Cruz Warns of ‘Profound Damage’ to Economy if NAFTA Terminated

Sen. Ted Cruz (R-Texas) arrives to chair a Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts hearing on June 28, 2016. (Photo By Bill Clark/CQ Roll Call via AP Images)

WASHINGTON – Sen. Ted Cruz (R-Texas) argued that the North American Free Trade Agreement renegotiation should “expand” international trade, and warned that terminating the pact would wreak “profound damage” on the U.S. economy.

“Texans believe in international trade. We believe in it because we benefit from it firsthand. There are about 2.2 million jobs in the state of Texas that depend on international trade. NAFTA has created millions of jobs across the United States – a great many of them in the great state of Texas,” Cruz said at a U.S. Chamber of Commerce event last week on “The Future of NAFTA: The Stakes for American Agriculture and Business.”

“We are in the midst of NAFTA renegotiations. In my view, NAFTA renegotiations can be a good thing or can be a bad thing, and it depends what the objective is of the administration and what the end point is,” he added.

Cruz said that the renegotiation of NAFTA should result in the expansion of international trade.

“If the objective of the negotiations is to modernize the agreement, to modernize it for modern situations – it’s over two decades old – if the objective of the agreement is to expand our access to Mexican markets and Canadian markets, if the objective of the agreement is to increase international trade, then NAFTA renegotiation could be a very good thing,” the senator said.

“If, on the other hand, the objective of the negotiation is to erect barriers to the U.S. markets, to decrease international trade, then I believe NAFTA renegotiation could be a very bad thing,” he added. “Erecting those barriers, shutting off our markets and as a result shutting off the Mexican and Canadian markets would do profound damage to the American economy and to Texas in particular.”

Cruz said he is unaware of the Trump administration’s objective in the trade talks with Mexico and Canada. “Now, which direction will the administration go? I will tell you candidly, I don’t know. I think there are voices within the administration pulling in both directions,” he said.

“So I think it depends which voices will be listened to. I can tell you my voice is emphatically urging the administration to go in the direction of expanding international trade and opening up foreign markets…standing here today, I don’t know which path the administration will take.”

Trump tweeted at the end of August that NAFTA is the “worst trade deal ever made.”

Cruz also said the Trump administration is already doing “well” in certain aspects of trade policy such as opening up Chinese markets, and he expects it to do even better.

“With regards to NAFTA, I’ve urged the administration – I think the single greatest opportunity for NAFTA renegotiation is energy,” he explained. “As you know, Mexico has abundant energy resources and yet because of the longstanding political and legal environment in Mexico many of those resources are not being developed.”

The senator said his GOP colleagues are “virtually united” when it comes to free trade but “you can’t find a free-trade Democrat anymore.” Cruz referred to 2016 Democratic presidential nominee Hillary Clinton as the “last prominent free-trade Democrat.”

“I think it is unlikely we see significant legislative advances on the trade side, and the reason for that is I think virtually anything expanding international trade would face a Democratic filibuster. We’re seeing Democratic filibusters to virtually anything,” he said. “The politics of trade have changed. NAFTA, famously, was signed by Bill Clinton, and there used to be such a thing as free-trade Democrats.”

Cruz said Hillary Clinton “got pilloried” by Democratic challenger Sen. Bernie Sanders (I-Vt.) during the campaign because her husband signed NAFTA.

“I think the remainder of the Democratic caucus looked over at what happened to Hillary and said, ‘I don’t want that to happen to me.’ So we have a changed terrain,” he said.

Sen. Pat Roberts (R-Kan.), chairman of the Senate Agriculture Committee, said he has brought his concerns with NAFTA renegotiations directly to Trump and vowed to continue to be a “champion” of free trade.

“We are fighting a pervasive view that our economy has not benefited from NAFTA. We are coming to a crossroads, and the decisions made on international trade will determine the future economic success of our country. We must educate. Our message must be clear and consistent in every way,” he said at the Chamber of Commerce event.

“We must commit to challenge this view, set the record straight and explain what is at stake,” he added. “These issues affect real jobs, real lives and real people.”

The chairman said he “personally told the president how important free trade is to agriculture not once, not twice, but on three occasions.”

Roberts reacted to Cruz saying there aren’t free-trade Democrats in the Senate.

“I know a few,” he said. “Whether they are going to weigh in on this, I can’t tell you. They should. I think most on the Ag committee will certainly do that, and also in the House.”