Trade – Energy and Opportunity
The Truth about Tariffs
Tariffs are taxes on imported goods that increase costs for consumers. Consumers, not countries, bear the burden of these additional costs.
API Supports Free Trade
Global trade and investment regimes are of critical importance. Free trade provides opportunities for business growth and expansion; increases the range of oil, natural gas, and other petroleum products available to consumers; enhances market‐based production globally; and contributes to global energy cooperation. API believes these ends can only be achieved by eliminating impediments imposed on international oil and natural gas producers, fostering a pro‐export environment, and maintaining a level playing field among industry sectors by reducing trade barriers that distort the market and raise costs to consumers. In addition, API opposes policy measures under Section 232 - such as new tariffs quotas or other measures to restrict U.S. imports of steel and aluminum - that would be based on a broader definition of "national security."
North American Energy Self-sufficiency and Energy Benefits of NAFTA
The U.S. is the world’s largest producer of oil and natural gas. North American energy markets are highly integrated and interdependent (see API backgrounder North American Energy). They benefit the United States by expanding the size of our energy markets which create economies of scale that attract private investment, lower capital costs, and reduce energy costs for consumers. NAFTA has played a critical role supporting and growing North American energy integration, interdependence and energy security by eliminating tariffs for crude oil, gasoline, kerosene-type jet fuel and other refined products, and for energy-intensive manufactured goods. NAFTA also has liberalized energy trade, provided investment protection and served as the foundation for recent access to Mexico’s hydrocarbon reserves.
NAFTA Protects US National Security
US national security interests in Mexico rest on NAFTA and continued, growing access to Mexico’s newly-opened energy market, over our adversaries China and Russia. The right way to enhance US national security interests related to energy in NAFTA is threefold. First, bind Mexico in NAFTA to keep its energy market open to the US by negotiating clear and binding commitments for a US energy presence in Mexico. Second, make a modernized NAFTA permanent and do not continue to negotiate for a “sunset clause.” Finally, strengthen NAFTA’s investment protections and retain Investor-State Dispute Settlement (ISDS). Do not continue to negotiate for eliminating ISDS or an “opt-in/opt-out” ISDS or other weakened investment provisions.
NAFTA Protects U.S. National Security (Whitepaper)
API Trilateral Approach to NAFTA
API, Canadian Association of Petroleum Producers (CAPP) and the Mexican Association of Hydrocarbon Companies (AMEXHI), released two trilateral position papers reiterating the importance of NAFTA, the need to maintain robust investment protections to keep North American energy integration strong, shared support for market-oriented policies and opportunities for commercial growth and job creation. API, CAPP, and AMEXHI work on behalf of international oil and gas member companies to enhance the opportunities for oil and natural gas production and manufacturing and to improve the competitiveness of the industry in North America and in the worldwide economy. The three organizations combined represent over 750 international oil and gas member companies.
API Supports a Modernized NAFTA
API supports a modernized NAFTA that enhances the North America oil and natural gas industry. NAFTA has been successful for North American energy security by allowing for the more efficient flow of energy, spurring economic growth, investment, and job creation in the US. The US must retain its commitment to NAFTA because it is mutually beneficial to all three NAFTA countries. It is fundamental that a modernization process achieves an agreement that preserves the positive impacts of NAFTA to all the three economies, recognizing the importance that energy integration under NAFTA has for the productivity and competitiveness of the region.
Investor-State Dispute Settlement (ISDS)
Strong Investment Protections, including ISDS, promote US interests and enforce fair trade and investment practices by US trade partners. The investment chapter of US free trade agreements (FTAs) such as NAFTA contains a core commitment by the host country to accord investors of the other FTA countries a basic standard of protection that includes non-discrimination, fair and equitable treatment and limits and rules for expropriation. This commitment to a basic standard of protection is backed up by a commitment to ISDS, which allows investors to seek a remedy for alleged violations of that standard in a neutral forum.
API advocates that trade agreements continue to include duty drawback provisions for U.S. manufacturers to obtain a refund (or “drawback”) of duties, taxes and fees that were paid on imported goods used in that manufacturing effort. The drawback of Federal duties, taxes and fees helps U.S. manufacturers, retailers and distributors compete in the global marketplace by reducing the distribution and production costs of U.S. exports.
Rules of Origin for NAFTA
Current rules of origin force importers to rely solely on producers to supply certificates of origin for the purpose of verifying NAFTA entries. While this is not a problem for Mexico, it is a large problem with Canada, where not all producers issue certificates. This means that importers pay duties on NAFTA entries that should be duty-free per the trade agreement. API supports a solution whereby importers would be able to self-certify NAFTA entries through a series of standard commercial documents with consistent data elements. This modification would save importers millions on unnecessary duties, enhance NAFTA, and provide a more efficient means for importers of Canadian crude and natural gas.