A truck hauls lumber at the Port of Brownsville, the southernmost port in the United States. (Photo: Port of Brownsville)

NAFTA uncertainty risks potential investments, port CEO warns

As the North American Free Trade Agreement (NAFTA) negotiations drag on, Eduardo Campirano, CEO of Port of Brownsville in south Texas, can only cross his fingers.

“From our perspective, we don’t want to see the agreement done away with,” Campirano said.

He said the need to update and adjusting NAFTA to address freight security and other issues are overdue. Yet, he can only hope “nothing too detrimental will happen.”

Campirano spoke with Fleet Owner as trade officials with the United States, Canada, and Mexico wrapped up a sixth round of talks. Afterwards all sides expressed optimism that progress was being made, but U.S. Trade Representative Robert Lighthizer said they must move at a faster pace.

The next meetings are projected to take place in late February or early March.

Campirano’s comments mimic Texas’ Republican Gov. Greg Abbott, who sent a letter to Lighthizer stating that while there is a “need to update the agreement to address innovations and technologies that simply were not envisioned in 1993 … it is important to not attempt to 'fix' the parts of the agreement that are not broken.”

The M/V Nordic Pollux is the largest ship ever to call on the port. The 900-foot oil tanker came through in late January. (Photo: Port of Brownsville)

The NAFTA talks are taking place during a crucial time for Brownsville, which is the only deep-water port on the U.S.-Mexico Border. It is 100 miles closer to Monterrey, Mexico’s industrial hub, than any other port. As a result it ships about 2.3 million tons of steel to Mexico annually, more than any other in the United States.

Campirano said there is concern the NAFTA uncertainty could create hesitancy among investors for expansion projects the port is promoting.

Brownsville said it has four major projects valued at more than $40 billion in the development pipeline. That includes a new steel manufacturing plant, and plans to deepen the Brownsville Ship Channel to 52 feet.

U.S. shippers of certain commodities could also be hurt through prolonged NAFTA talks, Campirano warned. He pointed to Mexico’s agreement in October to begin importing wheat from Argentina as a way Mexico could “hedge its bets” as negotiations drag on.

Overall, Campirano said shipping volumes at the port continue “to be robust,” and are projected to remain elevated.

During 2017, the port issued more than 32,000 permits as part of an efficiency program that allows trusted shippers to load trucks to the legal weight limits of Mexico, rather than the United States. That was up from 28,000 permits in 2016. Total commodities moving through Brownsville are about $6.5 billion annually. A 2016 economic impact study found the port is responsible for more than 44,000 jobs, and $3 billion in annual economic activity in Texas.

Beyond the local area, Campirano stressed a need for a better appreciation of the “significance of how NAFTA is integrated with rest of the country.”

 “This is not just a border issue,” he said, pointing out that Mexico is among the top trading partners with 33 states.

TAGS: News Economics
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