Date: 4/10/2018

With the future of the North American Free Trade Agreement (NAFTA) still uncertain, The New York Times highlighted the role freight rail plays in the global economy and why the industry hopes NAFTA negotiators will finalize a deal soon.

“At its guts, a railroad like Union Pacific is built on people consuming stuff, industry consuming stuff, and trade flows,” Lance Fritz, Union Pacific’s CEO, told The Times. “When those are happening and growing, we thrive. And all of that potentially gets impacted by getting NAFTA wrong or the United States exiting NAFTA.”

The Times story describes the history of Union Pacific and ways it benefited from the original 1994 NAFTA agreement.

“In 1999, Union Pacific had $700 million in business going to and from Mexico. Today, that figure has ballooned to more than $2.2 billion, with goods like grain and auto parts going into Mexico and finished cars, avocados and televisions coming back,” reporter Ana Swanson wrote.“Now the fate of NAFTA — and Union Pacific’s business — is up in the air.”

A withdrawal from NAFTA would cause significant harm to the railroad industry. More than 40% of railcar loads and intermodal units are directly associated with international trade, as is 35% of annual rail revenue. Additionally, 50,000 U.S. rail jobs, worth over $5.5 billion in salary and annual benefits, depend directly on international trade. A U.S. withdrawal from the trade agreement could have deep impacts on rail activity and the jobs it supports.

And it would harm communities such as Santa Teresa, New Mexico, which is in the midst of an economic boom thanks to investment from the freight rail industry.

Not only railroads would be harmed if the U.S. withdraws from NAFTA. The entire U.S. economy would be affected. Withdrawal will jeopardize 14 million U.S. jobs and expose U.S. businesses to $15.5 billion in new tariffs, as well as costing consumers at least $7 billion.

“Put simply, less trade means less jobs and less revenues for a host of industries, which means less investment to serve customers and a weakened U.S. economy,” AAR president Ed Hamberger said in a recent Agri-Pulse op-ed.

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