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THE IMPACTS AND FUTURE OF NORTH AMERICAN 

ENERGY TRADE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

DECEMBER 13, 2017 

Serial No. 115–89 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

GREG WALDEN, Oregon 

Chairman 

JOE BARTON, Texas 

Vice Chairman 

FRED UPTON, Michigan 

JOHN SHIMKUS, Illinois 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

MIMI WALTERS, California 

RYAN A. COSTELLO, Pennsylvania 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

JEFF DUNCAN, South Carolina 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

RAUL RUIZ, California 

SCOTT H. PETERS, California 

DEBBIE DINGELL, Michigan7 

SUBCOMMITTEE ON ENERGY

FRED UPTON, Michigan 

Chairman 

PETE OLSON, Texas 

Vice Chairman 

JOE BARTON, Texas 

JOHN SHIMKUS, Illinois 

ROBERT E. LATTA, Ohio 

GREGG HARPER, Mississippi 

DAVID B. MCKINLEY, West Virginia 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

JEFF DUNCAN, South Carolina 

GREG WALDEN, Oregon (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

SCOTT H. PETERS, California 

GENE GREEN, Texas 

MICHAEL F. DOYLE, Pennsylvania 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

PETER WELCH, Vermont 

PAUL TONKO, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

G.K. BUTTERFIELD, North Carolina 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 3 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 5 

Prepared statement .......................................................................................... 5 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

prepared statement .............................................................................................. 90 

WITNESSES

Karen A. Harbert, President and Chief Executive Officer, Global Energy 

Institute, U.S. Chamber of Commerce ............................................................... 7 

Prepared statement .......................................................................................... 10 

Chet Thompson, President and Chief Executive Officer, American Fuel & 

Petrochemical Manufacturers ............................................................................. 24 

Prepared statement .......................................................................................... 26 

Alan Krupnick, Ph.D., Senior Fellow, Resources for the Future ......................... 36 

Prepared statement .......................................................................................... 38 

Allen Burchett, Global Head of Strategic Projects, ABB, Inc., on Behalf of 

the National Association of Manufacturers ....................................................... 50 

Prepared statement .......................................................................................... 52 

(1) 

THE IMPACTS AND FUTURE OF NORTH 

AMERICAN ENERGY TRADE 

WEDNESDAY, DECEMBER 13, 2017 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:17 a.m., in room 

2322, Rayburn House Office Building, Hon. Fred Upton (chairman 

of the subcommittee) presiding. 

Members present: Representatives Upton, Olson, Barton, Shimkus, Latta, McKinley, Kinzinger, Griffith, Johnson, Flores, Mullin, 

Cramer, Walberg, Duncan, Rush, McNerney, Peters, Green, Welch, 

Tonko, Loebsack, and Pallone (ex officio). 

Staff present: Samantha Bopp, Staff Assistant; Allie Bury, Legislative Clerk, Energy/Environment; Wyatt Ellertson, Professional 

Staff Member, Energy/Environment; A.T. Johnston, Senior Policy 

Advisor, Energy; Ben Lieberman, Senior Counsel, Energy; Mary 

Martin, Chief Counsel, Energy/Environment; Brandon Mooney, 

Deputy Chief Counsel, Energy; Mark Ratner, Policy Coordinator; 

Annelise Rickert, Counsel, Energy; Dan Schneider, Press Secretary; 

Peter Spencer, Senior Professional Staff Member, Energy; Jason 

Stanek, Senior Counsel, Energy; Madeline Vey, Policy Coordinator, 

Digital Commerce and Consumer Protection; Priscilla Barbour, Minority Energy Fellow; Jeff Carroll, Minority Staff Director; Rick 

Kessler, Minority Senior Advisor and Staff Director, Energy and 

Environment; John Marshall, Minority Policy Coordinator; Alexander Ratner, Minority Policy Analyst; Tuley Wright, Minority Energy and Environment Policy Advisor; and C.J. Young, Minority 

Press Secretary. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Good morning. Good morning, everybody, and welcome to everyone that’s here. Appreciate you all taking time so 

close to the holiday season to be with us today. That’s for certain. 

This hearing builds upon the Energy and Commerce Committee’s 

impressive record of hearings on energy security, job creation, and 

infrastructure. 

One of the many things that I appreciate about this subcommittee is that we have members who represent both northern 

and southern border States. 

As a proud Michigander, I will be focusing my comments and 

questions more on our relationship with Canada, while I am sure 

2 

my friends from Texas—it was a nice win by Michigan over Texas 

in basketball last night—will be focusing more on Mexico. 

But one thing I want to make clear, this hearing is about North 

American integration, specifically the impacts and future of North 

American energy trade. 

We want to examine how North American energy trade has 

strengthened all of our economies and our trading relationships. 

Nationally, 14 million jobs are tied to trade with Mexico and 

Canada. In Michigan, it is nearly 400,000. This trade makes us 

more competitive internationally and can prove to be the difference 

between creating or shedding jobs. 

Eighty-four percent of petroleum and coal products exported from 

Michigan go either to Mexico or Canada. The energy markets of 

Canada, Mexico, and the U.S. are becoming increasingly interdependent, thanks in large part to the free trade status of energy 

commodities. 

When we think about energy trade, we are including crude oil, 

refined petroleum products and other liquids, natural gas, and electricity. 

To sum it up, we have transmission lines that go across the border, we have got pipelines that go across or under the border, and 

we have goods and services that go across the border, as well. 

Energy trade is much more than just commodities. There is also 

a huge supply chain supporting everything. The multiplier effect of 

energy trade is great throughout our economy. 

Trilateral engagement is not just about trade, but also about information sharing. Just last month, the Energy Information Administration announced the launch of a website on North American 

Cooperation on Energy Information, or NACEI. 

This resource consolidates energy-related data, maps, references 

from the U.S., Canada, and Mexico. The current areas of focus include comparing, validating, and improving respective energy import and export information, sharing publicly available geospatial 

information related to energy infrastructure, and exchanging views 

and information on protection of cross-border energy flows with the 

harmonization terminology, concepts, and the definitions of energy 

products. 

This will allow each country to work together for the benefit of 

all three countries. 

The centerpiece of our trade relationship, of course, is NAFTA, 

which entered into force on January 1st, 1994. On May 18th of this 

year, the Trump administration sent a 90-day notification to Congress of its intent to begin talks with Canada and Mexico to renegotiate NAFTA. 

Currently, negotiations are holding intersessional meetings in 

Washington through mid-December in advance of a sixth round of 

negotiations which are scheduled to be held from January 23rd to 

the 28th in Montreal. 

My expectation is that today’s hearing will provide some context 

for the NAFTA negotiations. I look forward to hearing the testimony of our witnesses and engaging in a conversation about the 

benefits of a robust North American energy sector. 

[The prepared statement of Mr. Upton follows:] 

3 

PREPARED STATEMENT OF HON. UPTON

Good morning and welcome to all our witnesses. I appreciate you all taking time 

so close to the holiday season to be with us today. This hearing builds upon the Energy and Commerce Committee’s impressive record of hearings on energy security, 

job creation and infrastructure. 

One of the many things I appreciate about our subcommittee is that we have 

Members who represent both northern and southern border States. As a proud 

Michigander, I will be focusing my comments and questions more on our relationship with Canada, while I am sure my friends from Texas will be focusing more on 

Mexico. But one thing I want to make clear: This hearing is about North American 

integration, specifically, the impacts and future of North American energy trade. We 

want to examine how North American energy trade has strengthened all our economies and our trading relationships. Nationally, 14 million jobs are tied to trade with 

Mexico and Canada—in Michigan, it’s nearly 400,000. This trade makes us more 

competitive internationally and can prove to be the difference between creating or 

shedding jobs. Eighty-four percent of petroleum and coal products exported from 

Michigan go to either Mexico or Canada. 

The energy markets of Canada, Mexico and the United States are becoming increasingly interdependent, thanks in large part to the free trade status of energy 

commodities. When we think about energy trade, we are including crude oil, refined 

petroleum products and other liquids, natural gas and electricity. To sum it up: we 

have transmission lines that go across the border; we have pipelines that go across 

or under the border; and we have goods and services that go across the border. Energy trade is much more than just commodities—there is also a huge supply chain 

supporting everything. The multiplier effect of energy trade is great throughout our 

economy. 

Trilateral engagement is not just about trade, but also about information sharing. 

Just last month, the Energy Information Administration announced the launch of 

a website on North American Cooperation on Energy Information or NACEI. This 

resource consolidates energy-related data, maps, and references from the US, Canada and Mexico. The current areas of focus include: comparing, validating, and improving respective energy import and export information; sharing publicly available 

geospatial information related to energy infrastructure; exchanging views and information on projections of cross-border energy flows, and harmonizing terminology, 

concepts, and definitions of energy products. This will allow each country to work 

together for the benefit of all three countries. 

The centerpiece of our trade relationship is the North American Free Trade 

Agreement or NAFTA, which entered into force on January 1, 1994. On May 18, 

2017, the Trump administration sent a 90-day notification to Congress of its intent 

to begin talks with Canada and Mexico to renegotiate NAFTA. Currently, negotiators are holding intersessional meetings in Washington, DC though mid- December in advance of a sixth round of negotiations which are scheduled to be held from 

January 23–28, 2018 in Montreal, Canada. 

My expectation is that today’s hearing will help provide some context for the 

NAFTA renegotiations. I look forward to hearing the testimony of our witnesses and 

engaging in a conversation about the benefits of a robust North American Energy 

sector. 

Mr. UPTON. And with that, I yield to the ranking member of the 

subcommittee, Mr. Rush. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman, for holding this 

important hearing on the impact and future of the North American 

energy and trade. 

Mr. Chairman, I have held several meetings with relevant stakeholders concerned with the Trump administration’s ill-advised decision to try and unilaterally change or get rid of existing agreements, existing accords, and treaties. 

Unfortunately, Mr. Chairman, we have heard the President talk 

of reneging on a mass array of deals signed by the previous administration on everything from the Iran nuclear deal to the Paris 

4 

agreement up to and including major trade agreements such as 

NAFTA. 

Personally, Mr. Chairman, while I did not vote for NAFTA when 

it came before the House, I do have concerns over the constitutionality of a President singlehandedly changing or overturning a 

trade agreement that was passed by Congress. 

Additionally, Mr. Chairman, and as importantly, I also have 

grave concerns over the global perception of the credibility of the 

United States when neither our friends or allies nor other foreign 

powers can depend on the sincerity of the U.S. Government if at 

any time a new President takes office, he or she chooses to reverse 

or renege on agreements signed under the previous administration. 

Unfortunately, Mr. Chairman, this appears to me a recurring 

theme of this President’s chaotic governing philosophy, where no 

previous accord is ever safe from interference and any promise can 

be voided at any time, regardless if it is made to friend or foe. 

Mr. Chairman, based just on the merits, the Energy Information 

Administration estimates that energy trade between the North 

American countries exceeded $140 billion just in 2015 alone, and 

with the U.S. importing an estimated $100 million and exporting 

over $40 million in energy products with Canada and Mexico. 

Additionally, Mr. Chairman, just last year, former President 

Obama signed the North American Climate, Clean Energy, and Environment Partnership along with his counterparts from Canada 

and Mexico. 

This important agreement established several objectives, Mr. 

Chairman, and benchmarks aimed at advancing clean energy and 

reducing climate change-inducing pollutants between all three 

countries with the goal of 50 percent clean power generation by the 

year 2025. 

Mr. Chairman, this pact would also help to develop cross-border 

transmission partners while improving and aligning appliance and 

equipment efficiency standards between all three partners. 

At a time when the U.S. has become more intertwined and interdependent in our dealings with other countries both economically 

as well as for national security purposes, we cannot expect to be 

seen as a credible leader within the global arena while at the very 

same time thumbing our nose at previous deals and agreements 

just because they were signed by a President from another party. 

Instead, we must show leadership in Congress to demonstrate to 

our friends and allies as well as to our foes and competitors that 

the U.S. will honor the deals that we signed and we will not renege 

on our promises. 

Mr. Chairman, I want to thank you. I look forward to hearing 

from our witnesses today and also want to at the same time welcome our witnesses. 

And I yield back the balance of my time. 

Mr. UPTON. Ranking member yields back. 

I know the chairman of the full committee is on his way from the 

hearing that’s downstairs. So, at this point, I’ll yield 5 minutes to 

the ranking member of the full committee, Mr. Pallone. 

5 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. 

Regardless of the outcome of the current NAFTA talks, the U.S. 

will continue to trade fossil fuel commodities with Canada and 

Mexico for years to come, and I’d like to see a change in our focus. 

Rather than focusing on trading fossil fuel commodities, we 

should prioritize expansion of renewable energy technologies and 

how they can benefit the North American electricity grid. 

According to the Energy Information Administration, more than 

half of new electricity-generating capacity added to the grid between 2014 and ’16 came from renewable technologies, and we 

should look at expanding this technology so that we can make renewables a larger part of our electric exports. 

In 2009, the U.S.-Canada clean energy dialogue was launched to 

encourage clean energy technology development among our two nations. One key aspect of this collaboration focused on expanding 

and modernizing the North American transmission grid to facilitate 

movement of renewable power between the United States and Canada, and right now there are several large-scale transmission 

projects in the works to bring renewable power across the United 

States’ borders with Canada and Mexico, and the modernization of 

the grid in order to facilitate these types of projects is critical to 

the overall future of energy development in North America. 

