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Texas Manufacturing Workers Deserve a Good NAFTA Deal

Tarrant County manufacturing jobs are making a comeback

Average hourly earnings in local manufacturing jobs have risen significantly from 2007 to mid-2017.
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Average hourly earnings in local manufacturing jobs have risen significantly from 2007 to mid-2017.

Thanks to the leadership of President Donald Trump and members of Congress, including Texas’ Sens. John Cornyn (R) and Ted Cruz (R) and House Ways and Means Committee Chairman Kevin Brady (R), tax reform has empowered manufacturers to hire more workers, offer bonuses and expand in Texas and across the United States.

As a result, manufacturers in the United States are confident in the future. According to the most recent Manufacturers’ Outlook Survey from the National Association of Manufacturers, 93.5 percent of manufacturers have a positive outlook for their companies, including 94.5 percent of small manufacturers—a record high in the 20-year history of the survey.

President Trump touted these results in a recent Rose Garden event, when he invited manufacturing workers to the White House to share how their lives and careers have improved over the past year.

To build on this momentum, the next thing the Trump administration can do is secure a new, modernized NAFTA. NAFTA is vital to the economic health of Texas—and manufacturers in particular. After all, Texas manufacturers sell nearly half of their total manufacturing production to Canada and Mexico, much of it directly through U.S.-owned operations in these countries.

These exports include a wide variety of products—petroleum and coal products, computer equipment, chemicals, motor vehicle parts, electrical equipment, semiconductors and food and beverages.

Over the past decade, computer equipment exports to Canada and Mexico alone have tripled, sold mostly by small and medium-sized businesses. Overall, one in four Texas manufacturing companies exports to Canada and Mexico, and 112,000 Texas manufacturing jobs depend on those exports.

NAFTA helped make this all possible, which is why manufacturers want to see the administration get a deal done—one that includes manufacturers’ priorities to make the agreement better and stronger.

Of particular importance for Texas manufacturers is a provision called investor-state dispute settlement (ISDS). It helps protect U.S. individuals and companies when they or their property are treated unfairly or discriminated against while doing business in Canada or Mexico. ISDS provides them a chance for an objective review of their claims and to be awarded damages.

When a U.S. company had its property seized in Canada, and was denied the opportunity even to pursue its case in a Canadian court, ISDS was the only recourse, awarding damages to the company so it could continue to grow its U.S. operations.

Over the years, the United States has never lost a case before ISDS—and few have been brought against us given the strong U.S. legal system. But U.S. businesses have brought more than 40 cases against Canada and Mexico, winning a significant portion of them.

Without ISDS, however, we could witness foreign governments seizing the property of American companies or forcing the transfer of valuable technology—without any consequence. It’s a nightmare scenario that we have seen in places like Venezuela, but thankfully, we have had the power to prevent that in Canada and Mexico through NAFTA.

So, while NAFTA is due for some updates, ISDS is one provision that must remain, if not be strengthened. Small manufacturers in particular can sleep at night knowing that they can open up distribution operations to sell to more customers without having Canada or Mexico discriminating against them or forcing them to use local materials or workers or hand over technology.

To keep America’s manufacturing resurgence going, manufacturers are looking to President Trump and his administration, as well as Texas’ senators and members of Congress, to deliver on NAFTA—just as they have on regulatory relief, tax reform and so much more.

Jay Timmons is President & CEO of the National Association of Manufacturers.

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