    [Public Papers of the Presidents of the United States: George H. W. Bush (1991, Book I)]
    [May 1, 1991]
    [Pages 451-456]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks and a Question-and-Answer Session at a Meeting of the Society of
    Business Editors and Writers
    May 1, 1991

        The President. Thank you, Jim. And let me say I'm very pleased to be
    here. And I was greeted out here by Sandy Duerr, the president. She
    seemed unfazed by her responsibilities of this awesome group. And I want
    you to know that we presidents must stick together--where is she?
    [Laughter] Randy Smith, and Susan Thomson.
        No, but it is a pleasure, and I appreciate what Jim said there
    because financial reporting, financial news, is very important. It isn't
    always front-page. Look at D1 or E-something or other. But it is
    fundamental, and it's timely. And I'm very pleased that you invited me
    here.
        I've been looking forward to finding a good forum to talk about an
    issue of importance to all Americans: economic growth in America. And
    this is a good one for just that, so that's what I want to do with you
    today.
        At the outset, I am, of course, very pleased that two major banks
    today, following yesterday's action by the Fed, dropped the prime rate
    of interest by half a point, down to 8.5 percent. I think that's going
    to be very good for the economy of the United States of America.
        While experts disagree about the length and depth of the recession,
    we must commit ourselves to policies that will promote growth and
    prosperity into the next century. This administration's economic growth
    package, including our urgent request to extend Fast Track trade
    procedures, can do just that. It can set us on a path toward long-term,
    market-driven economic growth.
        Our administration's growth package begins with control of Federal
    spending. You all know and I know how controversial last fall's budget
    agreement was, that bipartisan budget agreement. But what it did do with
    establishing these caps is to finally put the Federal Government on a
    pay-as-you-go diet. It cut the growth of Federal debt over the next 5
    years by nearly $500 billion. That extra capital--that extra capital can
    help generate new jobs.
        To increase private savings and investment, we've proposed tax-free
    family savings accounts, penalty-free withdrawals from IRA's for the
    first-time buyers. We've proposed cutting the tax on long-term capital
    gains. That would reduce the Tax Code's bias in favor of debt, expand
    incentives to invest, give hope to the small guy, the little guy, the
    small entrepreneur with the big idea. