[Congressional Record Volume 142, Number 116 (Thursday, August 1, 1996)]
[Senate]
[Pages S9437-S9438]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DORGAN (for himself, Mr. Byrd, Mr. Heflin, Mr. Campbell, 
        Mr. Wellstone, Mr. Hollings, Mr. Inouye and Mr. D'Amato):

  S. 2016. A bill to assess the impact of the NAFTA, to require further 
negotiation of certain provisions of the NAFTA, and to provide for the 
withdrawal from the NAFTA unless certain conditions are met; to the 
Committee on Finance.


                      The NAFTA Accountability Act

  Mr. DORGAN. Mr. President, the North American Free Trade Agreement 
has been a colossal failure. It epitomizes what is wrong with our 
nation's trade policies.
  This Nation has focused practically all of its efforts on achieving 
some theoretical system of free trade, without giving any real 
attention to whether what is advanced also provides fair trade and fair 
competition. We open our borders and provide access to our markets, 
without ensuring that at the same time there will be reciprocal trading 
opportunities with our trading partners.
  NAFTA has not produced the results that were projected. It has not 
lived up to its promises. Since NAFTA took effect our trade deficit 
with Canada and Mexico has ballooned by 368 percent.
  Today, Canada and Mexico are the third and fourth largest trade 
deficits for the United States. Rather than stopping the flight of 
American jobs, it has accelerated the loss of jobs to our closest 
trading partners.
  Today, I am reintroducing the NAFTA Accountability Act. This bill 
establishes benchmarks for measuring whether or not NAFTA has lived up 
to its promises. If it doesn't then the bill outlines the procedure for 
withdrawing from NAFTA.
  In reintroducing this bill we are updating some of the information in 
the findings and we are adding a section on highway safety. In 
addition, we are adding a number of co-sponsors. Senators D'Amato, 
Inouye, Hollings, and Wellstone are joining the list of original co-
sponsors, including Senators Byrd, Heflin, and Campbell.
  The companion bill on the House side, sponsored by Representative 
Marcy Kaptur now has 107 co-sponsors.


                    Trade Deficits Continue to Grow

  One of the untold stories of NAFTA is the growing trade deficit with 
Canada. Prior to NAFTA, the merchandise trade deficit was over $10 
billion in 1993. In 1994 it grew to $14 billion, and last year it hit a 
record of almost $19 billion. In the first 5 months of this year, our 
trade deficit with Canada is already at almost $9 billion. At this pace 
the trade deficit this year can be expected to be over $21 billion.
  The change in our trade position with Mexico is even more dramatic. 
Prior to NAFTA our trade surplus with Mexico peaked in 1992 at $5.4 
billion. It then dropped to $1.6 billion in 1993. In the first year of 
NAFTA, the positive trade balance with Mexico dropped to $1.4 billion. 
In the second year of NAFTA, we ended up with a $15.4 billion trade 
deficit.
  Much has been said about the role of the devaluation of the peso as 
the cause of this dramatic turn-around in trade flows with Mexico. The 
reality is that the problems of the overvalued Mexican peso were well 
known at the time of the passage of NAFTA.
  Yet, there was nothing in NAFTA that provided any means to address 
the question of rapid changes in currency values. Our bill would 
require the opportunity for renegotiation in such circumstances.
  This year the trade deficit with Mexico has already reached almost $7 
billion during the first 5 months. At this pace, it will be very close 
to last year's record level of $15 billion.
  Since NAFTA took effect, the United States has recorded a $42 billion 
trade deficit with Canada in the 2 years and 5 months for which we have 
statistics. During that time we have recorded a $20 billion deficit 
with Mexico.
  We have accumulated a total trade deficit of $62 billion with these 
trading partners since NAFTA started regulating these trade 
relationships. In other words our trade deficit with our NAFTA partners 
is draining over $2 billion a month from our national economy. These 
trade deficits have serious consequences for our country.


                      U.S. Job Losses Due To NAFTA

  Today a study by Rob Scott on the relationship between NAFTA and jobs 
was released by the Economic Policy Institute. This study reveals that 
the trade deficits we have had during the first 2 years of NAFTA has 
meant a loss of almost a half-million jobs and job opportunities for 
American workers.
  The study shows that as a result of our trade imbalance with Canada, 
we have lost 200,026 jobs during the past 2 years. In the same period 
the trade deficit with Mexico has meant a loss of 283,607 jobs. The 
total loss of jobs and job opportunities is 483,633.
  When NAFTA was being debated, the predictions were that the United

[[Page S9438]]

States would gain something between 120,000 and 220,000 jobs. Now 2 
years later, the reality is that our trade relationships under NAFTA 
have cost this country 484,000 jobs.


