NEW YORK Rhetoric against free trade from both likely U.S. presidential nominees poses a risk to the economy and consumers who would lose out if international trade is restrained, the chief executive of the largest U.S. railroad said on Thursday.
“Global trade is not getting a fair shake in the dialogue,” Union Pacific Corp (UNP.N) CEO Lance Fritz said during a discussion with Reuters journalists. “We’ve devolved to a form of populism in the rhetoric and that strikes me as having a lot of negative consequences.”
Free trade agreements and their impact on U.S. workers have been a major theme in the 2016 campaign for the presidential election on Nov. 8.
Presumptive Republican nominee Donald Trump has criticized the North American Free Trade Agreement (NAFTA) and promised to rip up the Trans-Pacific Partnership (TPP) trade deal. Hillary Clinton, the likely Democratic nominee, has criticized the partnership deal, which was signed in February but has not yet won congressional approval.
Omaha, Nebraska-based Union Pacific has a growing business serving cross-border trade with Mexico, and over the past decade has reported increased shipments of containers full of consumer goods, many of which come from Asia.
Fritz said both candidates are arguing that NAFTA is “a bad thing,” even though Trump has been more vocal than Clinton in warning about losing jobs to foreign competition and threatening to slap tariffs on imported goods.
“That’s concerning to me,” Fritz said. “That’s telling the U.S. public that free trade is a bad idea, and that’s patently not in the interest of the U.S. consumer.”
“We are worried and thinking about what-ifs,” Fritz said when asked how his company would deal with a Trump or Clinton administration. “What I’m hoping is we get a little more clarity as we get closer (to the election) and it starts making sense and we can plan around it.”
Fritz, who has served as Union Pacific CEO since February 2015, also noted that despite low fuel prices, U.S. consumers still have not taken up the slack in the broader economy.
“We haven’t seen a strong consumer in a little while,” he said.
Fritz said he did not know when the railroad would meet its target of an operating ratio, a measure of efficiency, of 55 percent. The ratio expresses operating expenses as a percentage of revenue, so the lower the figure the better.
“We’re going to get there as soon as we can in a reasonable fashion,” he said. Union Pacific posted a first-quarter operating ratio of 65.1 percent.
U.S. railroads generally have a significantly higher operating ratio than the 58.9 percent reported in the first quarter by Canadian Pacific Railway Ltd (CP.TO) and Canadian National Railway Co (CNR.TO).
Fritz also said Union Pacific would have an anti-collision system mandated by Congress in place by the deadline of 2018. But the company would need the two one-year extensions allowed to “debug” the Positive Train Control (PTC) system, he added.
Last year, Congress extended the deadline for the system’s implementation beyond 2015, despite opposition from some lawmakers following a fatal Amtrak crash in Pennsylvania in May 2015.
(Reporting by Nick Carey; Editing by Eric Effron and Richard Chang)