Join Our Newsletter - Get important industry news and analysis sent to your inbox – sign up to our e-Newsletter here
X

US oil and gas trumps climate change in new NAFTA deal

By Talal Husseini 02 Oct 2018 (Last Updated October 2nd, 2018 12:07)

The US oil and gas industry has urged Congress to approve the Trump administration’s renegotiated North American Free Trade Agreement (NAFTA), saying that the deal will support oil and gas exports across North and South America.

US oil and gas trumps climate change in new NAFTA deal
Oil and gas companies have thrown their weight behind Trump’s new NAFTA deal, despite serious concerns from environmentalists. Credit: Office of the President of the United States.

The US oil and gas industry has urged Congress to approve the Trump administration’s renegotiated North American Free Trade Agreement (NAFTA), saying that the deal will support US oil and gas exports across North and South America.

American Petroleum Institute president and CEO Mike Sommers said: “We urge Congress to approve the United States-Mexico-Canada-Agreement (USMCA). Having Canada as a trading partner and a party to this agreement is critical for North American energy security and US consumers. Retaining a trade agreement for North America will help ensure the US energy revolution continues into the future.”

There were concerns in the industry that Trump would scrap the NAFTA, which was pivotal in making Mexico the largest exporter of US oil, transportation fuel, and natural gas.

Meanwhile, with support from the trade agreement, Canada is the largest supplier of foreign oil and a significant exporter of electricity to the US.

The deal also makes Canada’s heavier crude oil more attractive to refiners in the Mexican Gulf, especially at a time when Venezuela’s production has reduced amid political and financial worries. Fracked US crude oil is lighter, and refineries in the Gulf, which traditionally deal with heavier crude, are still adjusting their processing practices.

The new NAFTA deal ensures a ‘zero-tariff’ on energy products traded between the US, Mexico and Canada.

Critics of the renegotiated NAFTA have accused the US Government of eliminating environmental protections in the oil and gas industry.

Friends of the Earth director of economic policy Doug Norlen said in a statement: “Trump’s trade agreement with Mexico and Canada is a corporate giveaway intended to sharply limit the powers of government to protect people and the planet.

"Trump’s trade agreement with Mexico and Canada is a corporate giveaway intended to sharply limit the powers of government to protect people and the planet."

“The agreement continues to give polluting transnational companies greater rights than governments and citizens. This agreement is an attack on our ability to hold Big Oil and Gas accountable for the damage they cause to our communities.

“If this trade agreement moves forward, citizens in all three countries must continue our fight to protect the very food, air and water our communities need to survive.”

The deal excuses US oil and gas firms from sufficient scrutiny, as companies that are already established, such as ExxonMobil, will have the ability to challenge potential new environmental safeguards that could be initiated when the new President-elect of Mexico, Andrés Manuel López Obrador, enters office.

It also contains a provision that would require the US Government to automatically approve all gas exports to Mexico.

Friends of the Earth Mexico director Gustavo Castro Soto added: “Trump’s and Peña Nieto’s NAFTA 2.0 agreement gives power to corporations to harm people, communities and collective rights, which will damage the environment, worsen poverty, and lead to human rights abuses in both countries. It worsens an international trend toward giving corporations increasing power over governments.”