[Congressional Record Volume 140, Number 77 (Friday, June 17, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 17, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                            NAFTA'S SUCCESS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Mexico [Mr. Richardson] is recognized for 5 minutes.
  Mr. RICHARDSON. Madam Speaker, 6 months ago, this body had some of 
the most acrimonious debate on an issue, the North American Free-Trade 
Agreement. Is it good for the United States, or is it bad policy for 
the American worker and our country?

                              {time}  1320

  Six months after the implementation began, the jury is in on NAFTA, 
and the verdict is that it has been a resounding success for American 
jobs, for American exports and for the American economy. That verdict 
bodes well for all Americans. So that giant sucking sound that Ross 
Perot talked about is the sound of jobs and U.S. exports creating jobs 
in the United States. It is a reinvigorated U.S. economy.
  This month we will celebrate the half-year mark of the historic 
agreement, and even at this early date the results, the statistics are 
most impressive.
  I would like to bring to the attention of my colleagues some articles 
that document these impressive statistics which I will include at the 
end of my remarks.
  In the first 3 months of 1994, United States exports to Mexico rose 
by $1.6 billion over the same period in 1993 and Mexico and Canada 
account for 88 percent of all United States export growth. This is 
significant for two important reasons. First, because 700,000 Americans 
already owe their jobs to the fact that United States goods and 
services are exported to Canada and Mexico. Second, because a fast-
growing export rate is in line with Clinton administration projections 
that NAFTA will create another 200,000 U.S. jobs by 1995. From January 
1993 to April 1994, 3.1 million new private sector jobs have been 
created. NAFTA's success thus far signals that more jobs, many more are 
to come.
  Here are some statistics on specific industries in this first quarter 
of the year since NAFTA was implemented: Electronics up 50 percent, 
chemicals up 104 percent, aircraft sales up 241 percent, and most 
importantly, cars and trucks up 411 percent.
  Mr. Speaker, this means 32,000 more American jobs. This means 10 
percent totality of more goods in this last quarter, and this means 
that the export economy to Mexico grew 30 percent during this period.
  Mr. Speaker, under NAFTA, United States goods and services are going 
to continue to flow to Canada and Mexico. U.S. products such as 
environmental technology, cars, home furnishings and appliances, 
computer software and farm goods are rolling southward on a massive 
basis, creating jobs in the United States, export jobs. Before NAFTA, 
exporting many of these products would have been difficult, if not 
impossible because of the higher Mexican tariffs.
  In my own State of New Mexico, the first 6 months of NAFTA have 
brought new opportunities and energy for the business community. Intel 
Corp. and its Rio Rancho operation is preparing to export 400,000 
United States made personal computers to Mexico in 1994 alone. 
Albuquerque's Honeywell Business Management Systems and Controls is 
getting more business as Mexico builds new hotels and upgrades existing 
office space. New Mexico's agricultural products are gearing up to take 
advantage of new markets to the south. New Mexico dairy, cotton, wheat, 
and other agricultural products are poised for increased exports to 
that country. All of this translates to more jobs for Americans, and 
especially in my State of New Mexico.
  It is important to remember that the positive effects that the U.S. 
economy is experiencing is only the beginning. And tariffs on United 
States exports to Mexico are eliminated over the next 15 years, as the 
United States transportation sector increases its access to the Mexican 
market over the next 6 years, and as the United States financial 
services industry increases its access to Mexican markets over the next 
10 years, both Americans and Mexicans will reap the benefits of this 
important treaty. As NAFTA spurs the growth of the Mexican economy, 
United States producers can count on greater exports as consumer 
earnings rise.
  NAFTA also provides a gateway to Latin America, a fast growing market 
of over 811 million people eager to strengthen ties with the United 
States. It opens up opportunities for the Caribbean, Trinidad and 
Tobago.
  Mr. DREIER. Madam Speaker, will the gentleman yield?
  Mr. RICHARDSON. I yield to the gentleman from California.
  Mr. DREIER. Madam Speaker, I thank my friend for yielding. I would 
just like to briefly say one argument that has been used by opponents 
to the NAFTA is that there has been a narrowing of the trade gap. We 
have got to realize with free trade with Mexico many of these things 
that we might have bought from other parts of the world are today being 
purchased by Americans from Mexico, and that is what has created that 
narrowing. And I thank the gentleman for his statement and for his 
support for NAFTA.
  Mr. RICHARDSON. I thank the gentleman for his great contributions to 
NAFTA.
  Madam Speaker, I include the articles referred to earlier as follows:

                [From the New York Times, June 6, 1994]

  U.S.-Mexico Trade Advances Sharply Under New Accord--But America's 
    Surplus Is Cut as Exports Trail Imports, Fueling Debate on Jobs

                         [By Allen R. Myerson)

       Dallas, June 5.--In the first three months after a new 
     trade agreement took effect, trade between Mexico and the 
     United States rose sharply to record levels.
       Imports from Mexico grew much more rapidly than United 
     States exports, cutting the American trade surplus with 
     Mexico for the first quarter nearly in half. The numbers are 
     the first to measure the impact of the North American Free 
     Trade Agreement since it took affect Jan. 1.
       The trade imbalance between the two countries has sharpened 
     antagonism between organized labor, which opposed the trade 
     agreement because it feared the loss of American jobs, and 
     leaders in business and Government, who said the pact would 
     create jobs by making Mexico a huge market for American 
     goods.
       United States exports to Mexico rose 15.7 percent, to a 
     record $11.85 billion, seasonally adjusted, in the first 
     quarter compared with the comparable quarter a year earlier, 
     according to the Commerce Department. Imports from Mexico 
     rose 22.5 percent, to a record $11.29 billion. That narrowed 
     the nation's quarterly trade surplus with Mexico by 45.1 
     percent, to $560 million.
       Both sides agree that a single quarter is not enough time 
     to determine a long-term trend and that it is difficult to 
     distinguish the effects of the trade pact from other causes 
     of steadily increasing commerce between the two nations. 
     Indeed, many shipments in the first quarter reflected plans 
     made before the trade agreement was approved in November.
       Nevertheless, Mickey Kantor, the United States trade 
     representative, said in an interview on Friday that the 
     agreement was already fulfilling the Administration's 
     promises to create jobs. ``Nafta has increased trade 
     substantially,'' he said. ``The balance of trade is not as 
     important as the content of trade and the increase in 
     exports. That's what raises our standard of living.''
       Some economists and trade experts had expected goods to 
     flow more strongly toward Mexico than toward the United 
     States, because trade barriers, which have been much higher 
     in Mexico, were falling rapidly. A strong peso also favored 
     Mexican purchasers because it made goods imported from the 
     United States more affordable.
       But United States exports have been hurt by the persistent 
     recession in Mexico even as the United States economy has 
     grown strongly. Another drag on trade, according to 
     economists, is the complexity of the new pact. Some 
     manufacturers are still figuring out how it applies to their 
     products.
       Labor leaders, although cautious about reaching conclusions 
     so soon, saw evidence that the trade pact was increasing 
     Mexican exports more than imports, at the potential cost of 
     jobs in the United States.
       ``Mickey Kantor always used to say that Nafta will create 
     200,000 new jobs by 1995,'' said Mark A. Anderson, director 
     of the A.F.L.-C.I.O.'s task force on trade, `'But that was 
     based on an increasing U.S. trade surplus, and our surplus 
     has declined.'' Mexico, he said, remained a minor market for 
     United States goods but a major source of cheap labor for 
     United States companies.
       Mr. Kantor said he saw no relation between the trade 
     balance and jobs, adding that an improving Mexican economy 
     and growing middle class would increase demand for United 
     States products.
       In the first quarter, the largest increase in imports came 
     in motor vehicles, up 48.3 percent, to $728 million, from the 
     first quarter of 1993. Among the largest increases in United 
     States exports were electrical and mechanical equipment for 
     industry, raw materials and motor vehicle parts.
       Much of the increased trade appeared to reflect closer 
     teamwork between factories across a fading border, with the 
     United States often sending parts and materials to Mexico for 
     final assembly.


