The North American trade community has been on edge during the recent NAFTA (North American Free Trade Agreement) negotiations. Trade officials from the U.S., Canada and Mexico concluded the fourth round of NAFTA renegotiations on Oct. 17th and announced a fifth round that will be held in Mexico City from Nov. 17th - 21th. Renegotiations are expected to continue through the first quarter of 2018. The U.S must support amending NAFTA as a trinational win or American can potentially lose many of the 5 million jobs supporting trade.
The NAFTA agreement has been instrumental in building the $17 Billion dollar market in trade between Arizona and Mexico. Simply a visit to our local grocery store is proof of the importance of NAFTA. No longer are fruits and vegetables seasonal – when was the last time we couldn’t buy an avocado year round? Americans can expect dramatic price increases and a decrease in convenience in products they’ve grown accustomed to if NAFTA were to be eliminated.
As the cross-border business community most affected by these negotiations, we cannot afford to idly sit by and watch the activities. We need to continue to communicate the importance of trade to our industries to our elected officials in all three countries.
Our message must be consistent and suggest the following during the negotiation:
1) Amend it, don’t end it. The elimination of NAFTA would create chaos and unintended consequences in the business community. Should the U.S. withdraw from the trade pact, businesses could face reinstated tariffs across a number of industries, potentially making goods more expensive for all three countries. Over 110,000 jobs in Arizona alone depend on trade with Mexico.
2) Keep it trinational. There was great value at the creation of NAFTA in consolidating trade agreements within a megaregion that included the U.S, Mexico and Canada rather than bilateral agreements. During NAFTA’s 23-year existence we have experienced many success stories as component parts are exported to one country to be manufactured into a finished good in another while also being exported to a third for distribution. A renegotiated NAFTA can learn from our history and can build a win-win-win for all three countries. Recently the U.S Chamber sent a letter supporting the renegotiation of NAFTA to our federal elected officials with over 325 Chamber Executives’ signatures from states across the country. There is a realization across the business community that NAFTA is vital to every state’s economy.
3) Work quickly. It is widely known that the enemy of business is uncertainty. Businesses utilize strategic plans that look forward ten years or more. A sunset clause every five years within NAFTA would be debilitating. Additionally, dragging on the NAFTA debate would also discourage businesses to invest in the infrastructure needed to export and import. Recent 2016 data from the U.S Department of Commerce indicates that trade is down 7% in Phoenix and that Arizona’s trade has decreased by over $1 Billion dollars. The debate surrounding NAFTA nationally has already had an impact on our state’s economy.
That leads to the question of what should our local businesses in Arizona and Sonora do?
In 2016, United States trade with foreign countries was $4.9 million. That included $2.2 trillion in exports per the U.S Census. To remain competitive in our global economy, the U.S cannot exit NAFTA. The U.S is the world’s third largest exporter behind China and European Union. Our mindfulness on the jobs tied to trade and the economic impact on every U.S citizen must be elevated in the current NAFTA debate.
Lea Marquez Peterson serves as the President/CEO of the Tucson Hispanic Chamber (THCC) and a Public Voices Fellow.
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