The United States has also forged a strong agreement with Canada and Mexico to address climate pollution and advance clean energy. 

In 2016, the countries established the North American Climate, 

Clean Energy, and Environment Partnership. Collectively, the 

partnership set a goal of 50 percent clean power generation and the 

more than 40 percent reduction on methane emissions by 2025. 

And the Trump administration has been silent on this commitment. But based on the President’s foolish decision to walk away 

from the Paris climate agreement, I do not have high hopes that 

he will fulfill this commitment. 

It’s unfortunate that the Republican majority has focused today’s 

hearing primarily on fossil fuels. Instead, I believe it’s even more 

important for us to focus on ways we can continue to work with our 

neighbors to reduce carbon emissions and expand trade and clean 

energy technologies. We have a knowledgeable panel of witnesses 

before us, and I look forward to hearing their testimony. 

[The prepared statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Mr. Chairman, regardless of the outcome of the current NAFTA talks, the U.S. 

will continue to trade fossil fuel commodities with Canada and Mexico for years to 

come. I would like to see a change in our focus. Rather than focusing on trading 

fossil fuel commodities, we should prioritize expansion of renewable energy technologies and how they can benefit the North American electricity grid. According to 

the Energy Information Administration, more than half of new electricity generating 

capacity added to the grid between 2014 and 2016 came from renewable technologies. We should look at expanding this technology so that we can make renewables a larger part of our electric exports. 

6 

In 2009, the U.S.-Canada Clean Energy Dialogue was launched to encourage clean 

energy technology development among our two nations. One key aspect of this collaboration focused on expanding and modernizing the North American transmission 

grid to facilitate movement of renewable power between the U.S. and Canada. Right 

now there are several large-scale transmission projects in the works to bring renewable power across the U.S. borders with Canada and Mexico. The modernization of 

the grid in order to facilitate these type of projects is critical to the overall future 

of energy development in North America. 

The U.S. has also forged a strong agreement with Canada and Mexico to address 

climate pollution and advance clean energy. In 2016, the countries established the 

North American Climate, Clean Energy, and Environment Partnership. Collectively, 

the partnership set a goal of 50 percent clean power generation and a more than 

40 percent reduction in methane emissions by 2025. The Trump administration has 

been silent on this commitment, but based on the President’s foolish decision to 

walk away from the Paris Climate Agreement, I do not have high hopes that he will 

fulfill this commitment. 

It’s unfortunate that the Republican majority has focused today’s hearing primarily on fossil fuels. Instead, I believe it is even more important for us to focus 

on ways we can continue to work with our neighbors to reduce carbon emissions and 

expand trade in clean energy technologies. 

We have a knowledgeable panel of witnesses here before us, and I look forward 

to hearing their testimony on this timely issue. Thank you, Mr. Chairman, and I 

yield back the remainder of my time. 

Mr. PALLONE. I don’t know if anyone else wanted—yes, I yield 

the remainder of my time to Mr. Green. 

Mr. GREEN. Thank you, Ranking Member, for yielding to me. 

Energy trade between the U.S., Canada, and Mexico has been at 

an all-time high in recent years. Where the U.S. is the largest producer of crude oil on the continent, Canadian reserves far outstrip 

our own. Mexico also has significant discoveries of offshore sites in 

the Gulf over this summer. 

Many Texas refineries rely on Mexican imports for their source 

of crude oil. At the end of this year, Mexico has a demand of about 

600,000 barrels a day of gasoline imports due to their lack of refining capacity. 

A huge percentage of this 600,000 barrels a day will come from 

the refinery complexes we have along the Texas Gulf Coast. While 

the U.S. and Canada have integrated our energy markets to a 

great degree post-NAFTA and with Mexico’s recent reforms in the 

coming years, cooperation among the countries will only get stronger. 

NAFTA has been a success in many ways but did not contain 

many provisions on energy policy. Our first goal when discussing 

how to improve NAFTA should be closer ties and friendship among 

all three countries. 

Our second goal should be an integrated North American energy 

market. This is one reason I introduced our cross-border infrastructure bill with our colleague, Representative Mullin, earlier this 

year. 

There are 11 cross-border projects awaiting a decision by the Department of State in the present and including electric lines and 

water pipelines. It’s Congress’ responsibility to create the regulatory rules by which infrastructure is constructed. 

Our bill, H.R. 2883, which passed our committee on the floor of 

the House, would create a regulatory process at the Federal Energy 

Regulatory Commission, Department of State, Department of Energy to permit cross-border infrastructure by recognizing the energy trade between Mexico, Canada as in our national interest. 

7 

It is my hope that the Senate will soon take up this language so 

we can continue building on that success, and we should embrace 

the changes taking place in North America and harmonize our policies with those of our neighbors to the north and the south. 

And again, thank you for the time by our ranking member. 

I yield back. 

Mr. UPTON. The gentleman yields back. 

We are ready for the testimony. I want to appreciate our witnesses providing the testimony in advance. It’ll be made part of the 

record. 

You will be given each the opportunity to take 5 minutes to summarize that statement, and then we will begin with questions. 

Our witnesses today: Karen Harbert, president and CEO, Global 

Energy Institute, U.S. Chamber of Commerce, and a former undersecretary from the Department of Energy—goes back a long ways; 

Chet Thompson, president of the American Fuel and Petrochemical 

Manufacturers; Allen Burchett, global head of strategic projects on 

behalf the National Association of Manufacturers; and Alan 

Krupnick, senior fellow for the Resources for the Future. 

Ms. Harbert, we will start with you. Welcome. Nice to see you. 

STATEMENTS OF KAREN A. HARBERT, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, GLOBAL ENERGY INSTITUTE, U.S. 

CHAMBER OF COMMERCE; CHET THOMPSON, PRESIDENT 

AND CHIEF EXECUTIVE OFFICER, AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS; ALAN KRUPNICK, PH.D., 

SENIOR FELLOW, RESOURCES FOR THE FUTURE; ALLEN 

BURCHETT, GLOBAL HEAD OF STRATEGIC PROJECTS, ABB, 

INC., ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS 

STATEMENT OF KAREN A. HARBERT 

Ms. HARBERT. Nice to see you. Thank you, Mr. Chairman, and 

thank you, Ranking Member Rush, and all members of the committee. 

As the chairman said, I am Karen Harbert, president and CEO 

of the U.S. Chamber of Commerce’s Global Energy Institute. 

As many of you have noted, the U.S., Canada, and Mexico have 

a long history of shared energy trade, but, for most of that time as 

a global economic leader and a large energy consumer, the U.S. has 

been purchasing large supplies of oil and natural gas from both nations. 

Today, the U.S. has the largest hydrocarbon resource base in the 

world plus very large nuclear and renewable bases in this country. 

The speed with which the U.S. has moved from energy scarcity 

to abundance has been nothing short of breathtaking. The U.S. is 

fortunate to have two neighboring countries—Canada and Mexico— 

that are also large energy producers. Canada ranks number 8 globally and Mexico 24th. 

Unthinkable 10 years ago today, North America’s abundant energy resources are upending the global energy market. Combined 

production from the U.S., Canada, and Mexico accounts for 19 percent of all crude oil, 20 percent of natural gas, and 12 percent of 

all coal output. 

8 

Having a large share of world energy production in North America not only helps our own energy and national security, it also 

helps global energy security by diversifying supplies, ensuring that 

a large share of global output occurs in reliable countries. 

We have always had a very open trade relationship with Canada. 

While our trade relationship with Mexico has traditionally been 

strong, Mexico has long prohibited foreign investment in its hydrocarbon sector. 

But that all changed in 2013 when Mexico instituted constitutional reforms to put an end to the more-than-70-year monopoly enjoyed by state-owned oil company Pemex. 

Today, the U.S. is a net importer of crude oil from both Mexico 

and Canada. In 2016, the U.S. imported about 580,000 barrels per 

day from Mexico and nearly 3 million barrels per day from Canada. 

Notably, the U.S. now imports more oil from Canada and Mexico 

than OPEC. That’s very important to take note of. 

Since 2011, the U.S. has been a net exporter of refined products. 

There was lively trade in products among U.S., Canada, and Mexico, and the trends now favor the United States, growing its share. 

Although the U.S. is a net importer of natural gas from Canada, 

that is not expected to remain much longer. The U.S. has been a 

net exporter of gas to Mexico since the mid-1980s, and exports are 

growing tremendously. 

As more infrastructure is added linking the U.S. and Canada, we 

welcome legislation to facilitate that. We expect that the U.S. will 

be a net exporter to both countries. 

In 2016, Mexico and Canada accounted for 13 percent of all U.S. net coal exports, which yielded a $440 million trade surplus. 

We expect the downward trend in coal exports to continue and 

exports to other countries to grow. We have a growing and integrated electricity market. There are 25 transmission crossings between the U.S. and Canada and 11 crossings between the United 

States and Mexico. 

So, in summary, for the last 6 years we have been running a 

trade surplus with Canada and Mexico in refined petroleum and 

coal, and while the trade deficit in oil and gas remains, it will be 

shrinking rapidly. 

The abundance of affordable energy in North America has given 

U.S. businesses a critical leg up. We pay about 2 to 4 times less 

for natural gas, coal, and electricity than many of our competitors. 

But the benefits aren’t limited to just industry. It’s consumers, 

too. Over the last 6 years, average annual household energy expenditures declined by 14.1 percent. 

Now on to NAFTA. As these trends demonstrate, the U.S. energy 

economy has nothing to fear from NAFTA and a lot to gain. A modernized NAFTA could sustain advantages for North American industry and advance the market-based integration of our energy sectors. 

However, we are concerned that withdrawing from NAFTA 

would impose unacceptably high cost to the U.S. when we are engaged in historic tax reform and regulatory reform to get our economy growing above 3 percent. 

We are also worried about attempts to undermine the investor 

state dispute settlement protections in NAFTA, which are indispenVerDate Mar 15 2010 12:20 Mar 27, 2018 Jkt 037690 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 I:\115THCONGRESS\115X89NAMERENERGY\115X89NAMERENERGYWORKING WAYN
9 

sable to maintaining our growing energy sector and provide neutral 

arbitration to ensure other countries treat our investors fairly. 

In short, the robust energy trade amongst the U.S., Canada, and 

Mexico would be threatened by a withdrawal from NAFTA. Given 

all of this, it is our strongest recommendation that, if NAFTA modernization cannot be reached, that the administration must retain 

its commitment to the current trade agreement. 

Today, the story of North American energy is one of increased 

economic, national, and energy security for all three countries. 

Thank you very much. 

[The statement of Ms. Harbert follows:] 

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Mr. UPTON. Thank you. 

Mr. Thompson. 

STATEMENT OF CHET THOMPSON 

Mr. THOMPSON. Good morning, everyone. Thank you, Chairman 

Upton, Ranking Member Rush, and the rest of the subcommittee 

members for the opportunity to testify today. 

My name is Chet Thompson. I am the president of American 

Fuel and Petrochemical Manufacturers. AFPM represents 97 percent of the Nation’s refining and petrochemical manufacturing capacity, including 118 refineries, 248 petrochemical facilities in 33 

States. 

We support more than 3 million jobs and add approximately 

$600 billion each year to the U.S. economy. Our members make the 

gasoline, the diesel, the jet fuel, and the petrochemicals that make 

our modern way of life possible. 

We are the world’s largest refining industry today and a global 

leader in petrochemical production, making us the backbone of 

global manufacturing and transportation. 

Our energy trade relationships with Canada and Mexico are critical to enhancing our position. I would like to expand on only a few 

points in my written testimony. 

First, Canada and Mexico are helping us achieve North American energy security. Although U.S. crude production has increased 

dramatically over the last, you know, decade or so, our refineries 

still import on average 8 million barrels a day of crude. 

Canada and Mexico combined supply nearly half of this volume. 

In fact, Canada is the largest supplier of crude oil to the U.S., supplying more than 3 million barrels a day, or 41 percent of all of our 

imports. 

We get more from Canada than all the other OPEC members 

combined. Mexico supplies 600,000 barrels a day. They’re our 

fourth largest supplier, representing 7 percent. Not only do we import from our neighbors, but we also export a substantial amount 

of our energy, as well. 

The U.S. exports nearly 5 million barrels per day of petroleum 

products. About a third of that goes to Canada and Mexico each 

year. Mexico is our largest export market for U.S.-refined products. 

Last year, we exported approximately 14 billion gallons of petroleum products to Mexico. This helped meet more than half of their 

gasoline demand and contributed approximately $11 billion of energy trade surplus—surplus—with Mexico. 

Likewise, we exported almost 9 billion gallons to Canada. Together, exports to Canada and Mexico have grown from essentially 

zero before NAFTA to more than 1.4 million barrels per day. 

That’s about 7 percent of our total refining production and about 

a third of our exports just to those two countries alone. 

As a result of our increased energy production and the increasingly integrated North American energy market, the IEA now 

projects that North America will be energy secure by 2020. 

This is good for our country, and it’s good for the American consumer. We also export a substantial volume of chemicals to both 

Mexico and Canada. Trade in all chemicals has more than tripled 

25 

over the last two decades, from approximately $20 billion in 1994 

to $63 billion in 2014. 

My second point: North American trade is growing our economy. 

