[Congressional Record Volume 143, Number 119 (Wednesday, September 10, 1997)]
[Extensions of Remarks]
[Page E1719]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page E1719]]



             THE TRUE IMPACTS OF NAFTA ON THE U.S. ECONOMY

                                 ______
                                 

                         HON. PETER A. DeFAZIO

                               of oregon

                    in the house of representatives

                     Wednesday, September 10, 1997

  Mr. DeFAZIO. Mr. Speaker, I recommend that all my colleagues read the 
article reprinted below from the Washington Times by Charles McMillion 
for an objective assessment of the true impacts of NAFTA on the U.S. 
economy.

               [From the Washington Times, Sept, 1, 1997]

   U.S. Should Slow Down and Think Before Racing Ahead on Fast Track

                       (By Charles W. McMillion)

       There are few things more important to our local and 
     national economy today than global investment and trade. With 
     our terrific new technologies and more than 1 billion (one in 
     three) of the world's workers unemployed, what policies work 
     best in driving growth and prosperity?
       Unfortunately, this is not the high-minded debate we will 
     hear this week as Congress begins discussions on renewing 
     ``fast-track'' negotiating authority for President Clinton to 
     expand the North American Free Trade Agreement south of 
     Mexico.
       Instead, brace yourself for an awesome display of big-money 
     arrogance and raw public relations power by the few dozen 
     largest corporations and financial institutions that dominate 
     discourse on these vital concerns.
       Speaking for these powerful special interests--and key 
     campaign contributors--President Clinton declared again last 
     week: ``Already, over the last four years more than 25 
     percent of our economic growth has come from overseas 
     trade.''
       This statement may be true for the small group of private 
     interests. But it is pure nonsense for the U.S. economy. The 
     United States must borrow from abroad or sell assets worth $3 
     billion each week to pay for our trade losses. Workers and 
     firms throughout the country have taken cuts in pay and 
     profits to avoid becoming a trade statistic.
       Yet global trade is one of the four defining elements of 
     our nation's gross domestic product. The others are consumer 
     spending, private investment and government spending.
       U.S. economic losses from trade, large when Mr. Clinton 
     came into office, have grown each year, setting world 
     records. Trade has sharply reduced the U.S. economy. It is 
     one of the reasons that growth has been slower and the U.S. 
     dollar far weaker in the current recovery than in any other 
     similar period on record.
       Beyond the simple arithmetic, U.S. trade losses are now 
     compounded by the composition of trade. Unlike a generation 
     ago, when oil and basic commodities accounted for most U.S. 
     trade losses, today's losses are dominated by autos and high-
     tech electronics. Global commerce, dominated by a few 
     transnational companies, is now largely a tool that 
     undermines domestic producers and living standards.
       While the Dow Jones industrial average has soared more than 
     150 percent the past five years, average salaries, health 
     care and retirement benefits have declined.
       But despite these facts, a ``globaloney'' PR campaign will 
     promote the benefits of expanding NAFTA.
       NAFTA, ratified four years ago, was sold by the business 
     and political elite as a precedent-setting investment and 
     trade pact among the sleeping giant of Mexico, with its 
     population of 93 million, the United States (population 260 
     million) and Canada (population 29 million). But the 
     administration and big-business lobby have recently been 
     forced to wildly spin NAFTA's effects.
       Several no-longer (if ever) independent ``think tanks'' 
     funded by transnationals, their foundations and the 
     government, from Brookings to Heritage, have put out reports 
     using remarkably similar and inappropriate assumptions to 
     reach the conclusion that NAFTA has had a slight but positive 
     effect on both the United States and Mexico.
       Yet under NAFTA Mexico has suffered its worst depression 
     since the 1930s, with incomes still 15 percent to 20 percent 
     below 1993 levels.
       Gone is any reference to Mexico's population, three times 
     the size of Canada's, or to its young and well-educated labor 
     force, which is growing by more than 1 million per year. Now 
     Mexico is presented as an almost insignificant little place 
     with an economy only one-twenty-eighth the size of the U.S. 
     economy. This to pretend that Mexico can have very little 
     effect on U.S. workers or firms.
                               __________
                               
       Gone also is any mention of the post-NAFTA $50 billion 
     package of stabilization loans that the administration 
     insisted two years ago was essential to head off economic 
     collapse in Mexico. This omission is particularly odd because 
     it was the equivalent of a $1.4 trillion loan, had it been 
     made to the United States.
       Now the spin is that ``opponents can't dispute'' the claim 
     that NAFTA greatly cushioned the impact of Mexico's economic 
     crisis. Of course, if there were any ``cushioning'' effect on 
     U.S.-Mexico trade, this massive U.S. loan--not NAFTA--would 
     deserve the, well, credit.
       And what, exactly, is the extent of this supposed 
     cushioning on U.S. trade? On a balance-of-payments basis, the 
     worst previous U.S. trade losses with Mexico were in 1983 and 
     1984, when they reached $7.5 billion and $6.1 billion, 
     respectively, and were concentrated in oil and simple 
     commodities. By contrast, U.S. trade losses soared to $16.6 
     billion and $18.4 billion in 1995 and 1996, respectively. 
     U.S. trade losses to Mexico are concentrated now in high-
     wage, highly productive manufacturing industries such as 
     autos and electronics.
       By contrast, the rest of the world continues to enjoy large 
     trade surpluses with Mexico.
       Peso devaluations have been a common occurrence in Mexico 
     for a generation. The 47 percent devaluation in 1995 was less 
     severe than devaluations in 1982, 1983, 1986 and 1987 and 
     barely worse than those in 1984, 1985 and 1988. It is not 
     politically correct to ask the obvious question: Why are the 
     effects of the post-NAFTA devaluation so much worse than 
     those that came before?
       The answer points to the failed elements of NAFTA and to 
     the debate that is needed before repeating mistakes that are 
     already costly to most citizens, even as they enrich a 
     powerful few.
       NAFTA has far more to do with providing new powers to 
     investors and speculators than with tariff reduction. Tariffs 
     now amount to no more that a few percentage points and are 
     insignificant in the face of 10-to-1 or 20-to-1 differentials 
     in production costs between the United States and Mexico for 
     many industries.
       These new private powers give investors, for example, the 
     standing to sue governments directly in international 
     tribunals over a wide range of ill-defined regulatory 
     matters. These powers are what suddenly catapulted $60 
     billion in global hot money into Mexico as NAFTA took shape, 
     turning it briefly into the fast-buck capital of the world.
       As the International Monetary Fund and others have noted, 
     these massive capital flows leave countries highly vulnerable 
     to worldwide events, dramatically increase investors' 
     influence and leave governments little room to manuever in 
     time of crisis.
       NAFTA's investors and trade provisions have clearly failed 
     the vast majority of Americans and Mexicans. To ignore this 
     experience and lurch ahead could be a fast track to deep 
     trouble.

     

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