What U.S. must avoid if we renegotiate NAFTA
At the Republican Congressional Retreat in Philadelphia last week, President Donald Trump reaffirmed his commitment to renegotiate the North American Free Trade Agreement. Meanwhile, his staff suggested imposing a 20 percent tax on imports from Mexico to help pay for construction of a wall on the southern border.
While renegotiations could strengthen and modernize NAFTA, any effort to impose new restrictions or barriers on our ability to trade with Mexico and Canada will have serious consequences for Arizona, including massive job losses for workers and dramatically higher costs for consumers.
NAFTA has delivered enormous economic benefits to the United States since its inception in 1994, especially for the citizens of Arizona. In just two decades, Arizona’s exports to Canada and Mexico have increased by $5.7 billion, or 236 percent.
Today, international trade supports more than 1 in 5 jobs in Arizona, which pay roughly 18 percent higher salaries than jobs unrelated to trade. Imports to the state have also lowered the cost of raw materials, allowing Arizona companies to remain competitive and reducing costs for Arizona consumers.
Importantly, NAFTA has made it easier for Arizona to freely exchange goods and services with our closest neighbor to the south, Mexico. Today, Mexico is Arizona’s No. 1 trading partner.
According to the U.S. Department of Commerce’s International Trade Administration, trade with Mexico accounted for 40 percent of our state’s exports to foreign markets in 2015, totaling $9.2 billion. Arizona’s bilateral relationship with Mexico directly supports more than 100,000 Arizona jobs.
The president has stated he wants to strengthen and modernize NAFTA, which could benefit both the United States and our trading partners. But imposing new barriers and levying punitive tariffs against our closest neighbors could threaten our trade relationship, cost Arizona billions of dollars and thousands of jobs, push our state into a recession and undermine security cooperation with our southern neighbor.
NAFTA has also made it possible for Arizona businesses to freely exchange equipment and supplies with Mexico without having to pay steep tariffs. As a result, manufacturing between Arizona and Mexico is highly integrated, with materials and manufactured parts often crossing the border several times before a product is finished.
Moreover, Arizona’s trade relationship with Mexico has strengthened our ties with its people, bringing additional benefits to Arizona’s tourism, retail and hospitality sectors. Around 65,000 Mexicans come to Arizona every day to dine in our restaurants, shop in our stores, and stay in our hotels, spending an estimated $7.8 million each day. Arizona has two trade offices in Sonora and Mexico City that are focused on facilitating additional cross-border business partnerships and furthering our mutually beneficial relationship.
In addition to boosting Arizona’s economy, free trade with Mexico has strengthened our bilateral cooperation, particularly as it relates to our mutual security. Today, the United States and Mexico rely on each other to share intelligence, reduce crime and combat illegal drug and human trafficking.
The free flow of trade has been the foundation of U.S. economic policy for decades, and a major factor in our prosperity and greatness. We should not have to relearn the lessons of history. Retreating from NAFTA and imposing new restrictions on free trade will harm our ability to compete in today’s global economy, threaten jobs, and undermine our relations with our closest neighbors.
Republicans John McCain and Jeff Flake are Arizona’s senators. Follow them on Twitter, @JeffFlake and @SenJohnMcCain. Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry. On Twitter, @azchamber.
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