Our relationships with Canada and Mexico have made our energy 

industry strong, and that strength has attracted more investment. 

Indeed, right now there is more than $185 billion in the queue 

for further investments in our refining and petrochemical industries. 

With that investment comes the need for more employment and 

a strong work force. Demand for skilled labor positions is expected 

to grow by 12 percent by 2024. We will hire additional skilled labor 

to work as welders, electricians, pipefitters, boilermakers, and 

many other positions. 

Changes in the global energy market, advances in technology, 

and legal reforms will provide further opportunities for U.S. companies. For example, the opening of the Mexican energy sector has allowed us to compete and sell our products in Mexico, leading to billions of dollars of investment by U.S. companies. 

My last point I would like to make is that AFPM fully supports 

NAFTA and believes it helps achieve energy security. North American energy security is the result of our plentiful natural resources 

that we are blessed with, the ingenuity of our energy sector, but 

also NAFTA. NAFTA has played a very important role in our 

growth. 

Thus, we support the continuation of NAFTA but think the 

agreement should be modernized. For example, NAFTA’s investment protection should be strengthened consistent with other more 

recent U.S. free trade agreements, or at the very least, investor 

protections must be maintained. 

Second, NAFTA should help increase regulatory coordination in 

cross-border energy infrastructure. 

Finally, NAFTA customs procedures should be streamlined and 

modernized to reflect the way that energy and petrochemical trading occurs today across our borders. 

So, again, I appreciate the opportunity to be here and look forward to answering your questions. 

Thank you. 

[The statement of Mr. Thompson follows:] 

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Mr. UPTON. Thank you. 

Dr. Krupnick. 

STATEMENT OF ALAN KRUPNICK 

Dr. KRUPNICK. Mr. Chairman, Ranking Member, and other members of this subcommittee, thank you for inviting me to speak today 

about energy trade with our Mexican and Canadian neighbors. 

I come before you as an economist, a senior fellow, and leader of 

the North American Energy Initiative at Resources for the Future. 

RFF’s mission is to improve environmental, energy, and natural 

resource decisions through impartial economic research and policy 

engagement. RFF is nonadvocacy and does not take positions on 

issues, so these opinions are mine. 

Today, I am here to advocate for greater harmonization and integration of energy markets and economic and environmental policies 

across the three countries, and I am very happy to hear the words 

today ‘‘harmonization’’ and ‘‘integration’’ across the aisle at this 

hearing from the Members. That’s great. 

So, with appropriate policies and agreements with our neighbors, 

North American can be the world’s energy powerhouse. Free trade 

in energy and electricity promises greater economic prosperity, a 

cleaner environment, and greater energy security in all three countries. 

These countries have been moving towards harmonization in 

these sectors for years now. On the economic front, the Mexican energy reforms opened up oil and gas leasing and exploitation to U.S. 

companies. The reforms also expanded markets for our pipelines, 

generation technology, and natural gas. 

Mexico continues to greatly increase natural gas imports from 

the U.S. to replace oil fire generation. This development will reduce 

electricity generation costs, lower air pollution emissions from 

power plants, and increase energy security for Mexico, which is a 

good thing. 

And U.S. producers have access to a large market for their natural gas. If, however, NAFTA negotiations go badly or if political 

interference in this trade occurs, we could see increased costs and 

delays in exporting gas. 

We might even run the risk of Mexico eventually turning away 

from the U.S. as a supplier, and we certainly wouldn’t want that 

for American producers or Mexican consumers. 

The electricity sector, likewise, can benefit from increased integration. We have found the cross-border interconnections and capacity planning occur less frequently than they should to maximize 

electricity reliability. 

On the environmental front, as was mentioned, during the 

Obama administration the U.S. became party to several tripartite 

agreements to improve energy efficiency, reduce methane emissions, work towards major CO2 reductions. 

These gains are being reversed by the Trump administration 

even as Canada and Mexico continue to solidify their policies to reduce greenhouse gases. 

Canada has implemented a national carbon price for provinces 

that do not already have a price for trading system. Mexico, along 

with its limited carbon tax, is in the process of implementing a 

37 

pilot cap and trade program, and joining California and some Canadian provinces in that. 

So, what can be done in general and specifically by Congress to 

realize the benefits of greater harmonization? First, the bill that 

you have introduced is a great start, and be vocal in supporting 

free energy trade and investment protections already in NAFTA. 

Be wary of unintended consequences of NAFTA failing. 

Second, remember that as the U.S. continues to roll back climate 

regulations such as its methane rules, our neighbors may grow increasingly concerned about competitiveness issues. 

Mexico and Canada may likewise become hesitant in efforts to 

align environmental policies in the future, limiting our opportunities that might improve environmental outcomes at lower cost to 

the private sector and consumers here in the United States. 

Third, Congress can support past and future efforts to align economic, environmental, and safety regulations for offshore drilling 

in the Gulf of Mexico. There is already an agreement to build upon, 

and DOI has worked closely with Mexican regulators to share best 

practices and align offshore safety regulations. Such work should 

continue so that we can ensure successful and responsible offshore 

drilling. 

Fourth, Congress can help promote, along with our neighbors’ 

counterparts, the vision of renewable capacity growth in areas that 

capture their locational advantages—for instance, solar in Mexico, 

hydro in Canada—for selling into an integrated North American 

grid. 

Lastly, Congress can work to further improve the U.S. infrastructure siting and permitting process. Pipelines, transmission lines 

are needed to execute this vision of a North America system. 

Streamlining and strengthening this process can occur while improving environmental social outcomes, for example, by using cost 

benefit analysis in permitting decisions. 

As our two neighbors are likewise facing similar challenges in 

this area, we should aim to share best practice. 

So, ultimately, the fates of the Mexican-Canadian-U.S. energy 

sectors are intertwined. The interdependence actually benefits the 

three countries, increases our joint energy security. 

Congress can play an important role in seeing this vision become 

a reality. 

Thank you. 

[The statement of Dr. Krupnick follows:] 

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Mr. UPTON. Thank you very much. 

Mr. Burchett. 

STATEMENT OF ALLEN BURCHETT 

Mr. BURCHETT. Good morning, Chairman Upton, Ranking Member Rush, members of the subcommittee, and my fellow panelists. 

Thank you for the opportunity to testify. My name is Allen 

Burchett, and I am global head of strategic projects for ABB. 

I am testifying on behalf of the National Association of Manufacturers, which represents nearly 14,000 small, medium, and large 

manufacturers in every industrial sector and in all 50 States. 

We are the number-one manufacturer of power grids in the world 

and a leader in industrial automation for the petrochemical industries. We are the number-one producer of electric motors and the 

second-largest producer of electric drives and industrial robots. We 

supply the energy, the electricity, and manufacturing sectors with 

enabling technologies that help them stay competitive. 

ABB has a strong and growing U.S. manufacturing footprint and 

is proud of our 20,000 employees across 50 manufacturing facilities, 

including those in Michigan, Texas, Oklahoma, Ohio, Virginia, and 

North Carolina, which is home to our U.S. headquarters. Over the past decade, we’ve invested over $11 billion in the 

United States, tripling our workforce. We have chosen to invest in 

the U.S. because it’s our largest market worldwide and we believe 

in being close to our customer. We believe in the American worker. 

A strong North American supply chain has supported our domestic growth and investments, enabling ABB to competitively manufacture here. 

For manufacturers throughout the U.S., the North American 

commercial market is the most important market in the world. 

Over 60 percent of U.S. manufacturing output in 2016—$1.36 trillion—was sold in the U.S., Canada, and Mexico. 

Canada and Mexico alone purchased one-fifth of all U.S.-manufactured goods in 2016, more than the next 10 U.S. trading partners combined. Eleven manufacturing sectors have experienced 

growth of more than 50 percent since 1993. 

Of particular interest to this subcommittee, energy products have 

led the pack, with over 250 percent growth. Most U.S. manufacturing sectors, 36 out of 42, count Canada or Mexico as their top 

foreign market. 

Despite growth in manufacturing, a changing energy landscape 

has created a major need for new and improved energy delivery infrastructure. Investor-owned utilities alone expect to invest more 

than $300 billion over the next 3 years. 

ABB has been a participant in this manufacturing boom and has 

developed an integrated North American supply chain that supports our domestic manufacturing capabilities and operations. 

While much of the manufacturing of these technologies happens 

domestically—many of our customers are domestic—certain parts 

of the manufacturing processes occur in Canada and Mexico, and 

many of the offerings produced in the U.S. are exported to customers in Canada and Mexico. 

I would like to provide a few examples. ABB is the largest producer of power transformers in the world. These transformers can 

51 

be found at power plants, manufacturing facilities, and in neighborhoods across the U.S. We build transformers at plants in Mississippi, Virginia, Missouri, and Tennessee. 

Yet, the insulation materials used as inputs into these transformers are sourced from a Canadian company. In Bartlesville, 

Oklahoma, ABB manufactures measurement and analytics products for the oil and gas sector. 

Our factory imports metal housings from the supplier in Mexico 

and electronic circuit boards from an ABB plant in Canada, which 

are both then incorporated into the final products manufactured in 

Oklahoma. 

Many of our U.S. factories also export to Canada and Mexico. For 

example, 50 percent of high-voltage surge arresters manufactured 

in Mount Pleasant, Pennsylvania, are sold to Mexico and Canada. 

ABB’s Sugarland, Texas facility supplies electric infrastructure 

control systems to Mexico’s electric grid operator and Canadian 

power generation. 

Restrictions on trade or new barriers between the U.S., Canada, 

and Mexico, including on data transfer and digital solutions, would 

put up barriers too large on markets in Canada and Mexico and 

could put upward price pressure on the U.S.-manufactured goods 

to all of our North American customers, potentially making U.S.- 

made products less competitive and adversely affecting our domestic factories. 

In conclusion, ABB believes the future of the U.S. economy is 

bright. This is particularly true on the energy sector. The integration of the three major North American economies has enhanced 

ABB’s competitiveness, encouraged our investments in the United 

States. 

Building on the North American Free Trade Agreement’s legacy 

of economic growth and job creation, we can set the stage for further gains in these areas by modernizing the agreement in ways 

that eliminate remaining distortions and barriers, raise standards, 

strengthen neutral enforcement mechanisms, and remove unnecessary red tape at the border. 

Thank you for the opportunity to testify before the subcommittee 

today, and I look forward to answering your questions. 

[The statement of Mr. Burchett follows:] 

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Mr. UPTON. Well, thank you. Thank you all for participating, and 

at this point we’ll start our questions. 

I have to say at the onset that, boy, if there’s anything that our 

constituents understand, it’s gas prices and, you know, back in 

2008 the average gas at the pump was $3.84 a gallon. Today, or 

this last weekend I saw it for $2.24. 

I think maybe it’s a little bit higher in some other areas of the 

country. But it’s a pretty dramatic decline and, you know, as you 

think about what NAFTA has done and where we are, as you 

pointed out in your testimony, Ms. Harbert, that we’ve now been 

running a trade surplus with Canada and Mexico in refined petroleum and coal, and the trade deficit with these countries in oil and 

gas has been shrinking rapidly. 

It’s in large part because we now really, truly have a North 

American energy independent plan that is coming to fruition, 

which is one of the reasons why these prices of energy have fallen, 

whether it be in LNG, whether it be with the gas at the pump, as 

well. 

You indicated at the end of your testimony that, if NAFTA was 

changed dramatically, it truly would threaten not only our energy 

security, but I have to presume it would also dramatically increase 

prices to consumers, as well. 

Can we explore that a little bit? 

Ms. HARBERT. Certainly. We have benefited from increased trade 

in North America, and, by lifting the oil export ban and increasing 

our LNG exports around the world, the American consumer and 

the American industry has benefited tremendously. 

Consumer prices have gone down by about 14 percent, and if 

that were to change and for some way we would jeopardize either 

the certainty provided by NAFTA or the investor protections provided by NAFTA or even the reforms that have been undertaken 

in Mexico, that would threaten production in the United States because it could not find its natural markets. 

It would also undermine current investments planned for Mexico, 

which would then bottle in some of our domestic capacity. So it’s 

a lose-lose if we undermine NAFTA in any way that has been the 

basis for an incredible energy integration effort that is providing 

tremendous benefits to industry, consumers, to our national security, as we are now getting more oil from them than from OPEC, 

and also, obviously, our energy security. 

Mr. UPTON. Mr. Thompson, as we know, the Gulf Coast is home 

to the most technologically advanced refineries in the world. Many 

of us have been down there to see these advances. 

How has the North American energy integration benefited the 

consumers of these products, and how might we strengthen—as 

these negotiations are going on with the three countries—what 

might you suggest to actually improve our situation in regard to 

the technological improvements that could be done? 

Mr. THOMPSON. Thank you for the question. 

I will just add that we have sophisticated facilities in far more 

than just Texas. We have some in your fine State, and we have 

them in 33 States. So, you know, a strong energy sector helps out 

most of the country. 

64 

As far as, you know, NAFTA goes, as we talked about it, it’s 

pretty simple at its core. We got a lot of product from Canada, and 

we were able to sell a lot of finished goods to Mexico, and this is 

good for consumers. 

We get more than—you know, 40 percent of all of our imports 

come from Canada, and we get it duty free. So that means lower 

price for crude, which benefits the American consumer. 

As far as additional protections, we think that a more robust 

chapter in NAFTA dealing with energy, dealing with how it’s developed and the modern way it’s traded, would benefit all. 

