Repealing NAFTA Would Hurt U.S. Energy Sector

Popular thinking has it that the United States is being flooded by wave after wave of Mexican emigrants. But the notion that Mexicans are overrunning the U.S. border is unambiguously wrong. In fact, as George P. Shultz, former secretary of state in the Reagan administration, pointed out in a recent article, net immigration from Mexico to the United States has been zero or even negative for roughly 10 years.

Anyone who quibbles about illegal immigration from Mexico simply hasn’t done the math. According to the Pew Research Center, fewer Mexicans are migrating to the United States than in the past. In fact, more Mexicans left than came to the United States since the end of the Great Recession. Between 2009 and 2014, 870,000 Mexican nationals left Mexico to come to the United States, down from the 2.9 million who left Mexico for the United States between 1995 and 2000. About 1 million Mexican immigrants and their U.S.-born children moved from the U.S. to Mexico between 2009 and 2014.

That said, if the United States wants to stop illegal immigration, it has ways to fight back by doing something about conditions in such northern Central American countries as El Salvador, Guatemala and Honduras, where authorities are struggling to cope with drug-fueled violence, corruption and institutional breakdown.

The evidence of illegal immigration from Central America has cast much-needed attention on improving security at Mexico’s southern border after years of security practices that have been insufficiently tough and vigilant.

What passes these days for sound policy on North American relations is in fact a form of economic self-destruction, which will cripple our economy for many years to come. Instead of trading insults with Canada and Mexico, we should be maintaining policies that put U.S. job creation front and center. The fact is, 14 million American jobs rely on daily trade with Canada and Mexico of more than $3.3 billion, thanks to the North American Free Trade Agreement.

Trade between North American countries – the United States, Canada and Mexico – underpins all we do in maintaining good relations.

A good start in improving NAFTA’s provisions would be to achieve greater integration of our economies, which would benefit the United States. On the other hand, reverting to pre-NAFTA tariffs would hurt the United States. This is especially true in the energy sector, where Mexico has lifted barriers against U.S. investment in oil and natural gas production. Also, Mexico is increasing imports of U.S. natural gas, further integrating our energy markets. U.S. pipeline export capacity to Mexico has expanded to 7.3 billion cubic feet per day and is expected to nearly double in the next three years.

With NAFTA, U.S. energy resources flow to our neighbors, and profits flow back, generating job growth and stimulating even more production and economic activity like construction and petrochemical and steel manufacturing.

But in the name of protecting our economic interests, some isolationists in Congress are proposing to break the NAFTA pact with Canada and Mexico. That misguided approach would significantly harm the U.S. economy. Instead of protecting U.S. workers, terminating NAFTA would turn into a fiasco. The reason is there would be immensely greater pressures for Mexicans to move to the United States.

Cutting off NAFTA would harm American economic interests in other ways as well. U.S. consumers are benefitting from the advantages of leading the world in production and refining of oil and natural gas. With resources from Mexico and Canada boosting our own supply, we’re protected from overseas disruptions that once sent energy prices spiraling upward.

We can have energy security with North American cooperation on trade while protecting our jobs. The right way to accomplish this is through maintaining NAFTA and investing in resources from Canada and Mexico – and we are doing just that.

The wrong way would be to turn our back on our neighbors, scaling back opportunities for trade within the region. We would pay a huge price for such isolation in a weakened economy and job market. And in the end, we would damage the very economic security we seek to protect.

Mark J. Perry is a scholar at The American Enterprise Institute and a professor of economics at the Flint campus of The University of Michigan.

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