The Trump administration recently finalized the United States-Mexico-Canada Agreement, a wide-ranging trade deal to replace NAFTA. The new pact is such a huge win for American workers and companies that even Senate Minority Leader Chuck Schumer, one of Trump's fiercest critics, gushed that "the president deserves praise."
It's easy to see why both parties are excited about the USMCA. It preserves the best parts of NAFTA and creates new export opportunities for American firms. In particular, the pact will fuel America's ongoing energy renaissance. Congress should waste no time in ratifying the deal.
USMCA builds on everything its predecessor, the North American Free Trade Agreement, got right. The new agreement keeps provisions that secured international American energy investments and allows raw and refined products to cross borders tax-free. That means energy resources can continue to flow seamlessly between the United States and its neighbors.
America's energy firms depend on buyers in Canada and Mexico for a significant chunk of their revenue. From 2010 to 2017, U.S. crude oil exports more than doubled. Canada received 58 percent of those exports in 2016. And Mexico, the number one importer of U.S. gasoline, received over half of U.S. gasoline exports in 2017.
U.S. energy exports are poised to increase. According to the International Energy Agency, U.S. natural gas production will increase by almost 60 percent by 2050. And after 2020, that production is expected to outpace domestic consumption, meaning we'll have plenty of natural gas to export.
Much of it will go to Mexico. By 2031, Mexico's demand for natural gas is expected to increase another 27 percent compared to 2016 levels.
This cross-border energy trade fuels job creation. The oil and gas industry supports over 10 million American workers, whose combined wages total $714 billion.
Throwing out NAFTA with no replacement would have jeopardized these jobs, hurting blue-collar workers across the nation. Oklahoma, Pennsylvania, and Louisiana are three of the top five states with the largest concentration of gas and oil jobs. And additional energy investment, particularly in shale fracking, could bring over 100,000 permanent jobs to Ohio, West Virginia, Pennsylvania, and Kentucky.
USMCA also preserves "investor-state dispute settlements" for five industries, including oil and gas. Essentially, these settlements allow U.S. companies operating abroad to petition neutral international arbiters, rather than biased local judges, for redress if foreign governments infringe on their rights.
Without ISDS, U.S. companies like Chevron and ExxonMobil could be kicked out of Mexico with minimal legal recourse, just as they were in 1938 when Mexico nationalized its oil industry. Over the past few months, many political analysts feared that incoming Mexican President-elect Andrés Manuel López Obrador would try to appropriate American firms' investments.
Thanks to the new trade deal, American companies -- and their workers -- can rest easy.
American energy exports propel job growth and strengthen our economy. It's time for both parties to join together and ratify the USMCA.
Andrew Langer is President of the Institute for Liberty.
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