We certainly believe that we would benefit from having the three 

countries work together on infrastructure so we can find the best 

ways to get crude to our refineries and products to consumers in 

the most efficient way. 

Mr. UPTON. So, Ms. Harbert, you know, as we think back to 

where we were, back particularly in the ’70s, I mean, we’ve got the 

new abundance that’s there now—the developments in shale technology, all those different things. 

Many of the laws and regulations were written back in those 

days when we weren’t exporters. What are some of the things that 

we could do to prevent us from being held back as it relates to energy exploration and increasing exports not only to these two countries, but the other countries around the world? 

Ms. HARBERT. Well, first, I think it’s ‘‘do no harm.’’ Don’t do anything to impair our ability to export to North America and beyond. 

Make sure that we can get those export facilities sited very quickly. 

We have to make sure that the regulatory process—and you guys 

have been working on this—is fair, transparent, and incorporates 

cost-benefit analyses. 

And last but not least, there is significant room for permitting 

reform, both within the country to move our products around more 

efficiently and also to export them to North America, both to Canada and to Mexico, and to import them as well. 

We’ve had a 7-year-waging war on importing more oil from Canada. But we shouldn’t lose sight of the fact that we have a tremendous opportunity to export our own natural gas—clean-burning 

natural gas—to Mexico with some additional permitting reforms. 

So both, I think, a laserlike focus in the upcoming debate on infrastructure in the Congress, who really need to take a very hard 

look at continuing reg reform and certainly permitting reform. 

Mr. UPTON. Thank you. 

Mr. Rush. 

Mr. RUSH. I want to thank you, Mr. Chairman. 

Dr. Krupnick, in your written statement you ask the Members to 

envision a world where the three North American countries act as 

a free-trade energy bloc which could rival every other nation or bloc 

in its ability to influence world markets for oil and gas. 

If we were to continue along the path we are currently on, with 

no changes to NAFTA and additional coordination, harmonization, 

and integration between the U.S., Canada, and Mexico, how long 

do you envision it would take for North America to truly rival a 

competitor like OPEC? 

Dr. KRUPNICK. Well, this idea of a future energy bloc—the 

United States, Canada, and Mexico operating as a unit—is, I think, 

65 

a useful exercise to think about an ideal situation from an energy 

perspective. 

We are, obviously, I don’t think, ever going to head in that—we 

are heading in that direction, but we are never going to be there. 

We are not going to have an E.U.-type structure with Mexico, Canada, and the United States. 

But I think it’s useful for thinking about how to realize as many 

gains from trade and as many—as lowest possible cost to industry 

of addressing environmental regulations, let’s say, by harmonizing 

those regulations across countries so that there’s sort of only one 

regulatory model that industry needs to address. 

So I think it’s a useful paradigm. It’s not something I see that’s 

actually going to happen in my lifetime, anyway. 

Mr. RUSH. Thank you. 

Mr. Thompson, in your testimony you noted that, in 2016 alone, 

the U.S. exported $20.2 billion worth of energy products to Mexico 

and imported $8.7 billion worth of energy products. 

In terms of jobs, how many U.S. energy jobs would potentially be 

impacted if the administration were to unilaterally make changes 

to NAFTA in a way that might upset our two trading partners and 

possibly hurt the mutually beneficial energy trade that we all can 

agree is very notable and profitable for all three countries? 

Mr. THOMPSON. Thank you for the question. 

We are optimistic that we are going to come through with modernized NAFTA and these negotiations are going to stay on track. 

We certainly are proud of what our industry means from an employment perspective. As I said in my testimony, we support 3 million jobs, and those jobs are there because of our strong energy sector and certainly are going to be strengthened the more we work 

with our neighbors to the north and the south. 

We believe that there’s lots of opportunities in Mexico now that 

they have liberalized their energy network, and we already have a 

number of companies. We have Andeavor and Valero and 

ExxonMobil have entered the market—the downstream market in 

Mexico for the first time in many, many decades. 

We are supplying over half of their gasoline needs, and that’s 

going to continue grow, and as that grows it’s going to strengthen 

our need for employment. 

Mr. RUSH. I want to just ask all the panelists, is there anyone 

on the panel who believes that our Nation would benefit if the administration unilaterally opened up negotiations on NAFTA and insists on establishing new terms that would be more beneficial to 

the U.S.? 

Mr. THOMPSON. Well, to be clear, we certainly believe that 

NAFTA would benefit by being modernized. So we do think, if modernized, it could benefit the energy industries we talked about. 

We believe that there could be a more robust chapter on energy 

in NAFTA. We believe that the United States should make sure 

that direct investors are protected, particularly now that Mexico 

has liberalized its energy system. 

We think that a modernized NAFTA could do that. We think that 

it could be enhanced to help us with regulatory cooperation with 

Mexico and Canada. So there are, Mr. Rush, lots of things that 

could be improved through NAFTA modernization. 

66 

Ms. HARBERT. We at the Chamber believe that withdrawal would 

be devastating to the U.S. economy. Modernization is preferable. 

First, do no harm and then make it better. 

That’s what modernization means, and that includes, from American business perspective, making sure that we have those investment protections in place that ensure that we have an ability to adjudicate our disputes fairly. 

So we need to stay in this game. I think we’ve all laid out—all 

the panelists have laid out the stakes. They’re high, and we need 

to find a way to get to yes. 

Mr. RUSH. Thank you. 

Dr. KRUPNICK. I just want to raise, there’s more going on than 

just NAFTA. So we shouldn’t lose sight of these other agreements 

that the administration is giving short shrift to or even walking 

away from on the environmental side. 

Mr. BURCHETT. From a North American Manufacturers’ and an 

ABB point of view. We support modernizing the agreement. 

Mr. RUSH. Thank you. 

Mr. Chairman, I yield back. 

Mr. UPTON. Thank you. 

Mr. Barton. 

Mr. BARTON. Thank you, Mr. Chairman and Ranking Member 

Rush, for holding this hearing. 

Before I ask my questions, I want to thank Karen Harbert for 

her help in passing the repeal of the ban on crude oil exports. 

You and the Chamber were big helps in that, and we’ve exported 

as much as 2 million barrels a day in the last year, and I think 

we are about a million and a half barrels a day now. So thank you 

and your organization for that. 

I want to ask a little bit different question than Mr. Rush did, 

but it’s basically the same thing. From reading your testimony and 

listening, my impression is that all of your organizations support 

staying in NAFTA in some way. 

Is that true? Is there anybody that advocates getting out of the 

NAFTA treaty? 

Everybody’s shaking their head, so we’ll say that that’s a no. I 

will ask Mr. Thompson, will there ever be a day when the U.S. refineries, which had really configured their refineries to use the 

heavier Mexican and Canadian crudes, that they will reconfigure 

to focus on the lighter U.S. shale crudes? 

Mr. THOMPSON. Well, I certainly couldn’t say there will never be 

a day, but right now I think they’re configured in the most efficient 

way possible. As you know, oil is a global commodity, and the most 

efficient—you know, we are configured right now the most efficient 

that we can be. The heavier crudes that we are designed to handle 

we are handling, and the lighter stuff that can be better processed 

is being exported. 

And so can I say never? No. But I think right now we have a 

very efficient system that’s operating the way the global market 

dictates. 

Mr. BARTON. Well, if that’s the case, then we almost have to 

maintain some sort of a NAFTA arrangement, because the Canadian and the Mexican crudes are the more sour, heavier crudes. Is 

that not correct? 

67 

Mr. THOMPSON. That’s correct. And, you know, I shook my head 

in agreement, but I will say it out loud: Yes, we certainly and 

wholeheartedly agree that we should stay in NAFTA. 

Mr. BARTON. This is a little bit off the NAFTA issue, but in that 

happy day, if it ever were to occur that we would actually build a 

new U.S. refinery—and I know that’s unlikely—I know we expand 

and modernize—but if were to actually from scratch build a new 

U.S. refinery, how would that refinery be configured? 

Would it still be configured for the heavier crudes that we import, or would it be configured to use the lighter crudes that apparently now we are exporting? 

Mr. THOMPSON. You know, frankly, I am not in the best position 

to answer that. I think people much smarter than me would design 

it in a way where they believe they’ll have the best access to crude. 

Could it be configured to handle the lighter stuff? Sure. But 

there’s arguments to handle the heavier stuff, as well. 

I will say on this point, we have adequate refining capacity today 

to meet our domestic needs. So right now there’s no need to build 

an additional refinery. 

Mr. BARTON. OK. I will ask Ms. Harbert, with the—I don’t know 

how you exactly say it, but the Mexican legislature and president 

have changed their policy and changed their laws to allow international companies to own more and be more invested in Mexico. 

How is that going? Are they—— 

Ms. HARBERT. Well, and first, let me thank you for your support 

and leadership in lifting the oil export ban, which has done a tremendous benefit to the American economy, and the EIA estimated 

for 2018 we will produce more oil than ever before in our Nation’s 

history, and obviously a lot of that will continue to be exports and 

particularly supplanting oil from other countries that don’t like us 

so much. 

You know, in Mexico it’s happening, and we have to congratulate 

the legislature and the president for being very courageous in doing 

something that took a long time to undo. And every major American company is down there with an office looking at how they can 

take advantage of this opportunity. Permits have been granted, infrastructure is being built, and to stop something right in the middle of its tracks of enjoying a boom of reinvesting back into Mexico 

would be tragic. 

There are companies that have a lot of pent-up energy and a lot 

of pent-up demand for realizing a better relationship with Mexico. 

So it’s going great, but it can only get better, and what we have 

to worry about is that a change in NAFTA or a change in leadership in Mexico that would jeopardize any of that certainly, you 

know, we would have to take that with a grain of salt—a grain of 

caution. 

Mr. BARTON. All right. 

Thank you, Mr. Chairman. 

Mr. UPTON. Mr. McNerney. 

Mr. MCNERNEY. I want to thank the chairman, thank the witnesses this morning. I will start with Mr. Thompson. 

You mentioned that North America will be energy secure by the 

year 2020. Could you explain what that means exactly? What does 

energy security mean to you? 

68 

Mr. THOMPSON. Well, let me just say that that’s not, you know, 

me saying it. That’s the International Energy Agency—the IEA— 

that’s saying it, and what that means is that we are producing a 

level of liquid fuels that satisfy our North American needs. 

So, basically, we are producing enough to satisfy our own needs 

and we are not relying on any other country for our energy needs. 

Mr. MCNERNEY. So we’d cut OPEC off, basically, from American—— 

Mr. THOMPSON. Well, we would have the potential to cut them 

off. Again, you know, whether the market would dictate that is another matter. 

But we could. We would be energy secure at that point. 

Mr. MCNERNEY. Do you disagree, Doctor? 

Dr. KRUPNICK. I just wanted to mention that oil is a global market, and the price of oil is determined in a global market in the absence of, let’s say, Saudi Arabia’s cutting back its supply voluntarily or on its own to change price. 

So we can never really be independent of other countries, other 

producers, because we’ll always be dependent through the price. 

But, obviously, as our oil demand falls and our domestic supply 

grows, it does give us a greater measure of energy security. 

Mr. MCNERNEY. Well, you have been advocating for harmonization, Dr. Krupnick. But just yesterday we had a hearing on the 

CAFE standards—tremendously difficult to get harmonization 

within the United States itself. So is there a pathway for us to 

reach harmonization with the other countries? 

Dr. KRUPNICK. Well, initially, I would just hope that we could get 

behind the agreements that we already had with Canada and Mexico. The ones I mentioned were on environmental issues. 

There’s an agreement with Mexico and the United States to 

jointly inspect facilities in the deep water of the Gulf of Mexico to 

make sure that they’re living up to the safety standards that both 

countries are enforcing. 

So I think there’s a lot that can be done bilaterally and trilaterally. 

Mr. MCNERNEY. Well, you mentioned that pulling out of the 

Paris conference—I think I understood you to mention or imply 

that that hurt the confidence of investors. Could you expand that 

a little bit? 

Dr. KRUPNICK. I don’t know if I exactly said it that way, but I 

think what we are seeing is that companies around the world and 

international companies that are located and based in the United 

States, plus companies in the United States, are already using 

what we would call as economists shadow prices of carbon—that is, 

internal prices of carbon to help in their investment planning. 

So whether we pull out of the Paris Accords or not, companies 

can’t afford not to bet on a future without climate legislation in the 

United States. So they have to take the long view with investments, let’s say, in pipelines lasting 40 years. 

They’ve got to take the long view in their investment decisions 

about what’s going to happen to climate policy in the future, in the 

U.S. and around the world, and they’re doing that irrespective of 

whether we are currently in the Paris Accords or not. 

69 

Mr. MCNERNEY. One last question. You said that Congress could 

help promote renewable capacity using local resources. Could you 

expand on that a little bit as well? 

Dr. KRUPNICK. Yes. So, I am not in Congress. I don’t know the 

levers that you all have to use. Some of it is just moral suasion, 

some of it is, as I am sure, is passing bills. 

But Mexico is blessed with very good solar energy, and Canada 

has a lot of unexploited hydro electric energy. So the United States 

could benefit, and Mexico and Canada could benefit, by taking advantage of these locational advantages that these countries have to 

have our electricity be cheaper for American consumers. 

Mr. MCNERNEY. And these can be cost competitive with traditional fuels? 

