How revisions could make NAFTA even better for Texas

By Christi Craddick

When I think about the upcoming NAFTA renegotiations, I think about the origins of the Railroad Commission of Texas, on which I have the honor of serving.

The Texas Legislature created the commission in 1891. Its charge was to oversee the state’s transportation industry, specifically railways.

When oil and gas pipelines came along, the commission had already been doing similar regulatory work — and doing it well — for decades. Since pipelines raised many of the same issues as railways, it was given regulatory authority over them. Fast forward to today, and as most Texans know, even though we are still called the Railroad Commission, we are no longer in the railroad business.

Instead, we are one of the leading regulators of oil and gas in the world — thanks to Texas’ continued dominance of the industry. If it were a country, the Lone Star State would be in the top 10 globally for oil production and second in the world for natural gas production, behind Russia.

The commission has fulfilled its responsibility of safeguarding our natural resources, securing community safety and achieving economic development because of relationships that were first negotiated in a different sector more than 100 years ago. We may see a similar trajectory around the North American Free Trade Agreement.

Overall, NAFTA has been great for Texas. We run a trade surplus with our neighbor to the south, with Mexican exports accounting for 6 percent of the state’s GDP, compared to 1.3 percent nationwide. However, there are some areas where the original 1993 agreement is either silent or outdated.

President Trump’s plans to work with Canadian and Mexican officials to revise the treaty could offer U.S. businesses and consumers a once-in-a-generation opportunity to build on what came before. Given my focus in the energy sector, three areas I would like to see included in negotiations relate to energy infrastructure, investment and the environment.

Infrastructure development is already out ahead of Washington. American gas exports to Mexico have doubled in the last two years. By the end of 2018, six transnational pipelines will be carrying gas from the U.S. into Mexico.

But our policies and practices are not harmonized across national lines. A revised NAFTA could allow us to coordinate the location and funding of future projects and develop a uniform and comprehensive regulatory framework to deal with the transportation and distribution of energy across North America. As an acknowledged leader in this area, Texas could influence the standards ultimately set.

As for investment, when NAFTA was originally negotiated, Mexico banned private development of its energy resources. That changed in 2013. Last December, Mexico awarded deepwater exploration and development rights to American, French and Chinese companies. Future investments are likely to follow, but their long-term stability will be uncertain until NAFTA is revised to explicitly protect foreign investors within North America.

When it comes to the environment, critics have long charged that the treaty’s existing protections are inadequate and fail to properly incentivize sustainable development. We can do better.

At the Railroad Commission, we have worked with industry experts to develop best practices around the extraction and distribution of natural resources in order to ensure environmental and public health. These standards should be written into any future agreement, along with a mechanism for enforcing the treaty’s protections on both sides of the border.

The most difficult part of any negotiation is nailing down the terms of that first, hard-fought agreement. It may well be that NAFTA was merely a first step — and that what began as a free-trade agreement will become much more than that. We should not ignore this potential. Indeed, if NAFTA’s revision is negotiated well, it could help realize energy independence for North America.

 

Craddick is chair of the Railroad Commission of Texas.

 

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