U.S. Rail Industry Asks Donald Trump to Embrace 'Fair and Open Trade'
November 09 2016 - 10:34AM
Dow Jones News
By Betsy Morris
The rail industry reached out to president-elect Donald Trump on
Wednesday, asking him to move quickly on issues that include a tax
reform reducing the corporate rate, fixing the "broken regulatory
system" and "embracement" of fair and open trade.
The statement from the Association of American Railroads, which
represents the nation's major freight railroads, went on to say:
"These policies, as well as the steady presence of America's
privately owned freight rail network, are critical to enacting much
of Mr. Trump's agenda, including public infrastructure
investment."
The rail industry is especially concerned about the
protectionist positions Mr. Trump has taken on trade. While the
industry has been hit hard by the slump in crude oil and
commodities markets as well as global trade in general, it has
benefited from free trade with Canada and Mexico, particularly the
fast-growing auto industry in Mexico.
But in a June speech, Mr. Trump said he would withdraw the U.S.
from global trade alliances, including the North American Free
Trade Agreement, if it isn't renegotiated. "I'm going tell our
Nafta partners that I intend to immediately renegotiate the terms
of that agreement to get a better deal for our workers," Mr. Trump
said at the time.
"If they do not agree to a renegotiation, then I will submit
notice...that America intends to withdraw from the deal." He has
also said he would kill the Trans-Pacific Partnership, a Pacific
Rim trade deal, which wouldn't help the volumes railroads get from
global trade. Mr. Trump has also said numerous times that he is in
favor of tariffs.
Reflecting investor concern about its heavy stake in U.S.-Mexico
trade, Kansas City Southern Inc.'s share price dived more than 10%
in early trading on Wednesday.
William H. Galligan, vice president of investor relations at
KCS, told a Stephens Inc. investor conference on Tuesday that the
railroad was bracing to see an impact on its stock price that
"might be ugly tomorrow and then ugly for a little while
afterward."
Mr. Galligan said the railroad would "have to look at our use of
capital dollars" if a Trump administration is "hellbent" on
restraining trade with Mexico. But, he said he believes Mr. Trump
would tread carefully on Mexico trade.
"Just think: the farming, the agricultural can be killed by this
because of export [of] grain to Mexico," he said, according to a
FactSet transcript of the meeting. "How about the Exxon, [the]
Shells and all those ones who see this vast new market go away
because of all this? I think it's more campaign rhetoric that plays
well in certain states. And so I think long term...I don't think
it's as big a concern as maybe some people think."
Mr. Galligan couldn't immediately be reached for comment on
Wednesday.
Meanwhile, the rail industry is also concerned about recent
efforts by shippers to get regulators involved in the way it
determines how to allocate service and share the rails. Railroads
own and maintain their own infrastructure. Additional regulation
would cut into profits, the industry argues and diminish the
industry's ability to maintain its infrastructure.`
--Paul Page contributed to this article.
Write to Betsy Morris at betsy.morris@wsj.com
(END) Dow Jones Newswires
November 09, 2016 11:19 ET (16:19 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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