Dr. KRUPNICK. Well, they can be, certainly in the hydro front 

they can be, and potentially in Mexico. Kind of better having solar 

in Mexico than having solar in New England. 

Mr. MCNERNEY. Thank you. Mr. Chairman, I yield back. 

Mr. UPTON. Mr. Olson. 

Mr. OLSON. I thank the Chair, and welcome to our four witnesses 

with a special Texas welcome to Secretary Harbert. 

Ma’am, you and I share a common bond. We are both Rice 

Owls—Jones ’85. Welcome. There we go. Well, Jones beats Hanson 

at all the sports that matter. So, again, welcome. 

Also welcome to Mr. Burchett. As you know, sir, ABB has a presence there in Sugarland, Texas, as you mentioned. Please come 

down and visit. You will love to see the facility. It’s amazing. 

Also, right around the corner is a restaurant called the Live 

Oak—the best burgers in Fort Bend County, right there at Live 

Oak, right by ABB in Sugarland, Texas. 

And this is no news, but North America and energy trade is vital 

to the world’s economy. Heavier crude from Canada is a critical 

part of the American refining space. 

We all know that the Eagle Ford shale does not stop at the Rio 

Grande waiting for a visa to cross, and we know that as Mexico improves its energy sector, our ties with that neighbor will only grow 

stronger. 

And make no mistake, we are on the verge of replacing OPEC 

with a de facto NAPEC—North American Petroleum Exporting 

Countries. 

And, of course, my own State of Texas’ ties to Mexico are also 

important for electricity. They have been invaluable in our electricity market. 

For example, in August of 2011, my State was hit with a statewide heat wave—over 100 degrees on every square inch of our 

State the entire month of August. 

That put us in a situation of some rolling blackouts. Mexico sent 

power across the river to help us out. Over 200,000 homes were 

powered by energy electricity from Mexico. 

It’s an important relationship for Texas and America to have. 

My first question is for you, Mr. Burchett. In your written testimony, you talked about how, one, electric transformers come together from sites all across the North America, and that’s a great 

example of how trade works in energy. 

70 

Can you discuss how trade deals like NAFTA make that possible 

and what would happen if the global supply chain—if it spikes with 

terrorists? 

Mr. BURCHETT. Thank you, Congressman Olson. And, by the 

way, my office is in Houston, Texas, so I do get to Sugarland quite 

often. So—— 

Mr. OLSON. Remember, the Live Oak. Live Oak. 

Mr. BURCHETT. Live Oak. Got it. 

So ABB is a—you know, we are a multinational multibillion-dollar company, and we make investments all the time. What drives 

those investments is consistency, stability, low trade barriers. 

And so, when we think of NAFTA, that helps drive those types 

of investment, because we have the consistency and the stability 

that’s provided there. 

Mr. OLSON. OK. 

Ms. Harbert, a question for you and the U.S. Chamber of Commerce: You were pretty clear in your testimony that our Chamber 

never, ever wants to see America walk away from NAFTA. 

At our local five-star Chamber of Commerce in Sugarland, the 

Fort Bend Chamber of Commerce, led by Kerry Schmidt, repeats 

that message to me every single time we meet at home. 

With that said, are there items that could be included in negotiations which would hamstring the agreement even if we stay part 

of it? 

To put it here in DC terms, is there a poison pill that’s possible 

that looks benign that could bring the whole structure down? 

Ms. HARBERT. Well—and thank you for your kind comments, and 

I will try and get the Hanson Athletics to step it up a little bit. 

You know, I am glad to see that the echo chamber is working, 

because the business community is united in its support of 

NAFTA—modernization, not withdrawal, and protection of those 

parts of NAFTA that are very important to the business community, specifically investor protections that are in there. 

If those were taken out, I think American industry would have 

a very, very large problem in agreeing with the future terms of 

NAFTA. There are lots of things that can be done to improve it. 

But that would be one that would be very difficult, and if were to 

see that go away and then we would have steep tariffs, you can 

know what would happen to the American consumer here. 

So we have our eyes laserlike-focused on the investor protections 

to make sure they are included. 

Mr. OLSON. I think I am out of time and, Mr. Chairman, again 

I thank the witnesses, and Merry Christmas. 

I yield back the balance of my time. 

Mr. UPTON. Mr. Peters. 

Mr. PETERS. Thank you, Mr. Chairman. Thanks to the witnesses 

for being here. Ms. Harbert, when we saw each other the last time, 

it was probably 80 degrees where we were. Not that way today. 

Thanks for being here. Just a couple observations. First of all, 

there’s a lot to like about energy abundance for consumers, for 

manufacturing, and even if our friends to the north and the 

south—Mexico and Canada—even if we don’t act like OPEC, it’s 

still advantageous to have friendly countries to trade with for energy. 

71 

Another observation: This really has been about petroleum and 

hydrocarbons, not all energy trade. We haven’t talked about nextgeneration nuclear or renewables. 

That’s also part of the discussion. But just focused on what we’ve 

covered here, it does strike me as, with all this abundance, an odd 

time to be opening up Alaska to offshore drilling. 

I don’t see the need for that. It’s part of a tax bill that didn’t even ever discuss the $2 billion of subsidy we provide at a time of 

all this abundance, and then at the same time we are talking about 

depleting the strategic petroleum reserve at prices that almost 

couldn’t be lower. It doesn’t seem like it’s very smart. I observe 

that as part of the context. 

Ms. Harbert, I am with you on regulatory reform and permitting 

reform. Actually, in my previous life I represented a lot of clients 

who tried to get through Government processes that could be very, 

very frustrating. 

I believe we can achieve high environmental standards with less 

drag on the economy. Would like to work with you on that. 

Along those lines, one thing I would point out is what’s happening around methane right now. I saw today that the American 

Petroleum Institute—and this is great news—started its own business partnership to deal with reducing VOCs and methane. 

They are probably observing what I am observing, is that these 

rules are becoming politicized, and that’s bad for business because 

what’s going to happen is you get this back and forth. If the President wants to undo everything because it’s got Obama’s name on 

it, that’s not good for business, either. 

So I congratulate the American Petroleum Institute. I know the 

Chamber is interested in certainty. We can have good methane 

rules that protect us and the environment and are certain for business. I would like to work with you on that. 

And I am with you on NAFTA. For me in San Diego, one of the 

most important parts of our economy is our trade with Mexico. Our 

relationship with Mexico is very important to us. 

I am a supporter of President Obama’s TPP negotiations. Again, 

the business community seems united behind this. I can’t speak for 

all the Democrats here, but I understand the need for dispute resolution that’s free from some of the hometowning, particularly in developing nations. I think that makes a lot of sense. 

Maybe we should just rename it the Trump Pacific Partnership 

and be on with it. Maybe get a vote on it that way. 

But what I did want to just say, because a lot of this has been 

covered, I heard mostly discussion in terms of modernizing about 

leaving it the same, making sure that we preserve dispute resolution, making sure that we do no harm. 

I just wanted to give you an opportunity—I think we’ve been 

asked this before—are there any specific changes you’d like to see 

in terms of modernization that we should be asking for? 

And Mr. Burchett, I will start with you. 

Mr. BURCHETT. Thank you, Congressman. 

There are more experts than I on the NAFTA agreement. I know 

in my career,I remember when it started, and I was doing business 

in Mexico. It’s been 23 years. So I would defer to the experts on 

NAFTA for the modernization. 

72 

But it just seems to me that given the changes that’ve happened 

in the 23 years, given the shale gas revolution, given the high-tech 

things that we do now, like the refineries mentioned by Congressman Upton, which is ABB technology, and given the level of trade 

that I see with our 50 manufacturing plants and a nice footprint 

in Canada also of manufacturing and a nice footprint in Mexico, it 

seems time to modernize. 

Mr. PETERS. Yes. Anything, Ms. Harbert? 

Ms. HARBERT. I have a couple of very specific things: that a new 

NAFTA would ensure that the cross-border trade of crude oil and 

natural gas and refined product wouldn’t be subject to any quantitative measures or tariffs; secondly, that we could more safely or 

more quickly develop safe cross-border interconnections of electricity and hydrocarbons; and lastly—there’s two more—we really 

need to look at and prohibit local content rules that the industry 

could not meet, and we should take a hard look at some common 

standards and regulations. 

Not all—where it makes sense in the energy sector, so we can 

more harmonize, which is a scary word to our friends in the north, 

they don’t like that word. But we could find some commonality. 

Mr. PETERS. OK. That’s very constructive. 

Dr. Krupnick, anything you want to add, briefly? 

Dr. KRUPNICK. No. I think this has been pretty well covered. 

Mr. PETERS. OK. I really appreciate you—I look forward to working with you to see if we can’t say what’s good and make it better. 

And Mr. Chairman, I yield back. 

Mr. UPTON. Mr. Shimkus. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I appreciate my colleague from California’s questions. I’ve got a—just a picture should 

go up on the screen, and I was trying to find another one but, really, that just gives you, you know, either pipelines, crude oil crossings, and sometimes they don’t show going in to Mexico, but there’s 

a little, like, a dot where the crossing location is for crude, for refined product, for hydrocarbon gas liquids, for natural gas, and for 

electric transmission. 

So I think what we struggle with is, those of us who have been 

on the committee, which is one of the reasons why I love the committee—we are interconnected. We are there. We’ve been there for 

a long time. We are going to continue to have this. 

So, why I think the hearing is important is—and Ms. Harbert, 

you just raised some of the issues of the concerns that, if there’s 

a pullout of NAFTA, what damage do you do to that interconnected 

North American grid, or North American crude oil, or oil-refined 

product lines. 

Does anyone want to mention that real quick? 

Ms. HARBERT. Looking at your map, if you can imagine in a 

world without NAFTA anything that would be coming into the—for 

example, to Texas, if, you know, electricity, if there was going to 

be a toll or a tariff put on there that we would have higher prices 

than we actually, you know, charge in America, that would be a 

huge disincentive for our energy security because we depend on 

this, as you well pointed out, and if we change that economic equation, that’s going to raise prices here at home, and we are going 

to have to search for other suppliers. 

73 

Mr. SHIMKUS. And right now there’s uncertainty because of conflicting messages. So I am from southern Illinois. We are pork and 

beans and corn. NAFTA is very, very important for my commoditybased products. 

But we also have the fear—every small town in America really 

has that small manufacturing facility that’s moved. So that’s the 

conflict of NAFTA for members. 

In fact, not to point out ABB, but they announced a closure of 

the St. Louis plant—a transformer manufacturer. I don’t know 

where it’s going. But I do know—I drive by it every day when I go 

to the airport. 

So that’s the struggle with how do you renegotiate while keeping 

the benefits of that, or for my corn to be sold, where you’re ensuring that our manufacturing sector is equally treated, because we 

can’t negotiate wages. 

We can’t negotiate environmental standards. Well, maybe some 

people think we can but, historically, those are things left to the 

individual country to be able to do. 

Anyone want to comment on that? Those challenges? 

Dr. KRUPNICK. I could say something about the map and one 

thing that’s not on the map. So there are a number of pipeline— 

there’s a lot of plans to grow the number of pipelines coming into 

Mexico to meet that rising natural gas demand. So those could be 

put in jeopardy. 

And then, in the Gulf of Mexico, the lease sale, round one was 

completed. Two is almost completed. Three is supposedly going to 

get into deep water, and that could be held up. 

Mr. SHIMKUS. Right. 

Dr. KRUPNICK. So it could put us and, of course, indirectly the 

Mexicans, at risk, as well. 

Mr. SHIMKUS. And for those that have followed the committee 

and what I’ve done in public statements, comments, Keystone Pipeline, Keystone XL, which feeds right, obviously, from the oil sands 

all the way down to my district. There was a big terminal there, 

and then it spreads throughout all the Midwest. And we’ve seen 

not just an international negotiation, but we’ve seen, obviously, 

just internal politics delay pipeline construction. 

Mr. Thompson. 

Mr. THOMPSON. So let me just say, I can say with certainty that 

my refining facilities are the most efficient in the world, and we 

are not relocating anywhere, you know, under NAFTA. We are 

going to be there. 

But, you know, as our transportation demand for fuel flattens 

out, our facilities need export markets to continue to grow and 

prosper. 

Mr. SHIMKUS. Right. I think that’s a good point, and I was going 

to jump on that with the last 40 seconds. Just for the liquid transportation fuels debate, we had that hearing yesterday on CAFE 

and greenhouse gas, and the debate of EV penetration. 

Now, it’s not huge across the country, but electric vehicle penetration in California is noticeable, and international comments 

about, like, Norway and France who are trying to make—or China, 

that really could disrupt this market—crude oil and refined products, don’t you think? 

74 

Mr. THOMPSON. EV penetration could indeed, yes. It could be 

very disruptive. 

Mr. SHIMKUS. So we need to keep the liquid transportation market. 

Mr. THOMPSON. We need to keep the liquid transportation market strong. 

Mr. SHIMKUS. Thank you very much. I yield back. 

Mr. UPTON. Mr. Loebsack. Oh, I am sorry. He left. 

Mr. Tonko. 

Mr. TONKO. Thank you, Mr. Chair. Welcome, witnesses. 

One area where our energy sector is undeniably and quite literally interconnected is the United States and Canadian electrical 

grid systems. 

