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Texas Is State Most Affected By Any NAFTA Overhaul

Logo for the NAFTA Secretariat

Mexico Consul General Carlos Gonzalez Gutierrez told state lawmakers Monday that Texas has more to lose than any other state if  President Trump keeps his promise to overhaul NAFTA. 

Gutierrez also told members of the House Committee on International Trade and Intergovernmental Affairs there are areas Mexico is willing to negotiate.

Gutierrez reminded a committee of state representatives that the economies of Texas and Mexico are interdependent - 40 percent of U.S. exports to Mexico come from Texas. 

“What you sell to my country is worth 6 percent of your GDP compared to 1.3 percent nationally.  That is why, Mr. Chairman, when people talk about renegotiating NAFTA, Texans should be extremely concerned.”

During his presidential campaign Donald Trump promised to scrap the trade deal or negotiate more favorable terms for the United States. 

Last month Mexican President Enrique Peña Nieto started the clock on negotiations by kicking off a 90-day period of consultations with Mexican businesses.  Now, NAFTA talks among the U.S., Mexico and Canada are expected to begin in May.

At the Texas Capitol economists joined Consul General Gutierrez in trying to shoot down claims by President Trump that the NAFTA trade deal signed 24 years ago led to manufacturing jobs being lost in Texas and the United States. 

Gutierrez called that a “misrepresentation” of facts and said that since then the number of U.S. jobs linked to Mexico trade has grown from 700,000 to more than 5 million.

Chris Wilson, deputy director, of the Mexico Institute at the Woodrow Wilson International Center in Washington said technology and automation– not NAFTA – are the biggest reasons for the loss of manufacturing jobs in the United States. 

International Economist Russell Green from Rice University delivered a lesson on what could happen to cross-border supply chains- companies in Mexico and Texas that ship products back and forth to each other without tariffs to create other products that are cost effective enough to compete with products in Asia or elsewhere.

“So what happens if misguided trade policy shuts U.S. firms off from the cross-border supply chains?  First, all our competitors in Asia and Europe will be very happy.  They will continue to use cross-border supply chains.  So U.S. competitors will become less competitive and continue to lose market share domestically and abroad.”    

While Mexico doesn’t want to completely renegotiate NAFTA, Gutierrez says Mexico would be open to developing cross border regulations for areas not addressed in the original trade pact:  for energy; e-commerce and the Internet; and for service sectors like banking and insurance.  

Gutierrez specifically mentioned changing insurance regulations for Texans who travel to Mexico for healthcare, but declined to say whether allowing U.S. citizens to use health insurance benefits in Mexico was one of the issues that could be on the table.