The North American Free Trade Agreement needs to be updated because of advances in technology and other changes since it was enacted in 1993, the CEO of the Texas Association of Business told a conference in Longview.
“We have 23 years of looking at how the trade agreement has functioned,” Jeff Moseley said Friday during the 2017 International Trade Summit hosted by the Longview Chamber of Commerce. “Look at how much the world has changed.”
As negotiators from Canada, Mexico and the United States headed to Ottawa, Ontario, for a third round of talks beginning this weekend on the agreement , Moseley was arguing for the sorts of change that would allow cross-border trade to continue to flourish despite uncertainty caused by the election of President Donald Trump.
Moseley, who heads an organization with 4,000 members statewide, compared mobile phones from the early 1990s that “looked like a briefcase” to smartphones small enough to fit in a pocket.
“Today, you can carry a walking computer,” he said. “You see how much technology has advanced.”
Southern border crossings date from the Eisenhower administration, he said, noting that 14,000 trucks daily enter the United States through Laredo. He suggested new technology, such as facial recognition software, could both secure and expedite border crossings to grow commerce.
The stakes are high for Texas. Moseley said 400,000 Texans work in trade, primarily with Mexico. So the business association put together the Texas-Mexico Trade Coalition, a binational group of business interests seeking to keep Mexico Texas’ No. 1 trading partner.
On Friday, the Trump administration was taking another side, releasing data it said proves the NAFTA playing field is tilted against U.S. manufacturers. A report issued by the Commerce Department contains data showing the United States is playing a diminished role in manufacturing products that are bought and sold around the continent. Meanwhile, countries outside of North America — like China — are capitalizing on NAFTA’s weak rules and benefiting from the trade agreement, the report said.
The administration’s report was expected to dominate this weekend’s NAFTA discussions over “rules of origin.” Those rules govern how much of a good must be produced in North America to qualify for NAFTA’s zero tariffs on many products.
The United States is expected to push for raising those limits. Negotiators also appear poised to argue for a new requirement on how much of those goods need to be made in the United States.
Since 1994, NAFTA has knit together the North American economy by lowering the barriers companies face when they ship products across borders. While most studies suggest the deal has had a modest overall effect on the U.S. economy, it has encouraged companies to reorganize their supply chains by moving lower-cost operations to Mexico. And it has become a huge source of controversy, with Trump describing it as the “worst trade deal ever made.”
Responding to a question from chamber President and CEO Kelly Hall, Moseley said a draft trade agreement could be negotiated by mid-December, giving Congress until June to approve it.
However, he also expressed concerns that an anti-American candidate could be elected president in Mexico in July.
At least one large Longview-based manufacturer is watching the NAFTA talks with interest. Todd Anderson, president of Stemco, told the conference a big chunk of his company’s business is based on exports to Mexico and other countries. It also has manufacturing operations in Mexico.
Stemco, the Longview-based subsidiary of EnPro Industries Inc., manufactures a line of systems and components for the commercial vehicle industry. The Longview plant has about 370 employees.
Anderson said Mexico and Canada combined account for about 25 percent of Stemco’s sales, adding, “We are growing in some key international markets.”
Stemco also has trained more than 60,000 people throughout the United States, Mexico and Canada in recent years, Anderson said.
He said NAFTA also is important to Stemco because the company manufactures air springs in Mexico. Stemco acquired a production operation in Mexico in 2015.
Other speakers at Friday’s summit discussed governmental agency services that aim to help small businesses land export opportunities.
The mission of the U.S. Commercial Service of the U.S. Department of Commerce is to promote the export of goods and services by small- and mid-sized businesses, Senior Commercial Officer Sheryl Maas told the conference. She added her agency also represents American business interests internationally and helps businesses find qualified partners in other countries.
She said the Longview chamber may want to arrange a trade mission, adding, “We can help you with that.”
Kelly Kemp, regional director the North Texas branch of the U.S. Export-Import Bank, said his agency operates through the private sector to provide support in more than 155 countries. The Export-Import Bank provides insurance guarantees on principal and interest for export-related inventory and accounts/receivables.
Small businesses face challenges to expanding their export businesses that include lack of information, capital and access to markets, said Alale Allal, regional export trade finance manager for Texas and Oklahoma of the Office of International Trade of the U.S. Small Business Administration.
He said SBA provides services that include export loans with 90 percent guarantees for lenders, and cited the availability of credit insurance for risks such as not being paid.
Allal advised audience members seeking to export to make initial contact through their banks for loans. Lenders then send paperwork to the SBA.