Oil Firms That Cheered Regulatory Cuts Are Quaking on Nafta

Oil Firms That Cheered Regulatory Cuts Are Quaking on Nafta
Energy companies that sat on the sidelines during other recent trade negotiations are getting more involved on Nafta.

(Bloomberg) -- The Trump administration is easing environmental regulations and opening up territory for drilling as part of the president's bid to unleash the "vast energy wealth" of the U.S. Yet Donald Trump's push to rewrite the North American Free Trade Agreement could have the opposite effect.

As Nafta negotiations resume Friday, oil industry leaders are desperate to preserve the 23-year-old trade deal that drove a North American oil and gas renaissance and paved the way for $34 billion worth of energy exports to Canada and Mexico last year.

"Any changes that disrupt energy trade across our North American borders, reduce investment protection or revert to high tariffs and trade barriers that preceded NAFTA could put at risk the tens of millions of jobs," said the top oil and gas trade groups from the U.S., Canada and Mexico in a joint position paper released last month.

Energy companies that sat on the sidelines during other recent trade negotiations are getting more involved on Nafta -- securing formal roles on committees advising the process, unleashing lobbyists to influence it and outlining their priorities for the administration. Armed with a modest wish list, the industry is mostly in a defensive posture, terrified Trump will torpedo the current deal or weaken existing provisions that allow investors to sue countries over discrimination, seizures and other injustices.

"We want to make clear in a thoughtful way that there's really no reason to disrupt the energy component of Nafta," American Petroleum Institute President Jack Gerard said in an interview. "Over time, this has really evolved to a very efficient marketplace in North America with Canada, Mexico and the United States. It's a mature system that's well in place, and they're just no reason to disrupt it."

'In the Crosshairs'

Trump has raised the possibility of an American exit from the deal at least three times since negotiations began last month.

"You may not necessarily be in the crosshairs, but if you don't maintain a focus on it, you could be collateral damage," Stephen Comstock, the American Petroleum Institute's director of tax and accounting policy, said in an interview.

When Nafta was signed almost a quarter-century ago, the U.S. was importing roughly half of its daily oil and petroleum needs. Canada's oil sands -- now churning out 2.4 million barrels of crude a day -- were just getting started. And Mexico still had a monopoly on its own energy development, blocking foreign businesses from drilling or processing oil in the country.

"Oil and gas has grown from an incidental discussion point to an enormous target of opportunity," said Kevin Book, managing director of ClearView Energy Partners LLC. "Because energy is such a big deal in North America -- a lot's changed, not just in the U.S. but with Canada's oil sands as well as Mexico's reforms -- energy could become an important hostage to the negotiations."

Nafta facilitates duty-free trade of gasoline and other energy products. It also serves as the legal pathway for rising gas sales to Mexico -- 4 billion cubic feet a day last year, or about 60 percent of U.S. natural gas exports. Because Mexico is a free-trade partner, natural gas exports to the country qualify for liberalized treatment under a U.S. law.

Arm in Arm

So far, North American oil and gas groups are collaborating, linked arm in arm as they advocate the same broad portfolio of changes. One possible exception: efforts by U.S. oil and gas interests to ensure any new trade agreement locks in recent reforms opening up Mexico's energy market for foreign investment.

U.S. companies are increasingly intertwining their operations with activity on both sides of the border.

Chevron Corp., which has a representative cleared to serve on an energy-focused committee of Nafta advisers, stressed in comments filed with the federal government that its supply chain extends across North America. Chevron relies on manufacturers in all three countries to provide equipment, parts, repair services and chemicals.

Unbroken Chain

"Disrupting these supply chains would directly harm U.S. businesses," the company warned.


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sally radford  |  September 05, 2017
All 20 CARICOM states are in the Northern Hemisphere and should be included in the renegotiation of NAFTA and the North American Energy Strategy. Following exploration success in Guyana and Trinidad and ,bolivarian decline this will boost regional trade, security and investment in offshore development, geothermal, hydro, solar and wind energy. CARICOM should seek a formal partnership between the energy sector and legislators implementing the United States-Caribbean Strategic Engagement Act, known as H.R. 2939. Passed in the U S Congress in 2015 and signed into law, it mandates a new long-term strategy to strengthen ties between the USA and the Caribbean region to increase security and prosperity of the region. This aligns with the US strategy for the Caribbean on sustainable development and will protect the third border of the United States, characterized by common interests and historic ties that yield benefits for Americans. The U.S. is the Caribbean’s primary trading partner. In 2016 this economic partnership produced a USD4.6 billion trade surplus for the United States, 14 million US tourist visits and 11,042 Caribbean students studying in the US. Hemispheric cohesion will fortify the USA as an antidote to Asian hegemon PRC/PLA, patron of DPRK, grabbing resources to increase its foothold in the Americas, compromising cybersecurity and posing an existential threat by sending prisoners on overseas projects who seek local spouses to acquire property, foster casinos and dump producrs made with exploited labour. A complete embargo on the obnoxious Kim regime is vital to bring back jobs to America.
Steve Hadaway  |  September 04, 2017
Interesting article highlighting possible disruption! It also highlights the great chasm between the perceived needs of the oil business and Freedom for the American People. In the last 8 years the U.S. Govt was very charitable to foreign countries and multinational companies, to the point that the American people were suffering. Donald Trump, our greatest President, is attempting to do something to even the playing field. Of course the multinationals are not going to like it, and Bloomberg (owned by one of the elites) is going to try stop any reform that provides for the Freedom or prosperity of ordinary people. Disruption is not a bad thing, it can lead to innovation and efficiency. MAGA