Fate of NAFTA remains a dicey situation, rail stakeholders say

When Donald Trump was elected as President of the United States a little more than a year ago, there was a fair amount of concern regarding what his plans would be for the North American Free Trade Agreement (NAFTA), considering that when on the campaign trail he said that NAFTA could go away entirely under his administration.

Now, nearly a year into his term, NAFTA remains intact, but it also comes with various uncertainties as the United States and its NAFTA trade partners, Mexico and Canada, continue negotiations with the future of the trade pact at stake, to be sure.

What happens next, when it comes to NAFTA, is, and remains, a major question moving forward. And it was a question that received a lot of attention at last week’s RailTrends conference in New York hosted by Progressive Railroading Magazine and independent railroad analyst Tony Hatch. 

Chuck Baker, a longtime RailTrends speaker and president of the National Railroad Construction & Maintenance Association, pulled no punches, when it came to assessing the state of NAFTA.

“I would say that NAFTA is one thing I am more worried about than others,” said Baker. “We are nearing a crisis stage, and there is a real legitimate concern that the President is going to pull out of NAFTA, which would be, by any legitimate economic analysis we looked, at a devastating blow to the freight economy and be extraordinarily problematic. I do think it is at risk of happening and I do think our industries need to try to do a better job of sounding the alarm louder and louder on the risks to the economy and trade patterns in North America could be severely disrupted.”

North of the border, concerns regarding NAFTA were also voiced by Michael Bourque, outgoing president and CEO of the Railway Association of Canada. 

“NAFTA has helped ‘float all boats’ and been very beneficial to Canada, as well as Mexico and the United States,” said Bourque. “One of the things we learned from the Keystone Pipeline is that it is not a very good idea to have so much of your product destined to one customer, and, so, while these NAFTA discussions are going on we are hopeful that they focus on that. Canada has strong ports and good rail access to ports and can grow markets into Asia and already has a free trade agreement with Asia. My view is that NAFTA is very important, and we need to try to do everything we can to modernize it and keep it.

While expressing support for NAFTA to remain intact, Bourque noted that Canada needs to look at diversifying its markets so it is not as dependent on U.S. trade as it currently is, while adding he hopes the White House does not do anything rash in regards to NAFTA on that front. 

Tom Simpson, outgoing president of the Railway Supply Institute, told the RailTrends audience that his organization has North American-based member with facilities in Mexico, building freight cars and components.

If NAFTA were to be discontinued, Simpson said that it would cause harm to those RSI member companies with presences in Mexico, which would, in turn, disrupt the North American rail network, making eliminating NAFTA “something that should be rejected.”