[Congressional Record Volume 143, Number 129 (Wednesday, September 24, 1997)]
[Extensions of Remarks]
[Pages E1835-E1836]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ON TRACK WITH OUR NATION'S INTERESTS
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HON. PHILIP M. CRANE
of illinois
in the house of representatives
Wednesday, September 24, 1997
Mr. CRANE. Mr. Speaker, recently, several Members of Congress,
including myself, met with the administration to discuss fast-track
trading authority soon to be offered in the House for consideration.
This legislation grants the administration authority to negotiate and
implement trade agreements with other nations, which Congress would
either support or vote down unamended. It is my opinion that this
authority is a necessary step toward the President's goal of having
hemispheric free trade by the year 2005. More importantly, fast track
is a necessary step to strengthen the U.S. economy at home--helping
producers, workers, and consumers. The agreements made as a result of
fast track will expand our markets far beyond our shorelines to other
nations who desire high quality, American-made products. Exporting
companies offer workers jobs, which provide better pay and better
benefits. Consumers have a larger variety of products to choose from at
more competitive costs.
In the past, fast track has been derailed by special interests, who
lack the foresight to see that the general interest of our Nation will
benefit from free and open trade--a status that can be greatly assisted
by extending traditional trading authority to this administration. The
following article, which was printed in the Wall Street Journal, on
September 12, 1997, highlights the need to pass fast track to maintain
our Nation's role in the international marketplace. If it is not
passed, special interests will in the end realize that their selfish
motivations cause more harm than good. I hope my colleagues consider
the points made in this article and support legislation to extend fast-
track trading authority to the administration.
[From the Wall Street Journal, Sept. 12, 1997]
U.S. Exporters to Latin America Need Fast-Track
(By Robert Mosbacher)
When President George Bush unveiled his Enterprise of the
Americas Initiative in the early 1990s, many thought the
emergent free trade bloc would develop according to a ``hub-
and-spoke'' model. As the ``hub'' of hemispheric trade, the
U.S. would form a series of inter-locking bilateral free
trade agreements with the ``spoke'' nations of Latin America
and the Caribbean until these agreements could be melded into
a single free trade accord. That vision is slipping away.
President Clinton promised Wednesday to put trade expansion
back on the front-burner. He plans to ask Congress to renew
fast-track legislation, which would authorize the president
to negotiate international trade agreements on which Congress
would vote up or down. If he fails to secure fast-track
authority, however, the U.S. will be relegated to ``spoke''
status in the emerging hemispheric trading order, leaving
many U.S. businesses at a disadvantage. Furthermore, fast-
track authority should be clean--that is, it must not be
weighted down with requirements that trade agreements also
mandate environmental and labor regulations.
Since the promising 1994 Miami summit, when the proposed
trade initiative was renamed the Free Trade Area of the
Americas, the U.S. has withdrawn from its leadership role on
liberalized trade. Instead, inter-locking trade relationships
have been forming around the southern cone customs union--
Mercosur--comprising Brazil, Argentina, Uruguay and Paraguay.
Last year, while Washington dithered, Mercosur took
decisive action, offering Chile and Bolivia associate
membership. This created a market of 220 million potential
consumers with a combined gross domestic product of about $1
trillion--more than twice the economic output of Asean, the
Association of Southeast Asian Nations.
This year, while still waiting for the president to lead on
fast-track, Mercosur is planning free trade talks with
Colombia, Venezuela, Ecuador and Peru. Mercosur might soon
realize its goal of establishing a South America Free Trade
Area, which could serve as a counterweight to Nafta, the
North American Free Trade Agreement, in hemispheric free
trade talks. Mercosur has already been approached by the
European
[[Page E1836]]
Union about a free trade alliance and will also soon begin
free trade talks with Mexico, Canada and the Central American
Common Market.
One of the consequences of Mercosur's expansion and the
American retrenchment is that the U.S. is losing leverage in
hemispheric free trade talks. While official negotiations are
not scheduled to begin until 1998, the failure of the U.S. to
secure fast-track leaves open the distinct possibility that
the agenda and timetable for these talks will be dominated by
other countries.
Lack of fast-track is also hurting U.S. companies seeking
access to the region's dynamic consumer markets. American
wine producers are losing market share in Venezuela to
Chilean producers, not because Venezuelans prefer Chilean
Merlot to Napa Valley Cabernet Sauvignon, but because Chile
has a free trade agreement with Venezuela that allows its
wines to enter the country tariff free. American wines, by
contrast, carry a hefty 20% duty. If the duty were to be
eliminated, industry experts believe that U.S. wine
producers could see their share of the Venezuelan market
jump from the current 5% to well over 30%.
While California wine producers cannot pull up their vines
and move to more hospitable commercial climates, other
industries are less restricted. Caterpillar Inc., based in
Peoria, Ill., recently announced plans to produce bulldozers,
excavators and off-road trucks in Brazil for export to Chile.
The decision to build the equipment on foreign rather than
U.S. soil was based on tariff considerations. U.S. exports to
Chile face an average 11% tariff, while tariffs on Brazilian
exports are being phased out under Mercosur. Other companies
that may follow Caterpillar's lead include General Electric
and Eastman Kodak.
Several major U.S.-based multinationals with joint ventures
in Chile--including IBM, Southwestern Bell and McDonald's--
have announced plans to source millions of dollars in
equipment in Canada and Mexico rather than in the U.S. The
reason, again, is that Canada and Mexico have bilateral free
trade accords with Chile that permit their goods to enter the
South American country tariff-free, while U.S. goods face
prohibitive duties. According to the U.S. Chamber of
Commerce, the loss of opportunity for U.S. exports to Chile
is $480 million a year and climbing.
Those who question the need for deeper economic integration
should consider the benefits of Nafta. Notwithstanding the
1994 peso devaluation--which halved the price of Mexico's
exports to the U.S.--U.S. exports to Mexico and Canada have
grown 34% since the pact took effect in 1994. They now
outstrip total U.S. exports to either the Pacific Rim or
Europe.
According to a Council of the Americas study of 21 U.S.
states, nine states have witnessed 40% plus growth in exports
to Mexico and Canada since 1993 and another seven have seen
those export markets grow by more than 30% during that time.
In 1996, California exported to Mexico more than $9 billion
in goods and services. The California World Trade Commission
estimates that exports to Mexico support more than 125,000
jobs in the Golden State, with almost 25,000 of these jobs
resulting from export growth in 1995 alone.
Nafta has also helped promote U.S. interests in Mexico by
helping stabilize the country in the aftermath of the peso
crisis. After Mexico's 1982 peso devaluation, it took seven
years before the country showed signs of recovery. By
contrast, Mexico's economy touched bottom and began to turn
around less than 12 months after the December 1994
devaluation. There is also little doubt that the climate of
openness fostered by Nafta raised political consciousness and
contributed to the July 6 electoral shakeup that ended 70
years of political dominance by the Institutional
Revolutionary Party.
An activist American trade policy made possible by fast-
track negotiating authority will keep the U.S. economy strong
and guarantee that future generations enjoy rising living
standards. That said, the importance of fast-track transcends
economic issues. As Rep. Lee Hamilton (D., Ind.) recently
said, ``Fast-track is not just about trade, it is about U.S.
leadership and influence in the world. And a president
without fast-track is a president without power to promote
U.S. interests abroad.'' We ignore this reality at our own
peril.
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