We must update NAFTA to put our businesses and entrepreneurs first

Published via The Hill

President Trump’s trade representative has notified Congress of the White House’s intention to renegotiate the 23-year-old North American Free Trade Agreement. While this is a welcome change from the protectionist campaign rhetoric to “rip up” the “worst trade deal in the history of the world,” a more modest course would clearly recognize that future economic and labor growth depends on more, not less, trade with our neighbors.

NAFTA helped raise our country’s standard of living. Canada and Mexico became our largest and second largest export markets in the world. In 2016, trade between the U.S. and our northern and southern neighbors totaled $627.8 billion and $579.7 billion, respectively.

 With interlocking supply chains that stretch from Calgary to Oaxaca, 14 million American jobs now depend on trade with our neighbors. And of the American companies that export, 98 percent are small and midsize businesses.

 But it is indisputably true NAFTA can be improved. Despite the deal’s benefits — lower prices for the American consumer, a boost in exports, and strengthened bilateral ties — Democrats and Republicans alike believe changes are overdue. We should start with a new name and a new mission. It’s time to strike a North American “Fair” Trade Agreement that prioritizes small businesses, manufacturers, and entrepreneurs in the United States.

We’ve hit a hard ceiling. Today, the U.S. is running close to a $60 billion trade deficit with Mexico and we’re bleeding jobs, particularly in landmark industries, such as steel and automotive. Americans need a continental agreement that reflects the realities of the 21st century. A North American “Fair” Trade Agreement would focus not on imposing artificial, one-size-fits-all barriers at the border, but rather creating clear incentives and enforcement mechanisms to foster principled commerce.

First, the U.S. has some of the strongest protections for workers in the world, from a minimum wage to restrictions on working hours to workplace standards. However, our neighbors disregard some of these practices, lowering production costs and creating an unjust competitive advantage. A fair trade agreement would set forth industry standards for compensation and reduce gender wage gaps.

Second, when it comes to environmental regulations, the U.S., the most industrialized country in the world, has agreed to cut back on negative byproducts, carbon emissions, toxic waste, and so forth. However, exploiters of the system again become the beneficiaries. A fair trade agreement would ensure others follow suit and, further, cooperate in developing cost-effective and clean energy sources.

Third, all products can be reproduced if not perfectly copied with enough resources. The ideas that inspire them, nonetheless, are inimitable, and should be treated as such. This is markedly the case in the digital age, where flows of information worth billions of dollars and terabytes of data cross borders daily. A fair trade agreement would include online contract enforcement and digital consumer protections, and would challenge “data localization” rules that mandate retention of data on Canadian servers.

Fourth, infrastructure deficiencies are a detriment to growth. Instead of concentrating on the border wall, we should work with Mexico to construct and rebuild physical ports of entry along the U.S.-Mexico border. A fair trade agreement would cut down on transportation time and lower operating costs, permitting companies to hire more employees at better wages.

These issues are acute for Hispanic-owned businesses, many of which are involved in cross-border trade, particularly with Mexico. The Hispanic community in the U.S. — the largest minority community in the country — is far from monolithic. Contrary to stereotype, we don’t just make up the unskilled labor force.

We’re hardworking and entrepreneurial, launching businesses at a pace more than double the growth rate of the national average. There are now more than 4.2 million Hispanic-owned companies in America – more than a 57 percent increase since 2007 – that contribute over $668 billion in revenue to the economy every year.

Prosperity and ambition do not know ethnicity. The same market forces that apply to all other Americans apply equally to Hispanics. We know what it takes to make a business succeed, and we have proudly chosen communities across America as the place to demonstrate that. After all, every tax we pay, every job we create, every product we manufacture, and every service we provide, benefits the American economy.

NAFTA succeeded in so far as it has created one of the most competitive regions in the world and spurred growth, especially for American businesses. It would be foolish to throw out the entire agreement.

Stay Informed

Sign up to receive updates from USHCC.