Texas Provides a Case Study In Trade Done Right

by Ioanna Papas

Everything is bigger in Texas, including its economy. According to The Heritage Foundation, Texas leads the nation in economic growth and in international trade. As the North American Free Trade Agreement (NAFTA) and other trade agreements are negotiated, Texas provides a case study in trade done right.

Everybody knows that exports promote economic growth, but the Heritage Foundation’s recent paper on the impact of trade on the Texas economy makes clear that, in fact, trade as a whole – exports and imports alike – promotes growth.  This point is echoed by the George W. Bush Institute North America Competitiveness Scorecard, which makes clear that NAFTA has provided the opportunity for the United States, Canada, and Mexico to outperform the world’s other major regions in growth, global trade, and job creation.

NAFTA has created a dynamic economy for the North American region. What this means is a healthy flow of exports and imports and a supply chain that has been woven together to benefit all three countries.

During a conversation at the Bush Institute, Heritage Foundation Senior Research Fellow David Kreutzer said that Texas is an example of jobs being created by trade in both directions. According to his research paper, Texas is successful in securing international investment, resulting in more than a half million Texans being employed by foreign-owned companies. As a result of foreign investment, the U.S. International Trade Administration estimates that more than one million U.S. jobs are supported by exports from Texas.

According to the Bush Institute Scorecard, since NAFTA was first agreed to in the early 90’s, employment in the U.S. has not declined. On the contrary, total private sector employment in the U.S. has increased by some 30 million jobs, a 30 percent increase on net, as jobs have been eliminated in some sectors and created in others.  Texas alone has seen an increase of almost 50 percent employment as the state’s economy has generally grown faster than the U.S. economy as a whole.

These numbers represent a pro-growth economy. For the past decade Texas has been pushing lower regulations, enticing both domestic and international investors with its business-friendly environment. Agreements like NAFTA, only sweetened the deal for these investors as they opened market opportunities outside the U.S. that made doing business in Texas even more attractive.

This open economy has also allowed innovation and creativity to thrive. Low tariffs mean low costs, which lowers risk and promotes a healthy atmosphere of competition.  The result is that the United States is consistently one of the top innovators globally and that Texas tends to lead the way.

To have a dynamic and thriving economy, trade is critical. Agreements like NAFTA promote the United States’ interests in maintaining its position as one of the most thriving economies globally.  A revised NAFTA that opens new opportunities would strengthen that position; to back away from NAFTA would weaken us.