[Congressional Record Volume 141, Number 187 (Monday, November 27, 1995)]
[Senate]
[Pages S17513-S17516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              NORTH AMERICAN FREE-TRADE AGREEMENT [NAFTA]

  Mr. DORGAN. Mr. President, a week ago Friday, just prior to the 
recess, I introduced in the Senate, along with the cosponsors, Senator 
Byrd from West Virginia, Senator Campbell from Colorado, and Senator 
Heflin from Alabama, a piece of legislation called the NAFTA 
Accountability Act. I want to talk briefly about that this morning. I 
understand that the Senator from West Virginia, Senator Byrd, will come 
to the floor and also provide some discussion about it.
  Not many people know what NAFTA is. It is an acronym that describes 
the North American Free-Trade Agreement. Not many people know much 
about it or much about how it affects them, their lives, or their jobs. 
But it is a significant piece of trade legislation that had its 2-year 
anniversary, or second birthday, about a week or so ago.
  It is time for the Congress, when you pass legislation like NAFTA, to 
stop and assess its impact and decide whether it did what it was 
advertised to do. 

[[Page S 17514]]

  A week ago today I drove to the Canadian border, a border town named 
Portal, ND, between North Dakota and Canada, along with some farmers. 
One of the farmers, Earl Jensen and his wife, brought along a 1984 
orange International grain truck with 240 bushels of hard red spring 
wheat, and we drove to the Canadian border last Monday.
  A number of other farmers came along and they brought some durable 
goods, dry goods, clothes, a clothes washer, several cases of beer, and 
some other products to try to understand what you could get into Canada 
under this North American Free-Trade Agreement.
  All the way to the border that morning we were meeting these 
semitrucks, double tandem semitrucks, filled with Canadian grain, 
coming south. We knew they were filled with grain because as they came 
south--and there was a pretty good wind--the grain came up against the 
windshield as these huge semitrucks came whipping on by us going south.
  We arrived at the Canadian border and Earl drove up with his orange 
truck filled with 240 bushels of hard red spring wheat and told the 
Canadian Customs that he was going to take the truckload of United 
States wheat to Canada to sell at a country elevator.
  We know that millions and millions of bushels of Canadian wheat are 
coming across our border, coming south, truckloads, every single day. 
But Earl was stopped at the border and told, ``You cannot take that 
wheat into Canada. You must have an end use certificate.''
  Well, Earl Jensen and his wife sat in his little orange truck. They 
did not have an end use certificate. It turns out you have to get one 
from Canada. If you apply, you cannot get one because you cannot sell 
grain at a country elevator in Canada because you are hauling United 
States grain.
  The fact is millions of bushels of wheat pour south from Canada into 
the United States, and Earl Jensen and his wife cannot drive north to 
Canada with 240 bushels of hard red spring wheat.
  Why is that important? It demonstrates the problem of unfair trade on 
the border. A fellow who brought three cases of beer felt, because 
there was a flood of barley coming south, you can turn barley into beer 
and take the beer back in cases. He learned you cannot take three 
cases, you can take one, and if you stay more than 24 hours you have to 
pay duty, $12.50 duty, on a case. Another fellow discovered the 
combined duty was over 20 percent for his products.
  Why do I take time to describe this? We have problems on the border. 
We have a free-trade agreement with Mexico and Canada that is 
fundamentally unfair to our country. It is called NAFTA.
  I want to describe what has happened in our own country with the 
trade deficits. I know you might think this chart is upside down, but 
it is not. The red represents trade deficits. You can see in this 
country we had trade surpluses through a series of trade acts, and then 
we had the Trade Reform Act in 1974, Tokyo round, the Uruguay round, 
NAFTA, and now GATT.
  Look what has happened. We will have a larger merchandise trade 
deficit in this country than a fiscal policy deficit. There is a lot of 
nail biting and wrist wringing about the fiscal policies deficit, and 
there should be. The budget deficit is a serious problem. But the trade 
deficit is larger and a more serious problem for this country.
  What has happened with respect to Canada and Mexico? Well, we have a 
trade deficit with Mexico now as a result of NAFTA, or at least partly 
as a result of NAFTA. Prior to negotiating a trade agreement with 
Mexico and with Canada, we had decent trade numbers with Mexico. We had 
nearly a $2 billion surplus.
