[W]ASHINGTON — Gov. Phil Scott is urging Vermonters to support a major regional trade agreement.
Scott, a defender of the North American Free Trade Agreement, wrote a letter to business and economic development leaders in Vermont, urging them to support the 24-year-old agreement that removes trade barriers between the United States, Canada and Mexico.
The three countries are currently in negotiations over the arrangement. President Donald Trump has repeatedly indicated he would consider withdrawing from the agreement.
Scott argues the trade pact is vital to Vermont’s economy. Quebec is the state’s largest trade partner. “I think a withdrawal would be very detrimental to our cross border communities,” the governor said.
Scott pointed to an analysis by the Business Roundtable that found that if the United States were to withdraw from NAFTA, Vermont would lose 4,200 jobs and the state’s economic output would plummet by $208 million.
“Failing to renew the United States’ commitment to NAFTA would undermine our businesses’ ability to compete in this increasingly competitive global marketplace,” he wrote.
Scott urged businesses to voice support for NAFTA to the United States Trade Representative, the federal agency responsible for participating in the renegotiations.
Trump has indicated he is considering pulling out of NAFTA on the campaign trail and in the White House, raising concerns that the agreement leads to loss of jobs in the United States. He mentioned that he still considers terminating the agreement an option during an interview when he was at the World Economic Forum in Davos, Switzerland, last month.
Though many speculated he would use his first State of the Union address last week to announce plans to withdraw from the agreement, he did not explicitly mention NAFTA during the speech. Instead, he spoke in broad terms about trade agreements.
“The era of economic surrender is over,” he said. “From now on, we expect trading relationships to be fair and to be reciprocal.”
“We will work to fix bad trade deals and negotiate new ones,” he said.
The lines drew applause from across the aisle. Sen. Bernie Sanders, I-Vt., was among those on the Democratic side of the chamber who stood and applauded.
Sanders has advocated for reforming the trade deals. He’s part of a group of senators that sent a letter to Trump last week urging him to renegotiate the terms of NAFTA to include stronger protections for labor and environmental standards, requiring imported goods to meet U.S. standards, reform provisions concerning medicines and more.
“You promised to bring manufacturing jobs back to the United States and raise Americans’ wages, but if you fail to get a deal to replace NAFTA that levels the playing field, more Americans will be forced into low-road jobs, pushing wages and incomes down for millions of Americans,” the group wrote.
Many businesses in Vermont that import or export goods are impacted by the agreement.
Jake Holzscheiter is president of A.N.Deringer, a near-century-old St. Albans-based customs brokerage firm founded by his great uncle. The firm, which has offices across the country, helps companies comply with import and export laws.
Holzscheiter estimated that about 90 percent of the firm’s clients use NAFTA in some way. Many businesses the company works with are “very worried” about the possible elimination of the trade agreement, he said.
“If NAFTA goes away, they’re suddenly going to be paying a lot more on every shipment,” he said.
The elimination of the pact would likely have an impact on Deringer’s work as well, though Holzscheiter said he was not sure exactly what that would look like.
There are some aspects of the terms of trade between the United States and Canada that could be improved, he said. For instance, it tends to be more expensive for American companies to export to Canada than for Canadian companies to sell to the United States.
Withdrawing from NAFTA could have a major impact on the ground in Vermont, Holzscheiter said, noting there are “a lot of jobs in our communities that are tied to goods that are taking advantage of NAFTA.”
Art Woolf, an associate professor of economics at the University of Vermont, said the economy benefits from arrangements that ease restrictions and encourage free trade. With Vermont’s position on the Canadian border, the state is a “staging area” for trade for between the two countries.
“If you think about trade in general, trade has a geographic component, and you tend to trade more with people that are close to you,” Woolf said.
Vermont also has a robust trade relationship with Mexico, he said. The state exported about $128 million worth of goods to Mexico in 2016, making it the sixth largest international export market for Vermont, according to the U.S. Census Bureau.
Goods sold in Vermont ranging from car parts to avocados are sourced from Mexico, he said.
Woolf said that it is possible that elimination of NAFTA would lead to a loss of jobs in Vermont, but in the long term those positions would be replaced in other parts of the economy. However, the jobs may not be as high-paying, he said.
Michael Schirling, the Vermont commerce agency secretary, said the agreement is “essential.”
“Withdrawing from NAFTA or completely eradicating the trade relationship would be problematic for countries, for workers in Vermont and for the state in general,” Schirling said.
Asked if he believes it is likely that the country would fully withdraw from NAFTA, he replied: “We don’t know.”
The Trump administration followed through on a campaign pledge to pull out of the Trans-Pacific Partnership last year, he noted. Since then, Schirling said, those countries have been negotiating a deal without the United States.
