Opinion

The USMCA: Great Neighbors, Better Trade Deals

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Posted: Oct 21, 2020 1:08 PM
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The USMCA: Great Neighbors, Better Trade Deals

Source: AP Photo/Martin Mejia

President Trump often says that his “America First” foreign policy does not mean “America Alone.” Nowhere is this better exemplified than in the new United States-Mexico-Canada Agreement (USMCA).

USMCA is a trilateral trade deal that replaces the outdated, ineffective North American Trade Agreement (NAFTA) and better positions the American economy and its private sector for success.

USMCA reflects the reality of the United States’ expansive trade relationships with Canada and Mexico, ensuring that American companies are protected while operating abroad and the American people are reaping the benefits of cross-border partnership. It also provides assurance that in times of natural disasters that Americans across the country have access to reliable energy.

There are few industries that stand to benefit more from this agreement than our oil and natural gas producers and fuel manufacturers. 

First, USMCA maintains zero-tariff energy exports through the continent, facilitating the free flow of energy across North American borders.

Second, USMCA supports the development of new pipeline infrastructure to transport oil and natural gas safely and efficiently.

Third, exports of liquefied natural gas, or LNG, will continue to receive automatic export approval.

And finally, this new framework reinforces Mexican energy reforms that have broadened its commercial ties to the United States.

According to the International Trade Commission, USMCA’s implementation – which occurred earlier this summer – will help create between 176,000 and 589,000 new American jobs, and drive tens of billions of dollars’ worth of new North American trade across the economic spectrum.

Canada and Mexico are our largest energy trading partners, with both countries serving as critical markets for American energy imports and exports and driving tens of billions of dollars in revenue into our economy. This trade has supported the United States’ emergence as the world’s largest oil and natural gas producer – a global superpower whose stature helped provide much-needed stability to the global markets earlier this year during the outset of the COVID-19 pandemic.

In fact, North American energy trade helped the U.S. become the world’s largest oil refiner, home to 20 percent of global refining capacity. Canada and Mexico also supply nearly all of U.S. crude oil imports, ensuring that we are able to source fuel from friends and neighbors instead of less reliable foreign regimes.

As such, the national security benefits of strengthening these trade relationships is paramount. USMCA equips North America with the tools and mechanisms it needs to enhance its energy independence, which in turn bolsters our mutual sovereignty by lessening our dependence on energy imports from countries who do not uphold the same adherence to free markets, transparency, and the rule of law.

The United States’ relatively newfound energy supremacy is based in no small part to the efficiency and innovation of the private sector. Our nation is blessed with tremendous amounts of natural resources – from traditional fuel sources like oil, coal, and natural gas, as well as renewable energy sources. President Trump’s energy policy allows us – perhaps for the first time, the full potential of our resource abundance and fuel diversity.

USMCA represents a new era for American trade deals.

In the short-term, this deal will create energy sector jobs and raise family incomes as we emerge from the shadows of the coronavirus pandemic. In the future, led by the United States, it will unleash greater energy-driven innovation and provide energy security for North America in an increasingly uncertain world.

Through the USMCA, the Trump administration is delivering for the American people.

Mark W. Menezes is the U.S. Deputy Secretary of Energy, responsible for the Department’s policy initiatives.