Congress Should Approve U.S.-Canada-Mexico Agreement

Mark Green
Posted February 26, 2019

When the U.S.-Mexico-Canada Agreement (USMCA) was announced last fall, we pointed out that it would be good for North American energy security and continue flourishing energy trade between the United States and its neighbors by providing market access and zero tariffs for U.S. natural gas and oil and related products.

The agreement would sustain and expand the gains made under its predecessor, NAFTA, which created a North American energy market, helped make the U.S. more energy secure and benefited U.S. consumers.

Congress should approve USMCA as soon as possible to lock in the critically important energy relationship between the U.S., Mexico and Canada – as well as the general flows of goods and services so vital to good economic health in this country. And then, to get the full benefit of USMCA, existing steel tariffs should be eliminated, without any quotas to replace them. Kyle Isakower, API vice president of regulatory and economic policy:

“In terms of the unique impact to the U.S. energy industry, North American energy markets are deeply integrated and interconnected, and the free flow of energy products across our borders is essential for the continued American energy leadership and economic growth.”

API joined more than 200 companies and associations covering a wide variety of industries in the new USMCA Coalition, which will press the case for the agreement’s approval in Congress. The coalition’s broad membership helps illustrate the wide, positive impacts of free trade across the U.S. economy. Isakower:

“This isn’t just about the potential impact to the U.S. energy industry – but also to small businesses, manufacturers and U.S. jobs. We call on Congress to put working families first and pass the USMCA to ensure the free flow of goods and energy between U.S., Canada and Mexico.”

We’ve shared the chart below in the past, reflecting the importance of trade with Canada and Mexico to the U.S.:

As you can see, Canada has been the No. 1 importers of U.S. exported crude oil and kerosene type jet fuel, while Mexico has been the No. 1 importer of U.S. exported motor gasoline, motor gasoline blending components, distillate fuel oil and other products. These markets for U.S. energy-related exports help stimulate production here at home while supporting jobs associated with energy production.

As policymakers consider USMCA they should view the agreement as one that plays a big role in free trade – unfettered by tariffs and quotas, such as those imposed on imported steel by the administration last year – trade that strengthens U.S. energy, supports employment, promotes North American energy security and benefits consumers in all three countries. Isakower:

“The USMCA contains critical provisions that will enable the American natural gas and oil industry to continue its role as the world’s energy leader, provide affordable and reliable energy to American families, support key investments and energy projects across the country, as well as the continued support of over 10.3 million U.S. jobs.”