CalChamber to California Senators: Support Swift and Efficient NAFTA Renegotiation

The United States should be committed to a swift and efficient North American Free Trade Agreement (NAFTA) renegotiation, the California Chamber of Commerce said in a letter to U.S. Senators Dianne Feinstein and Kamala Harris yesterday.

Action Needed

Today is the NAFTA Senate Lobbying Day 9 a.m. to 4 p.m. EDT organized by the business community, including the U.S. Chamber and the National Association of Manufacturers. The CalChamber is encouraging members to contact U.S. Senators Dianne Feinstein and Kamala Harris in support of NAFTA to coincide with this effort.

Support for NAFTA Modernization

CalChamber understands that NAFTA was negotiated more than 25 years ago, and while the U.S. and California economies and businesses have changed considerably over that period, NAFTA has not. CalChamber agrees with the premise that the United States should seek to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities under NAFTA.

The provisions of agreement with Canada and Mexico have been beneficial for American industries, agricultural enterprises, farmers, ranchers, energy companies and automakers.  Any renegotiation of NAFTA must recognize the gains achieved and ensure that U.S. trade with Canada and Mexico remains strong and without interruption.

The CalChamber actively supported the creation of the NAFTA among the United States, Canada and Mexico, comprising 484.3 million people with combined annual trade with the United States being around $1.069 trillion in 2016. In 2016, total goods exports exceeded $496.919 billion while goods imports totaled nearly $572.217 billion.

The CalChamber’s long-standing support for NAFTA is based upon an assessment that it serves the employment, trading and environmental interests of California and the United States, as well as Canada and Mexico, and is beneficial to the business community and society as a whole. Since 1993, trade among the three NAFTA countries has nearly quadrupled.

Now that the renegotiation process is underway, the California Chamber of Commerce urges a quick and efficient process, and one that does not hinder ongoing trade and investment among the three NAFTA members who must be kept united in the same end-goal of a successful renegotiation. As this process continues, the Trade Promotion Authority with its objectives and procedures should be followed. Further, during the process, the CalChamber encourages re-examination of the provisions agreed upon by the three countries during the already-negotiated Trans-Pacific Partnership, as these may provide a starting point for further discussion.

Mexico

Mexico continues to be California’s No. 1 export market, purchasing 16.2% of all California exports. California exports to Mexico amounted to $25.262 billion in 2016, a slight decrease from 2015. Computers and electronic products remained California’s largest exports, accounting for 21.7% of all California exports to Mexico. Exports of transportation equipment and machinery from California to Mexico grew to total more than $5.1 billion; with chemicals continuing to be a strong export sector as well.

Canada

Canada remained California’s second largest export market, with California exports to Canada increasing to more than $16.18 billion in 2016. Canada purchases more than 10% of all California exports. Computers and electronic products remained California’s largest exports to Canada, accounting for more than 30% of all California exports to Canada. California exports to Canada directly and indirectly support approximately 110,000 jobs in California, with many of those resulting from export growth under NAFTA.

Tourism

Globally, no markets have bigger impacts on California’s tourism economy than Mexico and Canada. In 2016, travelers from Mexico spent $3.2 billion in California, while Canadians spent more than $2 billion.

NAFTA Facts

Per the US Chamber “Facts on NAFTA,” the North American Free Trade Agreement has generated substantial new opportunities for U.S. workers, farmers, consumers, and businesses.

  • Trade with Canada and Mexico supports nearly 14 million American jobs, and nearly 5 million of these jobs are supported by the increase in trade generated by NAFTA.
  • The expansion of trade unleashed by NAFTA supports tens of thousands of jobs in each of the 50 states—and more than 100,000 jobs in each of 17 states.
  • Since NAFTA entered into force in 1994, trade with Canada and Mexico has nearly quadrupled to $1.3 trillion, and the two countries buy more than one-third of U.S. merchandise exports.
  • The United States ran a cumulative trade surplus in manufactured goods with Canada and Mexico of more than $79 billion over the past seven years (2008–2014). For services, the U.S. surplus was $41.8 billion in 2014 alone.
  • NAFTA has been a boon to the competitiveness of U.S. manufacturers, which added more than 800,000 jobs in the four years after NAFTA entered into force. Canadians and Mexicans purchased $487 billion of U.S. manufactured goods in 2014, generating nearly $40,000 in export revenue for every American factory worker.
  • NAFTA has been a bonanza for U.S. farmers and ranchers, helping U.S. agricultural exports to Canada and Mexico to increase by 350%.
  • With new market access and clearer rules afforded by NAFTA, U.S. services exports to Canada and Mexico have tripled, rising from $27 billion in 1993 to $92 billion in 2014.
  • Canada and Mexico are the top two export destinations for U.S. small and medium-size enterprises, more than 125,000 of which sold their goods and services in Canada and Mexico in 2014.

The goals of NAFTA are to eliminate trade barriers and facilitate movement of goods and services across borders, promote fair competition, increase investment opportunities, provide protection and enforcement of intellectual property rights, create procedures for trade disputes, and establish a framework for further trilateral, regional, and multilateral cooperation to expand the trade agreement’s benefits.

Global trade is crucial to the world economy, and trade agreements are an integral part of that success.

Staff Contact: Susanne T. Stirling