  Now, 2 years later, after 2 years of the trade agreement with Mexico, 
we will probably have--this says $15 billion; it is probably a $16 to 
$18 billion deficit. Let me say that again: We will have gone from a $2 
billion surplus to a $16 to $18 billion deficit after 2 years of a new 
trade agreement with Mexico.
  The situation is similar with Canada. There we started with a 
deficit. Now that deficit is nearly going to double. Some of us believe 
that this country ought not continue to get taken advantage of and get 
the short end of the stick on trade issues.
  I mentioned the Canadian problems. At least from the standpoint of 
someone who represents a rural State, the major problems are 
agricultural. A flood of grain is coming into our country, undercutting 
price, undercutting our family farmers. Yet, you cannot get one little 
orange truck across the border going north with 240 bushels of grain. 
That is the fundamental unfairness of the situation at our border up 
north with respect to grain.
  What is the circumstance at the border down south? What we have down 
south, as one Presidential aspirant described it a couple years ago, is 
a giant sucking sound of American jobs heading south. There is no 
disagreement about the impact of the deficit that we now have with 
Mexico. It means wholesale movement of American jobs to Mexico.
  We have introduced legislation in the Congress called the NAFTA 
Accountability Act. It was introduced in the House and the Senate as of 
a week and a half ago. It has, I believe, 32 original cosponsors in the 
House. We have four in the Senate and we intend to add to that.
  We say we want a couple of things to happen. We want to set a date 
for withdrawal from NAFTA unless certain conditions are met. If NAFTA 
is fixed and the conditions are met, that is fine. If it is not, we 
should withdraw from this trade agreement.
  We do not need a trade agreement that someone calls free that is not 
fair to our country. That is the circumstance we have now.
  At least we should require some balance in trade. Should we have a 
$30 to $35 billion trade deficit with our two neighbors? Of course not. 
We also have big problems with Japan and China and others. I understand 
that. But a trade agreement as a result of the Canadian Free-Trade 
Agreement and the North American Free-Trade Agreement that leaves us 
with $30 to $35 billion combined deficit, is that in our country's 
interest? Of course not. We ought to change it.
  Our Accountability Act also deals with trade deficits. There ought to 
be some balance. When that balance is thwarted, then you ought to 
decide to kick in some measures, tariffs if necessary, to come to some 
sort of balance in trade between our countries.
  We ought to deal with currency exchange rates. When you negotiate 
away a 10-percent tariff with Mexico and then you have a 40-percent 
change in the value of the peso, what have you done? What you have done 
is injured the interests of the United States.
  We would provide for some remedy to the agricultural trade 
distortions. We would also require the certification of progress in a 
range of other areas. There are eight conditions all told.
  Let me describe why a number of us have decided to offer this 
legislation. When NAFTA was debated in the Congress, here was the 
promise: The promise was more than 220,000 new American jobs.
  Well, we had economist after economist around this country doing work 
for the business groups, the Clinton administration and others, who 
wanted this to be passed in the Congress. They all made these wild-eyed 
promises about all these new jobs in our country.
  Well, take a look at what has happened. It is projected this year not 
that we will have 220,000 more jobs in our country but that, in fact, 
we will have lost about 220,000 jobs as a result of NAFTA.
  Let me show you one of the promises. One of the leading studies that 
was done was a study called the Hufbauer-Schotts study, and everyone 
used it in the House of Representatives and Senate in debate. Mr. 
Hufbauer, the study's economist, said there would be 130,000 new 
additional jobs in 5 years in the United States. That was the promise.
  Here is the reality. The same fellow who made that promise of 130,000 
new jobs in the United States, now says in April of this year, 1\1/2\ 
years later, ``The best figure for the jobs effect of NAFTA is 
approximately zero. The lesson for me is to stay away from job 
forecasting.'' Gary Hufbauer, Wall Street Journal, April 17.
  There is an update, October 26: ``The surging trade deficit with 
Mexico has cost the United States 225,000 jobs.''
  I ask unanimous consent for 4 additional minutes. 