In 2016, the U.S. imported 73.1 million megawatt hours of electricity from Canada, about a quarter of which went to New York 

State, my home State. 

Dr. Krupnick, do the interconnections between the United States’ 

and Canadian power systems improve greater reliability on both 

sides of the border? 

Dr. KRUPNICK. Well, sure. The short answer to that is yes. To 

maximize the benefits of cross-border electricity trade—we have a 

report that talks about what to do. There are several margins to 

increase reliability, and one of them is to have capacity planning 

be a joint exercise between, let’s say, control areas in the United 

States and in Canada. 

Mr. TONKO. Thank you. 

Dr. KRUPNICK. So that’s not—there’s a lot of things that we can 

do beyond what we are doing. 

Mr. TONKO. Thank you. 

And the Canadian hydropower is becoming increasingly important for New York State’s plan to meet its clean energy targets. 

So I see big potential for increased renewable electricity trade, 

such as the importation of Canadian hydro, which will reduce emissions in our country. 

But these projects rely on cross-border transmission infrastructure. What unique challenges exist to siting, permitting, and constructing cross-border transmission compared to domestic transmission projects? 

Ms. HARBERT. Well, I can take a stab at that. 

You’re absolutely right. The provision of Canadian electricity to 

the Northeast more broadly is hugely important for grid reliability. 

The Northeast suffered a very devastating blackout in the early 

2000s, and from that was established the Electricity Reliability Coordination Council, which seeks to look at these things and manage 

the grid up there more responsibly. And so that’s an important new 

organization that helps us to do that. 

Cross-border is still hard, and it takes approvals from both sides 

of the border. Sometimes it takes State and local, because it’s not 

just crossing the border, it’s going through other municipalities and 

counties that might not be excited about having a new transmission line. 

So we really need to take a look at the redundancy of Federal, 

State, and local permitting so that we get things built in a predictable time frame. 

75 

Mr. TONKO. Thank you. Anyone else want to respond to that? 

Yes. 

Mr. BURCHETT. Yes. So as ABB, we invented high-voltage DC 

transmission, which is the way you do a lot of these interconnections. So we do them all over the world. We are working on one 

with Denmark and U.K. now. 

One of the biggest ones is for New England, and it’s to get the 

power from Canada there. So in talking to our customers, I have 

heard them describe the regulatory approval process as, quote, unquote, ‘‘a game of Chutes and Ladders,’’ and that can take 7 to 10 

years. And so what they would—you know, they would like to see 

an expedited process, but the technology is there to get particularly 

hydroelectric power from Canada into New England. 

Mr. TONKO. Thank you. 

Yesterday marked the second anniversary of the Paris climate 

agreement. One hundred and ninety-seven parties have signed the 

Paris Agreement, and 170 parties have ratified it. 

The United States is the only country with the intention to withdraw. Progress in North American and global emissions reductions 

will be hindered by the absence of our leadership—United States 

leadership. 

But we have seen no indication that our neighbors intend to back 

away from their Paris commitments or their carbon pricing policies. 

So Dr. Krupnick, do you believe it will be more difficult for the 

United States, Canada, and Mexico to cooperate on cross-border energy and environmental policy harmonization if the United States 

continues to be disengaged on global action on climate change? 

Dr. KRUPNICK. The answer is yes, of course, it’ll be more difficult, 

and as I’ve tried to indicate, there is still at a State level, at a regional level, there are still opportunities for that kind of engagement, let’s say, that we are seeing from California with Quebec, 

Ontario, Manitoba, and so on in their CO2 trading program. 

So it’s not like all these interactions are going to stop. But, of 

course, we’ll be hurt in our ability to negotiate further. 

Mr. TONKO. Right. And so the consequences, I believe, are probably that we would be less likely to align their policies with ours, 

and are there limits then to opportunities to lower costs to business 

and consumers? 

Dr. KRUPNICK. Yes. Anytime you put barriers into a cooperation 

interaction, you’re going to create increased costs somewhere along 

the line. 

Mr. TONKO. Yes. With that, I thank you and yield back. 

Mr. OLSON. [presiding]. The gentleman yields back. 

The Chair now calls upon the gentleman from West Virginia, Mr. 

McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

In our majority memorandum binder, I read that apparently we 

have 73 gigawatts of electricity are being imported from Canada 

currently. For everyone to understand, that’s the equivalent of anywhere between 70 and 120 power plants. 

So I would like to focus on those implications, if I could, with this 

panel, because the first is currently under construction, is a Lake 

Erie connector. That’s a thousand-megawatt, high-voltage underVerDate Mar 15 2010 12:20 Mar 27, 2018 Jkt 037690 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 I:\115THCONGRESS\115X89NAMERENERGY\115X89NAMERENERGYWORKING WAYN
76 

water transmission line that would provide the first direct link between Ontario power generators and the America PJM. 

This Lake Erie connector will enable a subsidized Canadian 

power company to compete with American private-sector energy 

producers. 

Secondly, the Quebec electricity sector is dominated by Canada’s 

largest utility, and it’s a state-owned-and-operated monopoly which 

is heavily subsidized. According to CBC news reports, ‘‘Canadian 

electricity producers are generating more power than they consume 

and sell off excess power to the United States at rates below the 

cost of production,’’ closed quote. 

This unfair competition may result in lower utility bills for us in 

America, but this outsourcing of our electric generation costs American jobs and lost State and local tax revenue. 

Therefore, I am concerned that the U.S. markets are becoming 

the dumping ground for Canadian state-subsidized electricity, 

much like we’ve become the dumping ground for cheap, subsidized 

steel from China. Those are my concerns. 

The Canadian government subsidizes electric exports to the 

United States, the government dumps electricity at below rate, and 

it results in lost jobs and State revenue. 

So my question—perhaps it’s to you, Ms. Harbert—should the 

new NAFTA negotiations—and I would encourage those negotiations to take place—address this unfair market distortion? 

Ms. HARBERT. Sure, and one thing to point out, when we negotiated NAFTA the first time around, energy wasn’t even part of the 

equation. We didn’t know how much we had, Canada had, Mexico 

had. We didn’t anticipate the fully integrated energy economy that 

we have today. 

So, you know, as we proceed in the fifth and sixth and, hopefully, 

conclusion of this, there are issues like that that should be discussed. 

But at the same time, we also have to realize that in the Pacific 

Northwest of our country, we are exporting a tremendous amount 

of hydropower up into Canada, and some of those are from Government-owned facilities as well—back to the, you know, the TVA 

days and all of that. 

So, you know, it’s something that should be looked at. That is not 

particularly my exact area of expertise, but I think it should be 

talked about. But it probably floats on both sides of the border that 

we would have to consider that—the equation. 

Mr. MCKINLEY. Anyone else on the panel have comments about 

the subsidized—— 

Dr. KRUPNICK. Sure. I think subsidies to renewables, subsidies to 

fossil fuels—anywhere you see subsidies, there’s a case for eliminating them. All that I think it’s important is that, if we are eliminating subsidies on one type of fuel, we should eliminate them on 

others, as well. 

And so, if Canada is subsidizing their hydro, then that’s an issue 

that should be taken up. 

Mr. MCKINLEY. Mr. Thompson, anything? Any comments? 

Mr. THOMPSON. Well, this was certainly out of, you know, my 

area of expertise, but I will say this speaks more broadly to the 

77 

reasons that we need a separate, more complex title than NAFTA 

dealing with the energy issues. 

As Karen said, we need to—at the time NAFTA—when it was 

originally developed, these issues weren’t in front of us, and we 

need to because—— 

Mr. MCKINLEY. OK, because, according to these same reports, 

they’re saying that we’re ultimately going to be a net importer of 

electricity—the PJM from Canada. 

So I am interested to know whether or not something like this 

in a NAFTA agreement should allow for some kind of cost recovery 

or tariff, if I use the T word. Any thoughts? 

Mr. BURCHETT. As a final statement, from an ABB standpoint, 

we are a technology provider, so we do the high tech, and what I 

will tell you about those interconnects is the power can flow both 

ways. 

So I don’t know what the potential there is in the future. From 

a subsidy standpoint, I have no point of view. But I know the technology can go both ways. 

Mr. MCKINLEY. OK. I yield back. 

Mr. OLSON. The gentleman yields back. 

The Chair now calls upon the gentleman from the same home 

State as our chairman, who wants me to say publicly I recognize 

that Michigan beat Texas in basketball yesterday, 57 to 52. 

Mr. Walberg, you have 5 minutes. 

Mr. WALBERG. With that kind introduction, Mr. Chairman, I 

won’t add anything to it. Great basketball game. 

Mr. OLSON. Thank you. 

Mr. WALBERG. Ms. Harbert, thank you for being here, and 

thanks to each of the panel members for being here. 

Many people think energy, and they think oil and gas. What 

other industries benefit from North American energy trade? 

Ms. HARBERT. Well, I like to say that every one of our 50 States 

is in the energy business. You may not be producing it, but you’re 

in the supply chain, and obviously we are all consumers. 

So, with a more integrated North American energy market, all 

of our consumers—our families are benefiting, our industries are 

profiting—not profiting, but are benefiting from lower prices. 

And let’s not forget that industries have moved back to America. 

The fertilizer industry is back, helping your pork and beans and et 

cetera, and corn. The petrochemical industry is back in the Gulf 

that used to be in the Middle East. The steel industry is back in 

some form or fashion in Pennsylvania and Ohio. 

So manufacturing is back, and critical inputs to our manufacturing are back. So it is an energy revolution in all 50 States. 

Mr. WALBERG. And I think that’s important for us to get out very 

clearly. We often think of energy in combative terms at times—it’s 

not in my back yard—and the impact is sometimes forgotten, as 

well. 

So, for us here in Congress, and policy to think along those lines, 

but also the industries, to make sure that we broadcast it, assist 

in the long haul. 

Ms. Harbert, the low cost of natural gas and electricity is driving 

a revival in U.S. manufacturing and providing our economy with 

a competitive advantage. 

78 

However, free trade and market principles also allow producers 

of energy commodities such as natural gas and LNG to export their 

commodity abroad. 

How do we strike the right balance so that everybody, including 

U.S. consumers, can reap the positive economic benefits? 

Ms. HARBERT. Well, natural gas is real great story for America. 

We are producing more natural gas than we can consume, and, in 

order to continue to produce at that level, they need export markets, and that’s what guarantees lower prices in those industries 

that are coming back. 

We have additional capacity being planned into Mexico that will 

be good, because Mexico will then stimulate additional demand for 

our natural gas by developing new industries and new consumers. 

So having more than we consume is a good thing. They’re not 

going to sell it at the expense of domestic industry. They’re getting 

all that they need, but, in order to keep those prices low for that 

domestic industry, we want to be able to export. 

Mr. WALBERG. OK. Not a zero sum game, then? 

Ms. HARBERT. No. 

Mr. WALBERG. OK. Dr. Krupnick. 

Dr. KRUPNICK. During the debate over LNG licensing for export, 

there were many studies done on what the effect of those exports 

of natural gas would be on U.S. domestic prices, and the best ones 

of those clearly said that there would be very little effect on prices. 

With the shale gas revolution, we have such rapid response ability now in the fields to even small changes in prices, with increased 

supply that we are in a new era, and I don’t think we have to 

worry about increased exports of our natural gas. 

Mr. WALBERG. Thank you. 

Mr. Thompson, what types of opportunities are opening up for 

American companies with Mexico’s energy reforms? 

And we often talk about hydrocarbons, but what about electricity? 

Mr. THOMPSON. Well, I can’t speak to electricity. That’s not what 

my members do. 

But I can speak to, with the opening up—the liberalization of 

their downstream sector, we have a number of companies that are 

now entering the Mexican market. 

Andeavor has opened up the first Arco station in Mexico, and 

they’re supplying fuel from their refinery in the State of Washington. 

Valero now has entered into agreements to provide products— 

ExxonMobil, BP, Chevron. So we have a lot of U.S. companies now 

that are entering Mexico to supply needed fuel to the Mexican 

economy. 

Mr. WALBERG. Thank you, and Mr. Chairman, I yield back. 

Mr. OLSON. The gentleman yields back. 

The Chair now calls upon the gentleman from Ohio, Mr. Latta, 

for 5 minutes. 

Mr. LATTA. Well, thank you very much, Mr. Chairman, and 

thank you very much for our panel today. 

You know, if I could follow up from my friend from Michigan, Ms. 

Harbert, when we were talking about the shale revolution because, 

of course, in Ohio what we have seen happen on the eastern side 

79 

of the State and also in western Pennsylvania, when you look at 

the Utica and the Marcellus Shale, it has created a revolution out 

there with wide-ranging benefits to the economy, and when you’re 

looking at the creation of millions of jobs at a time when, you 

know, things are struggling out there. 

But overall, how has the consumer benefited from this revolution 

that we’ve seen out there, right here at home? 

Ms. HARBERT. Well, it’s an American supply chain that has 

jumped in and fulfilled, making new products to fuel that revolution, which means more jobs, and for the American consumer prices 

are—low natural gas prices here have saved the American family 

money. 

Over the last 6 years, prices have gone down by about 14 percent 

for energy for a family, which provides additional purchasing 

power, which stimulates the economy. 

In addition, if we were able to get more pipeline capacity out of 

the Marcellus and into the Northeast, those consumers up there 

would benefit from low natural gas prices as well. 

