By
Earl Baker
October 2, 2019 at 5:00 am ET
A critically significant share of trade between the United States and Canada is at stake if Congress does not act soon on the pending United States-Mexico-Canada Agreement.
Thanks to a recent Nebraska Supreme Court ruling, Canadian oil needed for energy will soon flow through the Keystone XL Pipeline to the United States. But while the decision is an important win for this project, to fully realize the potential of cross-border energy trade between our two nations, the USMCA also needs to be enacted this year.
The Nebraska court decision that the pipeline is in the public interest clears the way to start construction on the extension to the existing Keystone pipeline. But here is the catch. The existing trade agreement between Canada, Mexico and the United States known as the North American Free Trade Agreement has been renegotiated. The result is the USMCA.
All three heads of state appeared together to adopt the proposed agreement in November of last year. Unfortunately, the USMCA is waiting for action in Congress to receive final approval.
The energy sector is critical for Canada to be able to export oil to the United States to meet domestic industrial and manufacturing consumption. Additionally, U.S. energy products are also critical to Mexico, who like Canada is one of the top two purchasers of U.S. oil and gas.
This benefits all three nations and their citizens. It is not an easy figure to grasp, but the integrated economy of all three nations is $22 trillion. And energy is a primary element of that.
The ideal way for this integrated system of oil exports to take place is through the construction of modern, essential infrastructure such as the Keystone XL Pipeline, which would originate in Alberta, Canada, and progress through the United States.
With the approval of Keystone XL, USMCA passage is more crucial than ever. Once construction begins, 20,000 high-paying jobs will be created during manufacturing and construction. The estimated impact of the pipeline on the U.S. gross domestic product is $3.4 billion, while $585 million in taxes will go to deserving communities along the pipeline route. It will also allow U.S. oil producers to export more of their product at higher prices.
Energy is the most important factor in developing and powering any economy. But a thriving energy sector isn’t possible without free trade. USMCA passage will maintain energy production as a driving force in the economy and provide American consumers with affordable, reliable energy. Additionally, with the continuance of free trade, Keystone XL will lower costs at the pump for working families through increased efficiencies in the energy supply chain.
In my home state of Pennsylvania, our state is increasingly active in the worldwide energy economy. In the past six years alone, we have nearly doubled our natural gas production as a major player in the U.S. shale revolution. It is in our interest to encourage the free flow of energy transactions, and that is only possible through the USMCA.
As the pipeline’s legal situation is resolved, progress can be made as long as the USMCA is passed by Congress this year. North American energy trade is understood as vital to our economy, and there is broad support for the agreement among both political parties, businesses and unions. It would be short-sighted for congressional Democrats to oppose a bill that clearly benefits all Americans, just to deprive the president of a legislative victory.
Ratifying this agreement will provide direct benefits in terms of jobs, lower fuel costs and energy contribution to the GDP of each party country. Failure to pass will mitigate, if not wipe out, any positive outcomes from Keystone XL.
Now is the time for Congress to pass the USMCA so that Americans can reap the benefits of a strong and secure North American energy sector, first and foremost with the Keystone XL Pipeline.
Earl Baker is a three-term commissioner of Chester County, Pa., two-term Pennsylvania state senator, 19th District, and former executive in the nonprofit and private sectors, and he is active in the Chester County Chamber.
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