The North American Free Trade Agreement has been a critical component to Arizona’s economic success over the last nearly 25 years. The deal between the U.S., Canada and Mexico has allowed businesses to boom and fueled tremendous job growth.
Our state’s No. 1 and No. 2 trading partners are Mexico and Canada respectively, and our close proximity to Mexico has contributed to thousands of jobs for Arizonans. That adds up to billions of dollars and approximately 100,000 jobs on the line as the administration prepares to enter negotiations to update the agreement.
A NAFTA renegotiation isn’t just about big multinational companies and complicated business arrangements, though. At its heart, NAFTA affects us all, impacting everything from our grocery bill to what we pay for our next car.
Think of tariffs as taxes on trade. If Mexican manufacturers have to pay high tariffs in order to get their goods on U.S. store shelves, it makes this country a less attractive place to do business and it makes those Mexican-made goods more expensive.
The same happens if Mexico were to slap tariffs on goods stamped “Made in the USA.” Our products would be too expensive to compete in Mexico, we’d lose access to an important market, and manufacturing jobs would be lost here.
Maintaining a tariff-free flow of goods creates competition on store shelves, puts downward price pressure on the products shoppers want, and it leads to greater consumer choice and variety.
It wasn’t too long ago that the produce selection at your grocery store would depend on what was in season. Thanks to NAFTA, now everything’s in season all the time. One of the nation’s busiest produce ports is the Mariposa port of entry located in Nogales where, because of NAFTA, trucks full of Mexican-grown produce flow into the U.S., especially in our winter months.
NAFTA has also allowed for a more integrated process for manufacturing goods between Arizona and Mexico. The auto industry provides a prime example of how this works: Ford vehicles make their way from Hermosillo into the U.S. via Nogales. Many of these are manufactured in Mexico, but contain U.S.-made parts and components. These materials may cross the border – tariff-free – several times before a product is finished.
This seamless manufacturing process keeps product costs down for consumers and is a tremendous draw for manufacturing companies. Electric vehicle manufacturer Lucid Motors, for example, recently cited Pinal County’s proximity to Mexico and an integrated supply chain as prime reasons for the company’s significant investment in Arizona. If NAFTA were to be dismantled or be diminished, much of the entire automotive supply chain would shift to Asia, costing all three NAFTA nations jobs and a valuable industry.
Dismantling NAFTA would equal a backdoor tax increase on Arizona consumers, as goods would become more expensive and the overall cost of living would spike. Let’s instead focus on updating NAFTA to make cross-border transactions with our trade partners faster, easier, and less expensive.
The world is different today than it was nearly a quarter century ago when NAFTA was first implemented. In that time, the economy has changed dramatically. NAFTA should change to keep pace. The key, though, is to modernize the pact, not add barriers to a trade relationship that has served all three countries – and Arizona especially – so well over the last 23 years.
— Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry.
Rep. César Chávez represents Legislative District 29 in the Arizona House of Representatives.
The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.