record-setting U.S. energy exports which support domestic natural gas and oil development and jobs while benefiting consumers and the economy. A recent United States International Trade Commission report estimates USMCA could increase U.S. real GDP by $68.2 billion and employment by 176,000 jobs.

More to the point, trade with Mexico and Canada has been great for U.S. energy. Mexico is the No. 1 market for U.S. exports of gasoline, fuel oil and total refined products. Canada is No. 1 market for U.S. exports of crude oil and fuel blending components. These exports represent viable markets for U.S. products, spurring more production and economic benefits here at home.

Writing for the Washington Examiner, Aaron Padilla, API senior adviser for international policy, notes that increased demand stemming from trade generates economic activity beyond the natural gas and oil industry itself. “Infrastructure construction is just one example,” Padilla writes. “U.S. pipeline capacity to export natural gas to Mexico’s rapidly growing market nearly doubled since 2015.”

Trade and markets play an important role in sustaining and growing the United States’ global energy leadership – leadership that has made this nation more secure, helped U.S. households with their budgets and make progress toward important environmental and climate goals.

That progress would be hindered without market access and trade protections that would be provided by USMCA. The agreement will help the U.S. energy revolution moving forward:

Approving USMCA is an important step toward a winning trade approach for the United States, particularly in the energy space. Another would be ending the administration’s counterproductive tariffs, including those on imported steel, which have impacted our industry and could affect consumers.

“Finalizing USMCA is a prime opportunity to jettison the self-defeating tariffs,” Padilla writes. “Instead, the Trump administration is considering replacing tariffs with even worse restrictions: quotas. Where tariffs raise costs for essential supplies, quotas cut off the supply entirely once a pre-determined limit is reached.”

Think of it in terms of getting a replacement part to fix your car, Padilla writes. “Tariffs mean you can get the part, but it’ll cost 25 percent more. Quotas mean you may have to wait a year for the part, with no alternatives. Multiply that experience across the U.S. economy and you’ll get an idea of how steel quotas can gum up the works – by bringing construction projects to build new chemical plants and pipelines to a screeching halt.”

As the world’s leading natural gas and oil producer and know how trade helps sustain and grow that production, the U.S. should be playing a winning hand on trade. Congress should approve USMCA, and the administration should end tariffs and quotas that hinder the country’s energy sector.

Mark GreenMark GreenInterior gains new watchdog We need a new structure to secure our border Tackling China in modern Cold War MORE is the editor of Energy Tomorrow of the American Petroleum Institute.