                         Jobs Moving to Mexico

  One week ago I co-chaired the Families First Forum here in the 
Nation's Capitol. At that forum, a union worker in North Carolina told 
us about the upcoming closing of his plant. That plant closing was to 
be completed today and the jobs moved to Mexico.
  This is a plant that produces electrical transformers. These are the 
transformers that hang from electrical poles, sit on pads on the 
ground, and even some units that are made for use underground.
  They have been producing transformers at that plant for 40 years, and 
have been a profitable operation for most of those years. There are 343 
hourly workers and 250 salaried workers who today no longer have a job.
  These workers will no longer be able to be employed using the skills 
they have learned and developed in building electrical transformers. 
Their jobs our moving to Monterrey, Mexico, to a facility that pays 
workers less than a $1 per hour.
  There is another small industry in this country. It's scattered 
around in rural communities in the heart of the corn belt. This 
industry is dominated by small family business operations which make 
the brooms that we use to sweep out our houses. The future of this 
industry is in doubt.
  Stan Koschnick, manager of the France Broom Co., told a news 
reporter, ``I don't want to worry my employees too much when they open 
their newspapers, but I would guess if it was left unchecked, within 10 
years there wouldn't be any brooms made in the United States.''
  Kenneth Quinn, the retired president of the Quinn Broom Works, 
states, ``It's hard to say you can compete with somebody when they're 
paying 30 or 40 cents per hour. We can do everything better except for 
wages. We can't compete on wages.''
  Since NAFTA became reality, more than 200 jobs have been lost in this 
industry. These companies are paying in the neighborhood of $8 per hour 
to their workers. They are competing with Mexican workers who will be 
lucky to be paid $8 per day.
  The question is whether such wage competition is good for our 
country. There are those who would say we are raising our standard of 
living by being able to buy a couple of cheaper brooms every year. 
However, what are we gaining if at the same time our wages are being 
lowered and our jobs are being lost?

  This industry may get a second chance, because last Friday the 
International Trade Commission recommended restoring a tariff on 
Mexican brooms. Earlier this month, the ITC determined that unfair 
competition from Mexican factories posed a serious threat to the 
domestic broom industry.
  The reason they are getting a second chance is that hidden away in 
the fine print of the NAFTA agreement was a provision that allowed 
tariffs to be restored if the U.S. broom industry got hurt. Other 
industries are not so lucky, and don't have such provisions. They are 
being swept under.


                   Industries Experiencing Job Losses

  Let's take a closer look at the industries in which we are losing 
jobs and job opportunities under NAFTA. The study released today by the 
Economic Policy Institute provides some estimates of where we are 
losing jobs.
  Our exports to Mexico have been mostly capital goods and intermediate 
inputs which are used to build and supply factories that assemble final 
products for export back to the United States.
  With Mexico, we have lost over 85,000 jobs and job opportunities in 
auto, auto parts, and vehicles. Another 60,000 jobs were lost in 
electrical equipment, such as televisions and other electronic 
equipment. Over 26,000 jobs in nonelectrical machinery and 20,000 jobs 
in scientific and professional equipment were lost to Mexico.
  In our trade with Canada, we have lost over 53,000 jobs and job 
opportunities in the paper and allied products industry. We have also 
lost jobs in autos, auto parts, and vehicles to Canada. This accounts 
for some 38,000 jobs. Another industry where we have lost jobs and job 
opportunities to Canada has been in the production of primary metal 
products. That is a loss of 26,000 jobs.
  Now, these are not what is normally considered unskilled jobs. These 
are jobs that traditionally have paid good salaries and provided an 
industrial base for our country.
  The fact is that manufacturing jobs have been the hardest hit within 
the trade framework established by NAFTA. According to the Economic 
Policy Institute, 73 percent of the jobs lost to our NAFTA trading 
partners have been lost in the manufacturing sector.
  That should be of great concern to this country. Our manufacturing 
base has been what has provided good paying jobs for the bulk of 
American families. As we shift to buying more and more of our 
manufactured goods from beyond our own borders, we are also 
experiencing both a shift in jobs and an overall loss in jobs.
  According to the EPI study, the United States has had a net loss of 
483,633 jobs to our NAFTA trading partners since NAFTA took effect. 
That reflects an total job loss of 883,717 jobs, while our trade with 
Canada and Mexico created 400,085 jobs. Since almost three-quarters of 
the net job losses were in the manufacturing sector, this further 
underscores that we are losing our better paying jobs.


                            NAFTA Benchmarks

  As a nation we need to begin systematically measuring how our trade 
agreements are doing. Are they living up to their promises?
  Are they providing mutually beneficial reciprocal opportunities that 
strengthen the economies of the participating countries? Are they 
helping to improve the standard of living in each of the countries or 
are they pitting one nation against another down to the lowest common 
denominator?
  Those are the type of questions we are asking within the NAFTA 
Accountability Act. We are asking these questions in nine specific 
areas. In three areas we are requiring some renegotiation of NAFTA so 
it can deal with issues of significant trade deficits, currency 
exchange rates, and agricultural trade distortions.
  The other six areas are matters of ensuring that the results are 
measured and certified. These include certifications in maintaining our 
manufacturing base; highway safety; health and environmental standards; 
jobs, wages, and living standards; rights and freedoms; and, 
controlling drug trafficking.
  We need to make NAFTA accountable. If it doesn't measure up then we 
need to withdraw from it. We need trade agreements that work. America 
can no longer afford trade agreements that work against our long-term 
economic interests.
  That is why I am pleased to be reintroducing this bill. I am also 
pleased that my colleagues, Senators Byrd, Heflin, Campbell, Wellstone, 
Hollings, Inouye, and D'Amato are joining in this effort to make NAFTA 
accountable.

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