                       IMPORTS FROM MEXICO SURGE

       United States trade officials say that imports from Mexico 
     are growing twice as fast as imports from the rest of the 
     world, and American exports to Mexico three times as fast.
       ``We've really seen the difference with Nafta,'' said 
     Regina K. Vargo, director of the Commerce Department's Mexico 
     office. ``Especially given the relatively flat economy in 
     Mexico.''
       Quick judgments about the flow of jobs, however, are 
     difficult. Many economists say both nations are likely to 
     gain jobs from increased trade, which would benefit consumers 
     as well.
       ``The jobs hurt by trade are found in other industries that 
     are expanded through trade,'' said David M. Gould, a senior 
     economist at the Federal Reserve Bank of Dallas.
       Checks with several corporations that campaigned for the 
     passage of the trade agreement in November brought some 
     reports of increased exports and added jobs. Allied Signal 
     Inc., whose chief executive, Lawrence A. Bossidy, led USA 
     Nafta, a business lobbying group, said shipments of Autolite 
     spark plugs to Mexico would reach 20 million this year, up 
     from 12 million last year.
       For the company's plant in Fostoria, Ohio, ``that's a whole 
     month's production,'' helping to make the 1,000 jobs there 
     more stable, if not adding to them, said Paul A. Boudreau, 
     Allied Signal's director of government relations.


                             Lower Tariffs

       Under the trade pact, Mexico reduced its tariff on spark 
     plugs to 12 percent this year from 15 percent as the first 
     step toward elimination of the tariff by 1998. The company, 
     however, said stronger marketing and a contract to supply the 
     Mexican operations of the Ford Motor Company had also 
     contributed to its substantial gains.
       Texas Instruments Inc. said it was selling three times as 
     many computer printers in Mexico after the removal of a 20 
     percent tariff, and 10 times as many laptop computers, after 
     a tariff was reduced to 16 percent from 20 percent. But 
     Robert L. Price, a company spokesman, said a stronger sales 
     effort in Mexico had likewise contributed to these advances.
       USA Nafta recently published a 15-page list of current and 
     potential export gains, including examples from all three 
     auto makers. General Motors, the report said, had moved 
     enough Chevrolet Cavalier production to Lansing, Mich., from 
     Mexico to create 800 to 1,000 jobs.
       G.M. and industry analysts said that the company's 
     quarterly exports to Mexico had risen to more than 11,000 
     cars and trucks in just the first quarter of 1994 from 1,700 
     last year. About 8,500 of the cars sent to Mexico, however, 
     were made in Spain, with 1,906 cars and 605 trucks from 
     Canada and the United States.
       John F. Smith, Jr., the chief executive of G.M., said 
     earlier this year that he expected exports from the United 
     States and Canada to Mexico to reach 15,000 cars and trucks 
     this year.


                            Center of Debate

       The auto industry's sharp cutbacks in the United States and 
     heavy imports from Mexico placed it at the center of last 
     year's trade debate. Last year, G.M. sent 89,000 vehicles 
     from Mexico to the United States.
       But Mr. Smith noted that most of the G.M. cars built in 
     Mexico, including those for the domestic market, consist 
     largely of parts from the United States. ``As sales increase 
     in Mexico, production in Mexico will support more jobs in the 
     U.S.,'' he said.
       Some labor leaders, however, say the failure of exports to 
     rise as rapidly as imports is all the more striking because 
     Mexico has been much more protective. ``The reduction of 
     barriers all of a sudden produced a market there,'' said 
     Arthur Gundersheim, director of the international affairs at 
     the Amalgamated Clothing and Textile Workers Union. ``Our 
     markets were already open.'' As far as the trade agreement's 
     effect on United States exports is concerned, he said, ``The 
     story is that it hasn't done more.''
                                  ____


             [From the Wall Street Journal, June 13, 1994]

                Nafta Success May Aid New Trade Accords

                             (By Bob Davis)

