Railroad leaders stress importance of trade deals

While Trump’s election win has been viewed as a boon for big business, it was clear at last week’s RailTrends conference that tinkering with NAFTA could actually be bad for business.

By ·

One thing President-elect Donald Trump made very clear on the campaign trail is that he is not, by any stretch, a fan of the North American Free Trade Agreement (NAFTA).

At times, he said that, if elected, NAFTA could go away entirely, but based on a report in the Wall Street Journal, it looks like he may be willing to “settle” for some changes to  NAFTA instead of not scrapping it altogether. The WSJ report noted that comments from Trump and his inner circle indicate they want “big changes” made to NAFTA, including special tariffs or other barriers to reduce the nation’s trade deficit with Mexico and new taxes hitting for U.S. companies that have moved production to Mexico, and the removal of a NAFTA provision that enables Canadian and Mexican companies to challenge U.S. regulations outside of the court system.  

While Trump’s election win has been viewed as a boon for big business, it was clear at last week’s RailTrends conference in New York, which was hosted by Progressive Railroading magazine and independent railroad analyst Tony Hatch, that tinkering with NAFTA could actually be bad for business.

“We believe that NAFTA is good for the U.S. economy,” said Kansas City Southern president Pat Ottensmeyer. “It is certainly too big to be taken lightly. There were a lot of horrible things said about NAFTA, with some people calling it devastating or a big mistake.” 

Ottensmeyer said he is hopeful and confident that individually and through different organizations the freight railroad sector will have a voice at the table with policy makers to make sure there is a reasonable outcome for NAFTA, as there is too much at stake.

And he also made it clear that opposition to NAFTA is not new terrain, highlighting how in 2008 both President Obama and Republican candidate John McCain each made strong statement about the U.S. opting out of NAFTA. What’s more, Ottensmeyer said that the door appears to be open for a dialogue between businesses and policy makers, cabinet members and other officials that could be considerably different from the campaign rhetoric over the last several months.

“There is just too much at stake when you look at the trade numbers for the U.S. with Canada and Mexico,” he said. “When you opt out of NAFTA, you opt out of everything. You just cannot opt out of Mexico, so…it would be very harmful to the North American economy and potentially have social consequences as well depending on how far it went."

From a KCS perspective, Ottensmeyer said the company’s biggest export is corn from the upper Midwest into the heart of Mexico. And with its business across the border, for both imports and exports, being very well balanced in that it moves a lot of auto parts into Mexico that become finished vehicles and exported back to the U.S., with the U.S. contents of Mexican produced vehicles more than 50 percent.

Other railroad industry stakeholders at RailTrends stressed the importance of leaving trade deals intact.

“I am confident that the President-elect recognizes the importance of trade to the world economy, and he certainly has invested around the world and understands the need to have trade and will be working with the National Association of Manufacturers, the U.S. Chamber of Commerce and others,” said Ed Hamberger, Association of American Railroads president and CEO. “We want fair trade and need to make sure the lanes of trade remain open.”

The concept of removing or altering existing trade agreements has the potential for a disaster scenario, according to Chuck Baker, president of the National Railroad Construction & Maintenance Association.

Something like an import restriction spiraling into a trade war is not impossible to envision, Baker said, while adding it is something that should and could be avoided.

“Getting to fair trade is not an impossible thing, but there will be a lot of people with different opinions about what fair trade means and we don’t get to unilaterally impose those definitions in those sensitive negotiations so I think that is a real soft spot we are going to have to keep a close eye on.”


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Article Topics

· All Topics
Latest Whitepaper
Corrugated Boxes Deliver for E-Commerce
Corrugated box can and should be thought of as one of the key technologies for e-commerce-era fulfillment.
Download Today!
From the January 2018 Modern Materials Handling Issue
PFS built one of the largest and most automated AS/RS freezers in the world in Washington state. Next up is a new design for automation. Automated Storage/ Automated Retrieval System, Cold Storage.
Lift Truck Series Part 1: Lift truck technology connects pickers to productivity
Breaking Through On Yard Visibility
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Emerging Technologies for Your Distribution Center
Come get an insider's view of the latest technologies for inside your Distribution Center. You'll learn which technologies are being piloted, which are having success and moving from concept to implementation and into production on the maturity scale, and what's coming on the horizon.
Register Today!
EDITORS' PICKS
Trinchero Family Estates: Pallet handling in the vineyard
The second-largest family-owned wine company in the world turns to automated pallet handling and...
System Report: Rocky Brands Sees the Light
Confronting an aging materials handling system and new channels of business with new customer...

Top 20 industrial lift truck suppliers, 2017
The top lift truck suppliers list is changing with industry acquisitions causing a dramatic...
Lodge Manufacturing: Distribution Cast in Iron
In a new facility, iPhones and a new WMS allowed cookware manufacturer Lodge to double its business...