[[Page S 17515]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. The same fellow who predicted massive quantities of new 
American jobs with this trade agreement is now saying not only has that 
not happened, but the trade deficit with Mexico has cost us 225,000 
jobs.
  You have seen some of the press stories in this country about what is 
happening. Fruit of the Loom is closing six plants, laying off 3,200 
workers. Where are many of the jobs going? To low-wage countries, 
including Mexico. That is what NAFTA has been--an opportunity, a 
magnet, for jobs that used to be here but now go there.
  Tri-Con Industries is moving its car seatcover plant, 200 jobs, to 
Mexico. Ditto Apparel, Colfax, LA, lays off 215 workers. Says the 
fellow from Ditto Apparel, ``I'm telling you, NAFTA and GATT are the 
nails that are going to be in the coffin of the apparel industry in 
this country.'' They are laying off 215 workers.

  I wanted to show my colleagues, in the Record today, what has 
happened just with automobiles, because we were told that any jobs that 
would go to Mexico as a result of the agreement would be low-skilled 
low-wage jobs. The fact is different. Take a look at automobiles. Our 
deficit with Mexico is from automobile parts, electronics, electronic 
parts. This is the result of high-skilled jobs that used to be in this 
country. Take a look at automobiles. This is an example of what you 
read in the papers that leads people to the wrong conclusion.
  In 1993, just before NAFTA, we exported nearly 3,000 cars from the 
United States to Mexico. Now we export nearly 18,000 cars from the 
United States to Mexico. If you simply read that figure, people would 
say look, we have gone from 3,000 automobiles manufactured in the 
United States, exported to Mexico, to 18,000. That is a sixfold 
increase. How on earth can you describe that as anything but progress?
  Let me show you the rest of the story. The imports of automobiles 
made in Mexico to the United States, sent to the United States, has 
gone from 237,000 to 405,000. So, what you see is a nearly 180,000 
increase in automobiles manufactured in Mexico, sent into our market to 
displace automobiles that used to be made here. That is the rest of the 
story. The story on automobiles is a dismal story of failure, of jobs 
leaving America, going to Mexico.
  We have introduced legislation in the Congress, not because we do not 
value our relationship with our neighbors, not because we believe there 
should never be free trade agreements, but because many us believe our 
trade agreements have undermined the American economy, have actually 
created conditions that attract American jobs to go elsewhere, have set 
up circumstances to weaken the American manufacturing job base. We do 
not think that is in this country's interests.
  One can hardly look at the graphs that I have shown today, especially 
this chart, the chart of what has happened in American trade, that 
shows an alarming trend of ever-increasing deficits, sufficient so that 
in this year the merchandise trade deficit in this country will exceed 
the budget deficit in fiscal policy. We are going to talk a lot about 
the deficit, and we should. But we also want to talk a lot about this 
red ink. This is red ink that can only be repaid by a lower standard of 
living in this country.
  You can make a case--not a very good one, in my judgment--that the 
fiscal policy budget deficit is money we owe to ourselves. Because the 
debt is so unequally distributed that is probably an unfair comparison. 
But, you cannot make the case with the trade deficit that is money we 
owe to ourselves. It is not. It is money we owe to others, others who 
live outside of our country, and which will be repaid, inevitably, 
through a lower standard of living in our country.
  That is why this is a crisis. There are many other areas of trade we 
must deal with--China, Japan--to mention a few. But NAFTA, the most 
recent trade agreement has now resulted in a circumstance where we are 
being smothered with a combined trade deficit with our two closest 
neighbors. It does not make any sense. Our country ought to insist on 
trade policies with other countries that are fair.
  When I speak of this and when others on the floor of the Senate speak 
of this, immediately the editorial writers and others call us 
xenophobes and isolationists and folks who want to build walls of 
protection around our country. Not at all.
  I want our country to be able to compete. I want our businesses to be 
lean and able to compete all around the world. But I want the 
competition to be fair. I do not want someone who starts a factory in 
South Carolina or North Dakota or Colorado or New York to have to 
compete against someone else who has a factory in Malaysia or Indonesia 
that is hiring 14-year-olds, paying them 14 cents an hour, working them 
14 hours a day. That is not fair competition and it is not competition 
we should aspire to be involved in.