       Washington.--Already, the North American Free Trade 
     Agreement appears to be a big hit. Exports and imports are 
     surging and U.S. job loss is minimal.
       The good news should go a long way to change the politics 
     of trade, easing fears that the U.S. can't compete with low-
     wage countries. And that should make it easier politically to 
     extend Nafta throughout the hemisphere and negotiate new 
     trade deals elsewhere. Nafta has stiffened the 
     administration's spine concerning trade: Clintonites promise 
     to launch free-trade negotiations with Chile soon and they 
     plan a summit on the Americas in December where trade 
     expansion will be a major theme.
       The Nafta boom also should ease passage of the world-trade 
     pact reached under the General Agreement on Tariffs and 
     Trade, once Congress cuts a deal on how to replace lost 
     tariff revenue. Labor unions and Ross Perot, the twin pillars 
     of the anti-Nafta coalition, haven't made much effort to kill 
     the agreement. Indeed a number of unions are now exploring 
     how they can use Nafta. The AFL-CIO is playing a lead role in 
     a U.S.-Mexico symposium, which starts today in Albuquerque, 
     N.M., on health and safety problems in the electronic 
     industry.
       Mark Anderson, an AFL-CIO trade economist who opposed 
     Nafta, says he wants to see whether ``sunshine and 
     cooperative efforts'' can help change labor conditions south 
     of the border.
       Making much of this possible is Nafta's early success. The 
     first round of tariff cuts took effect Jan. 1, making U.S. 
     goods more attractive. As Mexican businesses continued their 
     modernization drive, the U.S. exported 9.4% more goods to 
     Mexico in the first quarter than in the previous quarter, 
     after removing usual seasonal fluctuations. At the same time, 
     investment keeps pouring into Mexico. And the Labor 
     Department says only 4,212 workers were certified for extra 
     unemployment benefits due to plants moving production to 
     Mexico or Canada.
       Bennett X-Ray Technologies says its has sold $2 million of 
     its advanced mammography systems so far this year to Mexico. 
     Before the 12% tariff on the machine was eliminated, Bennett 
     hadn't managed to sell even one. As Mexico dismantles a 
     labyrinth of rules that blocked auto imports, imports of U.S 
     and Canadian-made cars and trucks in the first five months of 
     the year rose to 19,910, twice as many as in all 1993.
       But tariff reductions cut two ways. Imports from Mexico 
     grew 4.6% in the first quarter from the fourth as the U.S. 
     economy hummed along. To feed the sizzling U.S. auto market, 
     auto imports were especially strong, up 48% in the first 
     quarter from the year-earlier quarter.
       Overall, though, exports grew more than imports, partly 
     because Mexican tariffs were higher and fell more than those 
     in the U.S. The U.S. ran a $560 million trade surplus with 
     Mexico in the first quarter, compared with $40 million in the 
     fourth, the first increase in the quarterly U.S.-Mexico 
     surplus in two years.
       Even optimists couldn't be confident of this outcome, given 
     the misfortunes that have swamped Mexico this year; an armed 
     rebellion in the south; a murdered presidential candidate; 
     anemic growth. Under such circumstances, says Brian Horrigan, 
     a Loomis Sayles economist, Mexican companies and consumers 
     might have hunkered down and bought fewer imported goods.
       Economists on all sides warn against reading too much into 
     a single quarter's numbers. Should Mexico devalue its peso, 
     or should its economy sink again into recession, for 
     instance, U.S. export growth could disappear, and with it the 
     trade surplus.
       Nafta, though, was always far more than a trade deal. It 
     became a potent symbol of a new age in which global economics 
     vastly influences domestic jobs and politics--and in which 
     the U.S. no longer seems able to control its destiny. Now, 
     though, those fears have dissipated. For all their hugging, 
     Nafta opponents managed to run serious challenges against 
     only two pro-Nafta House members--and lost them both. 
     Meanwhile, at least five anti-Nafta lawmakers face challenges 
     from trade-pact supporters.
       In Mexico, the pact helped moderate the government's 
     response to the Chiapas uprising and increase pressure that 
     it run an honest presidential election in August. Nora 
     Lustig, a Brookings Institution expert, talks of Nafta's 
     ``spotlight effect'' on the Mexican government to do the 
     right things.
       But will Nafta's effects be long-lasting? Forecasters at 
     Clemex-Wefa predict Mexico's sputtering economy will grow 
     3.5% next year, and more than 5% annually for the rest of the 
     decade. That's more than enough to support a continued U.S. 
     export boom. Both sides, however, have to guard against new 
     forms of protection arising as tariffs continue to drop over 
     the next 15 years. Already, Florida tomato growers and 
     Mexican beef producers are complaining of ``dumping.''
       The real gauge of Nafta's success is whether it disappears 
     as a political issue. That would mean that Americans will 
     have accepted the idea that their future is tied to open 
     trade, which can help rich and poor nations alike.

                          ____________________