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NAFTA Defended as Boon for U.S. Energy Sector in House Hearing

Representatives from the energy, business, manufacturing and academic sectors told a House subcommittee on Wednesday to "modernize" but not blow up the North American Free Trade Agreement (NAFTA), arguing that it's 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.

"A modernized NAFTA could help solidify the recent advances and create advantages for North American industry, advancing market-based integration of the energy sector, including hydrocarbons production, transportation and processing, as well as electricity generation, transmission and distribution," said Chamber of Commerce’s Karen Harbert, CEO of the Global Energy Institute.

Harbert said withdrawing from NAFTA would impose unacceptably high costs on the United States at a time when the Trump administration is pushing historic tax and regulatory reforms. Without NAFTA, she said, U.S. global energy dominance would be compromised.

The latest testimony mirrors other stakeholders who have sounded off during the NAFTA debate, including Don Santa, CEO of the Interstate Natural Gas Association of America. He cautioned that any renegotiation should be handled carefully, given that natural gas exports in the wake of the shale revolution are a growing part of the "demand pie" for gas produced in the United States.

Separately, the North American Energy Ministerial in Houston last month brought together the energy policy leaders from Canada, Mexico and the United States to discuss cross-border issues, prompting Energy Secretary Rick Perry to emphasize that trilateral cooperation is imperative for the continent’s energy sector.

Talks to hammer out a revamped NAFTA began in mid-August. Advocates for renegotiation have cited the need to reflect the recent energy reforms in Mexico.

"The abundance of affordable energy in North America, led by the U.S energy revolution, has given U.S. businesses a critical leg up in today's intensely competitive global economy," said Harbert. "Lower prices for energy and chemical feedstocks bring great competitive advantages to American manufacturing.”

During the past decade, Swiss-based electrical manufacturer ABB Inc. has invested more than $11 billion in the United States where it operates plants in 23 states, said ABB’s Allen Burchett, global head of strategic products, who represented the National Association of Manufacturers (NAM) at the subcommittee hearing.

"While a significant amount of manufacturing is domestic...for ABB and other U.S. manufacturers, some parts of the manufacturing process occur in Canada and Mexico," Burchett said. "Many U.S.-made products are exported to Canada, Mexico and beyond. A strong North American supply chain has supported ABB’s domestic growth and investments, enabling us to competitively manufacture here."

The U.S. refining and petrochemical industry has been enhanced by NAFTA, according to Chet Thompson, CEO of the American Fuel & Petrochemical Manufacturers.

"In 2016, the United States imported $53 billion worth of energy products from Canada and exported $14 billion worth of energy products to Canada," Thompson said. "Mexico is the largest export market for refined products manufactured in the United States, with energy products accounting for almost 20% of trade with Mexico."

Advocating an "increasingly integrated North American energy market," Thompson said his association recommends that the United States build on past successes under NAFTA. That effort, he said, should "enhance and modernize" the trade agreement to create a "more harmonized and efficient" regulatory environment that provides certainty for businesses and the general public.

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