  The same is true with respect to Mexico. I do not expect our 
producers and our workers in our country to be able to compete against 
a country that devalues its currency by 40 percent, that has 
substantially different enforcement on air and water pollution, 
substantially different enforcement on the hiring of children, a 
substantially different wage base than ours, where the minimum wage is 
so much below that in the United States. I do not expect that is fair 
competition for any producer in our country.
  I want our trade agreements to stand up for the economic interests of 
our country. I just do not want trade agreements any longer to be 
negotiated with other countries in which we do not require that the 
rules of trade, the rules of exchange between our countries be fair. 
When we fail to require that circumstance, then in my judgment we 
weaken our country.
  When Earl Jensen and his wife, in a little orange truck, drove to the 
Canadian border a week ago today, I watched the Canadians at the 
Canadian customs say to Earl and his wife, ``You cannot bring 240 
bushels of hard red spring wheat into Canada,'' despite the fact I have 
seen truckload after truckload of Canadian wheat come into our country, 
Earl and his wife have every right to be upset about a trade agreement 
that is unfair.
  When you go to the southern border of our country and you see a 
company that can hardly afford not to move its manufacturing plant to 
Mexico because of lower wages, because of less strenuous enforcement of 
pollution standards and child labor standards, you understand what has 
happened on the southern border is unfair as well--unfair to the 
American workers and unfair to the American manufacturers who stay 
here.
  We must, it seems to me, ask Republican and Democratic 
administrations, each of them, when they negotiate trade agreements, to 
stand up, finally, for the economic interests and the economic well-
being of our country; not to protect us against real competition, but 
neither should they subject us to unfair competition that we cannot 
possibly expect to win.
  That is the reason a number of us have introduced legislation, hoping 
it will lead to a thoughtful debate about the values of the North 
American Free-Trade Agreement. We think it needs to be changed because 
we think it does not at this point represent the best interests of our 
country.
  Changing it does not mean we do not believe in freer trade or we do 
not believe in expanded or open trade. It simply means we believe there 
ought to be required fair trade rules between countries with which we 
are engaged in day-to-day commerce and exchange.
  As I indicated, Senator Byrd from West Virginia will, I believe, 
today be making some comments about this legislation. We will be, now, 
circulating among the Members of the Senate, a ``Dear Colleague,'' 
seeking cosponsors. There are four of us, Republicans and Democrats, 
who have introduced this legislation and we hope for bipartisan support 
of this legislation so we can have a thoughtful trade debate in the 
months and the years ahead.
  I would like to make one additional comment. I introduced an 
amendment a couple of weeks ago, that was defeated on the floor of the 
Senate. I am going to introduce it again at some point, I feel so 
strongly about it. We not only have trade rules that are so unfair, we 
have a tax law, a tiny little thing, that says to companies: If you 
close your manufacturing plant in America and move that plant and its 
jobs to a tax haven country and then 

[[Page S 17516]]
make the same product and ship it back to America, we will give you a 
tax break. It is called deferral.
  The company that stays here and makes a profit, pays income taxes. 
The company that leaves here, makes the same product and makes a profit 
and ships it back here, pays no taxes unless they repatriate the 
profit. As long as they keep the profit in that foreign plant, they 
never pay taxes in the United States. That is a loophole that ought to 
go, a loophole that says if you move jobs outside the country we will 
give you a tax break. If we cannot close that tax break, we cannot ever 
close a tax break in the Internal Revenue Service Code.
  Although I was unsuccessful in an amendment to close that loophole, I 
intend to offer it again in coming Congresses, during this Congress and 
the next Congress, in the hope that one day we can begin to change the 
laws, both taxes laws and trade laws, that I think augur against the 
interests of those who invest here, those who build manufacturing 
plants here, and, yes, those who work in those plants who expect us to 
have at least the rules of trade and the rules of the Tax Code be fair 
to American interests.
  Mr. President, I thank the Senator from South Carolina for his 
indulgence, and I thank the Chair.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GREGG. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GREGG. Are we in morning business, Mr. President?
  The PRESIDING OFFICER. We are in morning business.
  Mr. GREGG. I ask unanimous consent to proceed then as in morning 
business for a period of up to 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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