Congress has spent most of the last few weeks consumed with impeachment, a topic that’s already swallowed a good portion of the legislative calendar this year. But even as that process grinds forward and even as lawmakers struggle to pass a 2020 budget, Congress has an opportunity to prove it can still enact sensible policy, contribute to economic growth and accomplish necessary things. A bipartisan deal on an important issue, the United States-Mexico-Canada Agreement, is in hand.
House Democrats will vote this week to move USMCA forward with some needed changes, primarily enforcement provisions. The Senate is expected to follow next month. That means this agreement has bipartisan support. That makes sense, since USMCA would boost economic growth and create American jobs, something that politicians in both parties can rally behind.
USMCA was hammered out late last year by the three countries as a modernization of the North American Free Trade Agreement (NAFTA) and its proven track record of expanding trade among the three countries. During the first half of 2019, Mexico was the largest trading partner of the U.S., followed by Canada.
Free trade is especially important in my home state of Texas. Forbes reports that our state accounted for almost a quarter of NAFTA trade last year, nearly three times more than California. Close to half of our exports go to neighboring Mexico, and we’re seeing an uptick in exports to Canada as well. That means tens of billions of dollars in goods and services — led by oil, natural gas, motor vehicle parts, dairy and poultry — are originating in Texas each year.
That trade helps fuel the commercial real estate sector. CBRE reports that warehouse inventory alone has increased by 3.3 billion square feet since NAFTA took effect in 1994, and “Economic Impacts of Commercial Real Estate, 2019 Edition,” published by the NAIOP Research Foundation, says commercial real estate construction and development in Texas generates more than 400,000 jobs and contributes $62.2 billion to the state’s economy.
But concerns about a trade war had been slowing the rate of growth. According to NAIOP’s Industrial Space Demand Forecast, absorption is now expected to average 37 million square feet per quarter for the next two years, down from the 60 million square feet of quarterly net absorption experienced during 2017 and 2018. The report’s authors explained, “Industrial is uniquely exposed to trade activity and manufacturing activity, which are very much impacted by the tariffs.”
The updated USMCA will offer worker protections, labor fairness and lead to bigger paychecks. It will also boost trade on everything from cars to dairy products.
Washington is consumed with political questions, but trade doesn’t need to be a partisan issue. NAIOP is one of almost 700 organizations that have signed on to letters this year encouraging lawmakers to move quickly and enact USMCA. Action in Congress shows Democrats and Republicans can work together, and all Americans can enjoy the bump in economic growth that’s expected to follow.
A version of this piece was first published in the Washington Examiner on Dec. 18, 2019.
Greg Fuller is the President and Chief Operating Officer of Granite Properties. He is the 2019 NAIOP Chairman.