Oil and gas groups explain why NAFTA is good for energy industry

By Staff | August 15, 2017

The American Petroleum Institute (API) has joined with oil and gas organizations in Mexico and Canada to strengthen the competitiveness of North America’s energy industry under the North American Free Trade Agreement (NAFTA).

API, Canadian Association of Petroleum Producers (CAPP) and the Mexican Association of Hydrocarbon Companies (AMEXHI) released a joint paper outlining their shared policy positions on NAFTA.

The joint paper outlines the North American oil and natural gas industry’s positions on specific policy areas of NAFTA, including the preservation of tariff reduction and elimination in the trade of energy products, market access, a modernized system of certificates of origin, regulatory cooperation and fully liberalized trade across North America.

The paper also highlights the support for preserving provisions for strong investment protections and investor-state dispute settlement (ISDS), including rules that restrict expropriation of investments and that provide for prompt, adequate and effective compensation when expropriation does occur.

The three organizations collectively represent more than 750 international oil and gas companies in the U.S., Canada, and Mexico. They stressed their support for market-oriented policies and opportunities for commercial growth and job creation.

Why are the major oil and gas organizations from the U.S., Canada and Mexico calling for greater support of NAFTA?

Jack Gerard, API president and CEO: “The natural gas and oil industry across North America is united in our support for NAFTA and the significant consumer, economic and security benefits it generates. As the energy flows between our countries continue to grow, it’s important to highlight the critical role NAFTA has played in facilitating cross-border trade and investment in energy. The positions we put forward today reinforce our commitment to the energy trade alliance under NAFTA, which supports jobs and manufacturing in energy, helps to make energy more affordable, and enhances our energy security.”

Tim McMillan, CAPP president and CEO: “It is imperative to maintain fully reciprocal market access for Canadian oil and natural gas between Canada and the U.S., as well as enhance trade with Mexico. Since NAFTA’s inception in 1994 our three nations’ economies have become interconnected and integrated. The logic in supporting a free trade zone is more compelling today than ever before which is reflected in our joint position to strengthen our deep trade relationship for all three countries.”

Alberto de la Fuente, AMEXHI president: “After Mexico’s Energy Reform, NAFTA itself enabled much of the investment attraction, infrastructure development and a more intensive commercial exchange. The synergy between NAFTA and the Energy Reform in Mexico is essential to attract investments, develop integrated value chains and increase North America’s economic competitiveness.”

What parts of NAFTA are important to the oil and gas industry?

API, AMEXHI and CAPP support the preservation of NAFTA’s elimination of tariffs in the trade of crude oil and natural gas, refined products, and other goods supporting exploration, production and manufacturing (refining). NAFTA eliminated tariffs for crude oil, gasoline, motor fuel blending stock, distillate fuel oil and kerosene type jet fuel—all of which would increase without NAFTA. The associations also advocate for the elimination of tariffs of all goods used in the energy industry across oil and natural gas exploration, production and manufacturing (refining). API, AMEXHI and CAPP advocate that further NAFTA drawdowns in tariffs apply immediately rather than over long, multi-year timelines.

What other parts of NAFTA do the three organizations support?

API, AMEXHI and CAPP support fully liberalized trade across Mexico, the US and Canada in crude oil, gas, liquefied natural gas (LNG) and all refined products and petrochemicals or other energy intensive manufactured goods reliant on natural gas. The associations also support fully liberalized trade of all goods used in the energy industry, which are essential to the oil and natural gas industry’s integrated North America supply chains.