Governor of Texas Stresses Importance of Key NAFTA Provisions

April 5th, 2018

Governor Greg Abbott has once again publicly stressed the importance of the North American Free Trade Agreement (NAFTA). On Wednesday, Governor Abbott sent a letter to U.S. Trade Representative (USTR) Robert Lighthizer, imploring him to protect key parts of NAFTA including the Investor-State Dispute Settlement (ISDS) and Rules of Origin (ROO), two provisions that are of particular importance to the Lone Star state. He also called on USTR Lighthizer not to include a sunset clause in the agreement.

The Trade Leadership Coalition supports Governor Abbott’s stance on ISDS, ROO, and the sunset clause. These provisions are critical to healthy economic performance.

The key excerpts from Governor Abbott’s letter are below:

Investor-State Dispute Settlement

“Those protections reflect fundamental private property rights under U.S. law, including fairness and due process, non-discrimination, and compensation for expropriation… The enforceability of those protections is one of the driving forces for Texas businesses and businesses across the country to invest in Mexican and Canadian infrastructure and natural resource development.”

Rules of Origin

“Texas annually imports 40 percent of its intermediate goods under NAFTA, including $6 billion in auto parts from Mexico and $11.5 billion in petroleum products from Mexico and Canada. Stricter rules of origin will force Texas businesses and businesses throughout the country to produce greater numbers of goods without NAFTA benefits, which will lead to increased production costs, higher consumer prices and job loss.”

Sunset Clause

“The stability and predictability of the agreement have enabled investment decisions that have led to a substantial increase in exports between Texas and our NAFTA trading partners. Since NAFTA took effect, Texas exports to Mexico have increased by 13 percent annually. This organic growth in exports stems from the stability inherent in a long-term trade agreement. Likewise, it has played a significant role in the diversification of Texas’ economy and fostered a robust, yet stable labor market. Today, Texas’ unemployment rate is at an all-time low, thanks in large part to more than 1 million Texas jobs that depend on NAFTA. Your work to update and rebalance the agreement will undoubtedly ensure that the next generation of American companies and workers will reap even more benefits from a more just and modernized trade agreement. For that reason, the addition of a five-year Sunset provision to the agreement is unnecessary and will only interject uncertainty into the thriving trade relationship between us and our neighbors to the north and south.”