So it’s jobs, it’s new industries, it’s low prices, and we are being 

more competitive with our exports overseas because our prices are 

2 to 4 times lower than they are in Europe, which is a good thing. 

So we are more competitive on the global stage because of these 

low prices. 

Mr. LATTA. Yes. Well, thank you very much. 

And Mr. Burchett, our electrical systems are evolving rapidly 

with the technological innovation and regulatory policies that’s 

driving the change. In your view what does the grid of the future 

need to look like in order to deliver electricity more efficiently and 

more cost effectively? 

Mr. BURCHETT. So, when we think of the future grid, as we are 

working with most of the investor-owned utilities and our customers, I mean, we know the words ‘‘reliable’’ are there. We know 

the words ‘‘renewable’’ are there. 

But we also, when we look at power generation, we view it as 

an all-of-the-above situation. 

Our future does have solar, wind, but also coal and nuclear—traditional generation. If you look at studies from EIA, out for the 

next 30, 40 years, you still see all the different fuel elements in 

play. 

With the technology in play, there’s more around a distribution 

grid in the automation and being able to fully automate the grid 

so that, when an occurrence occurs you get—the interruption and 

restoration of power happens almost immediately. 

Mr. LATTA. Thank you very much. 

Mr. Thompson, with the huge increase in domestic production, 

our imports have, you know, fallen dramatically, as is being discussed. We’ve cut OPEC imports in half in less than a decade. How 

has our energy security situation changed as a result of the North 

American energy trade? 

Mr. THOMPSON. Well, thank you for the question. 

So as you noted, our domestic production is near all-time highs, 

and so we are more energy secure than we have been in quite some 

time. 

80 

Now, that certainly hasn’t eliminated our need to import crude 

into our country, and that’s more because our facilities are configured to handle the heavier crudes. 

So we are able to take our lighter crudes and export them to facilities that are better designed and equipped to handle those. But 

we’ve been able to get more of our crude from our friends up north 

in Canada, and 41 percent of all of our imports come from Canada, 

and that’s a good thing. 

And as the IEA said, that we are all on track here as North 

America to be energy secure by 2020. 

Mr. LATTA. Well, thank you very much. 

And Mr. Chairman, I yield back the balance of my time. 

Mr. OLSON. The gentleman yields back. 

The Chair now calls upon the gentleman from Illinois, Mr. 

Kinzinger, for 5 minutes. 

Mr. KINZINGER. Well, thank you, Mr. Chairman, and I know 

there’s—based off of the last question, I do want to make the point 

that I think energy security is essential, not just for our economy, 

which is great, obviously, and important, but also because a lot of 

foreign actors use energy as a weapon, and I think it’s essential to 

note that, if the West is ever going to fight back against some of 

the policies of the East or Russia, it’s essential that we have a very 

strong energy platform to do so, because the Russians in many 

cases use energy as a weapon to try to extract political favors from 

foreign actors and foreign governments, and I think that’s an essential point to know. 

Ms. Harbert, since NAFTA was originally negotiated, Mexico has 

instituted a number of reforms, including opening its energy markets. 

What do these reforms mean for consumers in our country? 

Ms. HARBERT. First of all, I just want to underscore what you 

just said, which is the national security dividend of our energy revolution is enormous—that we are able to provide exports to allies 

who have been forced into choosing a single source for their oil or 

for their natural gas. So providing that choice provides national security for them and for us, providing choice. 

The opening up of—the reform of the hydrocarbon sector in Mexico, which took a very long time and some courageous political actors to do, has been an open invitation for American companies, because they did the reform right and they’re continuing to improve 

it. 

And so we’ve already had several lease sales there, and there’s 

one that’s going into deep water, and our companies that have the 

best technology around are going to be the ones bidding on it. 

So that, from an environmental standpoint, is very important. 

But also, as we have all of our resources flowing across borders in 

North America, which makes that energy market more efficient, it 

keeps prices low—electricity prices, fuel prices, natural gas prices— 

and it’s stimulating that manufacturing revolution that’s putting 

more Americans back to work. 

Mr. KINZINGER. And so you mentioned a little bit about future 

bids and technology. What are new opportunities that you see to 

engage Mexico’s energy sector further? 

81 

Ms. HARBERT. Well, they’re sort of threefold at the moment, and 

all of them are ongoing and in rapid fire, which is cross-border electricity, which has—we’ve had that for a while, but now there’s a 

lot more demand on the Mexico side, so more interconnected electricity. 

Natural gas—we have a lot of American companies that are 

building pipeline right now, right at the border, waiting to go 

across, and that will stimulate more demand for our products 

under NAFTA because they will have a bigger middle class that 

can purchase our products. 

And then there’s offshore, which I think, between the North Sea 

and the Gulf of Mexico, those are the most advanced companies 

ever. So we should take great comfort, and that is our companies 

that will be investing in the Gulf of Mexico and these tricky deep 

shore—— 

Mr. KINZINGER. And what do we do to ensure that the renegotiations won’t have adverse consequences on our energy industry? 

Ms. HARBERT. Well, one of the most critical things that we are 

looking at is the investor protections that have been provided for 

and need to be maintained. 

So the Mexican energy economy is reformed—that’s bright investment. Investment likes some certainty, and so two things could 

upend that, which would be a withdrawal from NAFTA or something that jeopardizes the—a NAFTA that does not have the investor protections. 

And so we as the business community are united, and those investor protections need to be maintained in any type of modernized 

NAFTA. 

Mr. KINZINGER. OK. 

Mr. Burchett, in your testimony you provide examples of how 

ABB’s supply chain spans North America, including a supporting 

number of manufacturing sites in the U.S. 

As you say, the U.S., Canada, and Mexico do not simply trade 

with each other—we build things together and rely on each other’s 

markets to support millions of jobs. 

How can we ensure that NAFTA renegotiations won’t have adverse consequences on ABB and similar U.S. manufacturers that 

have robust trade cooperation through North America as a central 

part of their business? 

Mr. BURCHETT. Yes, that’s from an ABB perspective. From the 

National Association of Manufacturers, we are also now talking 

14,000 small, medium, and large businesses that have similar levels of integration with Canada and Mexico, right. 

And quite simply, when we look at what needs to happen, for 

manufacturers we obviously do a lot of investment. So the consistency, the stability, the lack of volatility allows us to make those assessments, and these low trade barriers. So it’s a pretty simple formula for us. Investment likes consistency. 

Mr. KINZINGER. Yes. And with my 20 seconds left, I yield back, 

Mr. Chairman. Thank you all for being here. 

Mr. OLSON. The gentleman yields back. 

The Chair now calls upon the gentleman from South Carolina, 

Mr. Duncan, for 5 minutes. 

82 

Mr. DUNCAN. My son tore an ACL on Sunday, Mr. Chairman, 

and he had a doctor’s appointment so I’ve been Face Timing and 

trying to inform his wife on what’s going on. So I appreciate it. 

As you can see, I am sitting down here. I’ve been in the Congress 

for 7 years, but I am the newest member on this committee. 

Before I came to the E and C, I chaired the Western Hemisphere 

Subcommittee, and I held numerous hearings on energy issues in 

the Western Hemisphere, specifically focusing on Canada and Mexico in a lot of those hearings. 

Yesterday, the House passed H.R. 357, reaffirming its strategic 

partnership with Canada, and when I think about the inner 

connectivity between Mexico and Canada—some of the testimony 

that’s been given today—you know, Canadian oil coming to America refineries, producing petroleum products that are then exported 

from the U.S. back to Canada and Mexico, and really other parts 

of the world. It is a strategic alliance there. 

But when I think about Mexico, natural gas pipelines providing 

natural gas to Mexico, oil coming back to U.S. refineries, there is 

tremendous interconnectivity there. 

But it goes beyond North American strategic alliance. I used to 

talk about American energy independence. Then I talked about 

North American energy independence, and I really broaden that to 

hemispheric energy independence, because if you think about Canada and Mexico and you think about the energy renaissance in this 

country and our ability to export an abundant natural gas through 

LNG, then you think about the needs in this hemisphere. 

You think about the Caribbean nations that are relying on Venezuela and the Venezuelan situation. That’s opportunity for Americans and American businesses and the oil and gas industry. 

But there are other opportunities where American technology can 

be exported. When we think about energy exports we just think 

about product. 

But we have fracking technology and other downhole technology 

that can be utilized offshore, say Guyana, which just discovered a 

tremendous oil field—32 trillion cubic feet of natural gas, not 

counting the oil. 

I don’t have that number right off the top of my head. But it’s 

an abundant find. American technology, both onshore and offshore, 

can be exported within this hemisphere. 

So I want to ask Ms. Harbert, because you seem to have a lot 

of knowledge about global energy initiatives, what are other opportunities that American industries can take advantage of? Because 

we are a leader in the energy area. 

Ms. HARBERT. Well, you’re absolutely right, and the countries in 

Latin America, save for Venezuela—Argentina, Peru, Brazil—they 

have welcomed American investment in the energy sector because 

they know we have the best technology and the best techniques 

available. 

We’ve been able to develop gas in Peru. We’ve been able to, with 

some hiccups along the way, be big investors in Argentina, and the 

demand in Latin America as a developing world is going to go up. 

And so the opportunities for us to invest in some of those repositories in Latin America but also to export from America is huge, 

just like it is in Africa. 

83 

Africa is going to be an industrializing part of the world, and we 

want to be part of that industrialization through energy as a foundation for it. They don’t have all the energy they need. 

So the opportunities, if you look at the International Energy 

Agency forecast, the demand for fossil fuels not only is constant but 

goes up, and we will provide fossil fuels. We’ll provide 80 percent 

of all the world’s energy resources in 2050. So huge opportunities 

to export, way beyond just North America. 

Mr. DUNCAN. Mr. Thompson, are our refining capacity and refineries ready to receive, say, Guyanan oil for refining, so that those 

products can be shipped around the globe? 

Mr. THOMPSON. Yes. We have the capability to take crude from 

all around the world, and most importantly we look forward to the 

opportunity to export products back to the rest of the world. 

You know, last year we exported 72 billion gallons, and with the 

U.S. transportation fuel demands staying relatively flat now, we 

need those export markets. 

Mr. DUNCAN. Right. 

Mr. Chairman, in the remaining time I want to point all the committee members and the panelists to a Wall Street Journal article 

today, I believe: ‘‘Fracking Our Way to Mideast Peace.’’ It’s worth 

reading, and with that I yield back the balance. 

Mr. OLSON. The Chair thanks the gentleman and yield back. 

The Chair now calls upon the gentleman from Texas, Mr. Flores, 

for 5 minutes. 

Mr. FLORES. OK. Thank you, Mr. Chairman. I appreciate you 

holding this hearing, and I appreciate the panel for joining us 

today. 

When NAFTA was negotiated, Mexico’s energy sector was largely 

closed to foreign investment. This is important to me because one 

of my firms did substantial energy activity in Mexico, and it was 

a very closed market. It was very arduous to deal in the energy 

space down there. 

But in recent years, as you have heard, I mean, Mexico has 

opened up their markets and they’ve shown real leadership, and we 

have substantial trade activities that opened up just in a short period of time. 

But in order for all of us—Canada, the United States, and Mexico—to take advantage of that market opening, U.S. companies 

need to have the certainty that their investments will be protected 

against government mistreatment. 

The NAFTA renegotiation presents an opportunity to recognize 

Mexico’s energy reforms and to maintain and strengthen NAFTA’s 

investment protections, and this is why it’s important. 

Mexico is the number-one export destination for U.S. gas exports, 

making up 60 percent of Mexico’s total gas supply. Most of that gas 

comes from my home State of Texas. Mexico is also the numberone export destination for U.S. petroleum products. 

Half the gasoline U.S. refineries exported this year went to Mexico, and energy and production activity off the shore of Mexico is 

just starting, as well, creating new opportunities for U.S. businesses—many folks that are friends of mine that I used to do business with when I was in the energy business. 

84 

It’s my understanding that the White House and the USTR are 

supportive of locking in these energy reforms, as is Mexico. Unfortunately, there are proposals in a NAFTA renegotiation that would 

undercut if not eviscerate important investment protections in 

NAFTA, typically via the well-recognized ISDS mechanism. 

So, in light of the foregoing, here are my questions. Ms. Harbert, 

I believe that you touched on the importance of investment protection via the ISDS mechanism in your written testimony. 

Will you please comment on the USTR’s proposal to scale back 

investment protection, particularly the consequences for the energy 

sector? And Mr. Thompson, I will ask you the same thing. 

Ms. HARBERT. Thank you for the opportunity. 

You’re absolutely right. Anything from the U.S. side that would 

seek to upend the certainty that is necessary to continue the investments brought about by the reform are certainly unwelcome, 

and I think they would have the following repercussions. 

Number one, it would jeopardize that American investment, and 

that’s what we are actually trying to protect. We would also jeopardize North American energy security. 

Without having that free cross-border trade, we wouldn’t have 

the benefit of both the import and export of energy from both of 

our trading partners, which would be a big setback to energy security. 

We would also jeopardize North America becoming the center of 

gravity of the world’s energy market, and that—we talked about 

OPEC here. I mean, we are going to just throw that away and let 

them become dominant again? That would be a huge national security issue for us. 

And last but not least, let’s not lose the fact that this would raise 

costs on the consumer, because if we are forced to only consume 

our domestic resources from North America and our producers 

don’t have export, they’re going to start producing less, and that 

really is a lose-lose for the American economy. 

