The new U.S.-Mexico-Canada Agreement (USMCA), a replacement for the North American Free Trade Agreement (NAFTA), will have a positive economic impact on Texas and Galveston County.

NAFTA created a free trade zone between the U.S., Canada, and Mexico, and the USMCA utilizes NAFTA as a basis for the new agreement. 

The USMCA has been called a “mutually beneficial win for North American workers, farmers, ranchers, and businesses,” by the Office of the United States Trade Representative,

For Texas and Galveston County, the USMCA is centered on stabilizing and improving trade network between the state of Texas and its largest international trading partners, Canada and Mexico. 

Galveston County is well-positioned to capitalize on this new trade agreement. As the gateway to the Gulf, we envision a strong surge of reinvestment into the state’s coastal region.

USMCA & Texas

Under NAFTA, the State of Texas prospered thanks to its robust business sector and commitment to free-market enterprise. 

Mexico and Canada are the state’s two largest trading partners.  In 2018, Texas exported nearly $140 billion in goods to Mexico and Canada under NAFTA.  It is estimated that nearly one million jobs are generated in the state by trade with Mexico and Canada.

Top Exports of Texas

  • Computer & Electronic Products ($28.5 Billion)
  • Petroleum & Coal Products ($22.8 Billion)
  • Chemicals ($14.8 Billion)
  • Transportation Equipment ($14.6 Billion)
  • Oil & Gas ($10.8 Billion)
  • Machinery ($8.9 Billion)
  • Electrical Equipment, Appliances & Components ($8.9 Billion)
  • Fabricated Metal Products ($4.9 Billion)
  • Plastics & Rubber Products ($4.8 Billion)
  • Primary Metal Products ($4.4 Billion)

It is estimated that under the USMCA, Texas will see an economic benefit of $18 billion in annual gross product, and the creation of almost 200,000 new jobs. 

“As the number one exporter in the nation, a strong relationship with our trade partners is vital to Texas’ booming economy and its unprecedented growth. Whether it be agriculture, technology, or energy industries, the USMCA will promote free enterprise and help create even more jobs in the Lone Star State,” said Governor Greg Abbott in January 2020.

As USMCA begins to reshape global trade, Texas will be the largest beneficiary. As the top exporting state, Texas will experience increased trade growth with both Canada and Mexico. 

For Texas, more trade equals more jobs.  More manufacturing jobs are expected to onshore in the coming years, due largely to the USMCA and the COVID-19 related decoupling from China. Cross-border improvements required by the USMCA will strengthen the job market locally.  Texas will be the first recipient of the benefits of this increased trade.

Texas is the nation’s leader in energy production of both crude oil and natural gas. The state’s downstream industries created $22.8 billion in exports to our northern and southern neighbors in 2018. Its upstream products represented $10.8 billion exported during that same period. With USMCA in place, the export of LNG to both Canada and Mexico will be a much simpler process.  Mexico in particular will be a large purchaser, as their national energy consumption primarily derives from natural gas. 

Not only will the USMCA affect the LNG industry, but it will also diminish the “rules of origin” certification process for oil and gas moving between the three countries. 

Additionally, under the agreement, there will be a direct and immediate benefit to the state’s agricultural industry. The current $7.7 billion industry is expected to increase by $2.2 billion thanks to the new trade agreement. It will enable the state to address concerns within the agro-business regarding information sharing, trade rules over biotechnology, and gene editing for the first time in both Texas and US history.

What This Means For Galveston County

Under the USMCA, Galveston County represents a particular land of opportunity. As part of the Greater Houston region, the county occupies a unique position: we are the southern frontier of the Greater Houston Region; We represent our state’s most iconic historical summer destination, which just also happens to be the gatekeeper of the waterway access to all of the ports of Galveston Bay. 

The county continues to grow as we expand development countywide. The new trade agreement will allow Galveston County to be a key cog in the future development of our area and the state. 

The county is part of the world’s most dynamic energy hub in Houston, the reinvigoration of NASA and its partners in the space industry, top port systems for a variety of goods, developable land, room for growth, and a strong desire to reimagine the future of our communities.

Key sectors will receive much of the immediate benefit of the new USMCA. Those include energy, agriculture and food, manufacturing, intellectual property / e-commerce, and small businesses. These sectors align closely with the expertise offered in Galveston County’s various cities.

Texas City continues to grow and remains a highly sought after location for new development as seen in the recent Gulf Coast Ammonia project, as well as the purchase of BP’s petrochemical plant by INEOS. 

Furthermore, the newly announced Galveston LNG Bunker Port on Pelican Island and other projects under early development indicate that Galveston County will continue to be a major player within the energy industry.

With the strong presence of industries such as the Texas City Refinery, the Port of Texas City, and the Port of Galveston, our county has always been a manufacturing hub, dating back to its inception on Galveston Island. With national on-shoring efforts underway due to the USMCA and COVID-19, the county has seen drastic increases in demand as its logistical access, cheap land, high quality of life, and an educated and skilled workforce necessary for any strong manufacturing community to thrive and remain highly sought after. 

It is expected that the USMCA will provide much stronger protection for our nation’s intellectual property. This will benefit those companies within Galveston County which create and sell digital goods or services.

Small business represents the best in all of Galveston County.  Nine out of ten Texas exporting companies are small businesses with less than 20 employees. With lower barriers of entry to both Mexico and Canada, our small businesses will find access to a whole new customer base. 

While some benefits may take time to truly develop, Galveston County will remain a bastion for economic growth as it maintains its sights on the present and future. Our commitment to our community’s development as a business center, innovation hub, and work-life haven remains at the forefront of our daily mission.