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API Chief Says NAFTA Key for Creating U.S. Energy Company Opportunities in Mexico, Canada

The head of the American Petroleum Institute (API) on Tuesday diverged from the White House on the North American Free Trade Agreement (NAFTA), arguing that if its benefits cannot be salvaged by modernizing the accord it should be left in place as it is.

API CEO Jack Gerard said the petroleum industry association was "very focused" on NAFTA, and has engaged the Trump administration and Congress regarding negotiations, stressing that the 20-year-plus agreement benefits all U.S. business, not just the energy industry.

In his annual State of American Energy address, Gerard was generally bullish on the prospects for the U.S. oil and gas sector given the "courage and foresight" of President Trump's energy policies and the technology and innovation of member companies to produce energy while cutting greenhouse gas (GHG) emissions to a 25-year low point.

North America presents a valuable example, he said, of how global trade agreements are good for the energy sector and NAFTA is “critical" to that success, "making energy more affordable and creating opportunities for U.S. companies in Canada and Mexico."

"As the Trump administration continues negotiations with Canada and Mexico, we urge them to seek modernization in ways that maintain these benefits."

Representatives from the energy, business, manufacturing and academic sectors also told a House subcommittee last month to "modernize" but not blow up NAFTA, arguing that it is essential to the nation's energy growth. While most of the subcommittee members from both political parties were in agreement with the witnesses, lawmakers raised concerns about the loss of U.S.-based jobs and the need for strong protections for American companies making investments in Canada and Mexico.

Gerard urged an approach with NAFTA that would strengthen U.S. relationships with its neighbors and avoid adding uncertainty between the three nations. "So for the time being, our view is that if we can't modernize and strengthen it, we ought to leave the existing agreement in place."

At the North American Energy Ministerial in Houston in November, U.S. Energy Secretary Rick Perry said he expected Mexico and Canada would join the United States in drafting a revamped NAFTA to incorporate cooperation for the continent’s burgeoning natural gas and oil trade.

Stressing that the industry is promoting "environmentally responsible domestic energy production" in the onshore and offshore, Gerard said. He lauded the Trump administration's new five-year plan for offshore development and praised the recently enacted tax reform legislation, which he said would help the energy industry.

Gerard also encouraged the administration and Congress to push forward with an infrastructure initiative that includes energy. He said API estimates that there is more than $1 trillion of U.S. infrastructure development potential to 2035, and more than one million jobs annually that could be created during the same period.

The draft offshore development plan, he said, would lift unnecessary restrictions and opens up about 90% of Outer Continental Shelf areas to energy resources. However, many coastal states are opposed, and it will take at least a year before a final plan is approved.

"It's not complicated; it's relatively straightforward," Gerard said of the offshore draft. "I thank this administration for having the courage and foresight to ask, 'Why would we restrict our U.S. capability and our natural resources?'”

Many areas of the Gulf of Mexico, for example, "haven't been looked at with our modern technology." The nation shouldn't "continue to deny that opportunity."

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