So, serious consequences. Those investor protections are fundamental, and they are present in all other trade agreements. I don’t 

know why we’d want to make something new here. 

Mr. FLORES. I agree. I agree. 

Mr. Thompson. 

Mr. THOMPSON. Yes. So I echo everything Ms. Harbert said. We 

have members that are investing at the moment hundreds of millions of dollars to enter the Mexican downstream market. 

If you take away ISDS protections, it’s going to jeopardize that. 

We need to make sure that the Mexican market stays open. We 

need an agreement that locks that in, and we need to protect our 

investors. It’s critical that the ISDS mechanisms remain in 

NAFTA. 

Mr. FLORES. OK. So, I mean, just simply, I mean, to put it this 

way: On one hand the White House says, ‘‘We believe in energy 

dominance for our country and for North America.’’ On the other 

hand, the USTR is undercutting that by any conversation about 

getting rid of the ISDS mechanisms. Is that a simple way to put 

it? 

85 

Ms. HARBERT. And we hope through continued discussions that 

they can understand how important it is, for all the reasons I articulated. 

But at the end of the day, if we are trying to protect American 

investors, let’s not take away the thing that protects American investment. 

Mr. FLORES. Exactly. OK. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Mr. OLSON. The gentleman yields back. The Chair now calls 

upon the gentleman from the Commonwealth of Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you very much, Mr. Chairman. Let me 

apologize to you and for the committee. I usually like to come and 

listen to everything, and today, because I’ve been in another committee hearing, I have been unable to do so. But your testimony 

is important, and we appreciate you being here today. 

So I have no problem with this trading with our friends, north 

and south. But there needs to be, I believe, a more balanced and 

fair deal between our respective countries. 

My district in southwest and south side Virginia was devastated 

by NAFTA, and we lost tens of thousands of jobs. You know, back 

when that was all going on, there would be a press conference and 

3,000 people would be out of work. 

We didn’t get those jobs back. That was textiles, predominantly. 

We also have a heavy dose of coal in my district, and it shows me 

part of the problem we have with NAFTA. 

A lot of the coal mining in Mexico—and we are not importing a 

lot, but we do some. But that’s not the issue. The point is, they 

have coal mines there. But a large part of their coal industry is 

now controlled or managed by elements of their drug cartels, and 

the working conditions are horrible. 

But we are supposed to be considered equals, and the same problem happens with all industries. So what do we do in areas that 

have been devastated, like my district, where the jobs never came 

back? The help from the Federal Government was never there to 

rebuild our economy, and I am dealing with communities that have 

parts of their downtown that used to flourish, they’re now—you 

know, there’s a block I am thinking of in particular that’s just 

empty. 

All of the stores are gone. It’s not like a shell of itself. It’s just 

not there. It’s a ghost part of that community. Part of it’s surviving, but just barely. Part of it’s doing better. 

How do we solve that problem? As we look at making a better 

deal, how do we rectify when you have disparities in working conditions, disparities in regulations, that then make the American 

product uncompetitive against our colleagues and our friends in the 

south who don’t have those rules? 

And some went to Canada, but they’re more like us in the regard 

of their regulations and rules. Who wants to handle that? 

Ms. HARBERT. Well, I will take a stab at one part of that—two 

parts of it. 

First, I do think it’s important to recognize that coal exports are 

on the rise in America, and 13 percent of all of our coal exports are 

going to Canada and Mexico—predominantly Mexico, right. So they 

86 

are a good and important and potentially growing destination for 

our coal exports. 

On the relocation of industries, I think that is why we find ourselves back at the table, that we want to update and modernize 

NAFTA from where it was 30-some-odd years ago and that there’s 

an opportunity to open up some of these things and look at that, 

and it’s complicated. 

And if you have ever been in a trade negotiation, if you come out 

with—the acronyms they use are mind boggling. And so I think 

that’s the reason we are at the table. At the end of the day, there 

are going to be industries that choose to move for economic reasons. That has been the history of free enterprise and capital markets and free trade. 

But there are things that we are looking, you know, at the coal 

industry in particular. We have the Appalachian hub that’s going 

to be built, a new ethylene storage hub in Appalachia that will take 

some of those coal miners and put them to work in something else. 

Mr. GRIFFITH. Where in Appalachia is that going to be? 

Ms. HARBERT. Well, that’s a great question, and that’s up for the 

industry to decide and those—and all of the States in Appalachia 

to say what makes the most sense. But at the end of the day, it 

will benefit that region and provide sort of a relief valve for some 

of the miners that lost their jobs. 

But it’s not just NAFTA. I think we have to realize it’s robotics. 

It’s artificial intelligence. It’s mega, you know, data. It’s all kinds 

of things that 21st technology has brought us that make moving 

around a little bit easier. 

Mr. GRIFFITH. Well, let me just say, I actually believe that, if we 

could get some of our textile industry back, it would mostly be robotics. But that would still be some good, high-paying jobs. 

But when we lost those jobs 20 years ago, 25 years ago, it was 

all based on regulations and wages, and it just disappeared. In a 

matter of a couple of years, we went from being vibrant to having 

been crushed. We made a bad deal. We got to fix it. 

Thank you. I yield back. 

Mr. OLSON. The gentleman yields back. 

The Chair now calls upon the gentleman with the Bakken Shale 

Play in his home State of North Dakota, Mr. Cramer, for 5 minutes. 

Mr. CRAMER. Thank you. Thank you, Mr. Chairman. We are 

known for lots of other things, as well. A lot of food. 

First of all—and I am sorry I had to step out for a little bit— 

but this has been a really good hearing. All of you, tremendous job. 

Thank you. Very well done, and I share all of your concerns with 

what’s going on with regard to NAFTA. 

And it’s particularly in the energy area—and I am concerned 

about some other things, too, but the energy area being sort of new, 

if you will, since NAFTA was first passed to seek to present so 

many opportunities. 

But here’s an opportunity I want to raise just sort of rhetorically 

and then get your responses to it. And, by the way, I am going to 

be sort of fuel agnostic on this. 

87 

I really don’t think the fuel matters. I think that what matters 

is whether it’s intellectual, whether it’s fossil, whether it’s technology—just there’s so much opportunity. 

But we talk a lot about trade with one another, you know, the 

big three of us, and we are all important to each other. As I like 

to tell my Canadian friends, however, ‘‘As important as you are to 

us, we are critical to you. So we have a leverage that you don’t, and 

always remember that.’’ And our President understands that very 

well. 

So anyway, but here’s what I think we miss so oftentimes in the 

discussion that I wish we could get to. Just as sure as all the statistics you have shared in terms of how much we trade with one 

another and what—a large percentage of our business with, you 

know, the other two—Mexico and Canada—I think somebody said 

that the next 10 added up, don’t add up to what—in certain areas 

what Mexico and Canada add up to for us in terms of market. 

What I get enthused about is the opportunity as a bloc—as a 

seamless—and by the way, when I was sitting here earlier, I pulled 

up—one of my favourite maps in the world is the North American 

petroleum products pipeline map. 

It knows nothing of borders, and I remember the first time we 

reversed a pipeline in North Dakota, that instead of bringing, you 

know, Canadian crude down we went Bakken crude up on the very 

same line. Just not necessarily even to get it to Saskatchewan but 

perhaps to get it to the Gulf Coast. I mean, that’s how important 

that infrastructure is. So I appreciate all the emphasis on infrastructure. 

But I would love to just hear some comments and maybe beginning with you, Ms. Harbert, and all of you could, if you have an 

opinion. 

But what’s the potential opportunity from an economic security 

as well as a national and energy security opportunity? If we as a 

bloc get our act together, harmonize everything we are talking 

about, and then who needs OPEC, right? I mean, that’s how I view 

it. 

So just open it up for discussion. 

Ms. HARBERT. Absolutely. The national security dividend of this 

should not go unnoticed in the energy sector. First, from an American standpoint, we are importing more oil from Canada and Mexico than we are from OPEC, and so that’s been a change in energy 

fortune, for sure. 

And the opportunity to fully develop the resources of Canada, the 

United States, and Mexico and become the center of the world’s energy market, which would send shock waves into not just OPEC 

but Russia sort of warms my heart. 

Mr. CRAMER. Yes. 

Ms. HARBERT. So I think that we shouldn’t lose—this is not just 

an economic negotiation. This is a national security negotiation, as 

well, because the stronger we are, the more competitive we are on 

the world’s stage as a bloc, if you will, but also from an energy 

standpoint, the more energy secure we are, the more national secure we are, and that provides our allies with choices of where they 

can get their oil, their gas, their technology. They probably can’t 

88 

import their renewables, but there’s growing renewables within our 

bloc, and it’s a tremendous win-win. 

Mr. CRAMER. Mr. Thompson. 

Mr. THOMPSON. Well, let me say without sounding too corny, I 

mean, I think it would give us lots of things. It would give us unprecedented freedom in North America—freedom, and to take away 

the leverage that the rest of the world or certain parts of the world 

has over us now. 

It will give us prosperity. Our nations will prosper. Our employees will prosper. Our consumers will prosper. We’ll continue to benefit from low oil prices and low gasoline prices and good, high-paying jobs. We can become an energy-dominant region. 

I think the possibilities are endless. We should all be, you know, 

trying to get there. 

Mr. CRAMER. Doctor? 

Dr. KRUPNICK. In our report to the Department of Energy on 

these issues, we call very strongly for thinking about ways of moving towards this bloc—a concept that you’re talking about, and we 

talk about that, as well. 

So I think the way to move forward on this is to give DOE responsibility and the charge to develop pathways for the future. 

What are the current challenges? How deep do you have to go in 

environmental policy and tax policy to make all this a reality? 

You know, I am amazed at how much agreement there is about 

moving in this direction, and it’s great. But someone needs to think 

through it carefully. 

Mr. CRAMER. Thank you. 

Mr. OLSON. The gentleman yields back. The Chair thanks him 

for bringing up the bloc we call NAPEC—North American Petroleum Exporting Countries. 

And seeing that there are no further Members who wish to ask 

question, I would like to thank all the witnesses for being here 

today. 

Merry Christmas. And pursuant to committee rules, I remind 

Members that they have 10 business days to submit additional 

questions for the record and ask that all witnesses submit their responses within 10 business days upon receipt of those questions. 

Without objection, this subcommittee is adjourned. 

[Whereupon, at 12:14 p.m., the committee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

89 

PREPARED STATEMENT OF HON. GREG WALDEN

The United States’ abundant energy resources are a major contributor to our Nation’s continued economic growth and job creation. When it comes to cross border 

trade among the United States, Canada, and Mexico, energy is a key component, 

and I think we can all agree that ensuring the reliable supply of fuels and electricity 

is vital to our Nation’s security, economy, and public health. 

In my home State of Oregon and across the country, our Nation’s energy abundance enables every aspect of our daily lives, from telecommunications, to financial 

transactions, to powering the infrastructure that delivers our drinking water. Energy enables business and industry to make and provide the goods and services of 

our modern society. It powers our hospitals, our households. 

Advances in transportation, the growth of manufacturing, and technological innovation have opened the door for an integrated North American energy market, resulting in more dynamic and connected energy systems and more competitively 

priced energy for American consumers. 

Cross-border energy infrastructure—which includes pipelines for oil and natural 

gas and transmission lines for electricity—enables the movement of energy across 

the continent. These cross-border pipes, poles, and wires, are the super highway system for North America’s fuels and electricity. Clearly, if we want robust energy 

trade with our neighbors then we must have the necessary infrastructure to support 

that trade, which is why this committee, and the House of Representatives, recently 

passed Mr. Mullin’s bill, H.R. 2883, the Promoting Cross-Border Energy Infrastructure Act, which improves the permitting and siting process for all types of crossborder energy infrastructure. When it comes to North America’s ‘‘energy highway,’’ 

I think it is safe to say that we want to add more lanes, not less, making it easier 

for the United States to engage in beneficial trade with Canada and Mexico. 

In addition to the infrastructure that enables trade, we of course must also have 

strong trade agreements in place to facilitate fair and favorable trade across North 

America. It is worth noting that this hearing we are holding today is especially 

timely, given the fact that the administration is currently in the midst of renegotiating the North American Free Trade Agreement, an agreement that has been critical to furthering and promoting energy trade between America and its neighbors. 

In terms of trade with our neighbor to the north, those of us in the Pacific Northwest are paying close attention to the upcoming renegotiation of the Columbia River 

Treaty. Just last week, the State Department and the Canadian government announced that both nations will meet early next year to hammer out the details of 

this river treaty, which has been in effect since 1964. With its headwaters in British 

Columbia, the Columbia River winds its way through Washington and Oregon before emptying into the Pacific. Along the way, this resource has a major effect on 

everything from fishing and flood protection, to power production and recreation— 

the importance of this Treaty cannot be understated in terms of commerce and 

trade. However, over the past 53 years, some of the provisions have become out of 

date particularly with respect to the electricity rates paid by consumers in the Pacific Northwest. That said, it will be important for both nations to reach an agreement to continue to share this valuable natural resource. 

I want to thank the witnesses for being here today to discuss the important topic 

of cross-border energy trade. This hearing will further inform the committee’s ongoing oversight and legislation reforms that build on our Nation’s energy abundance, 

modernize our energy infrastructure, and promote domestic manufacturing and job 

growth. 

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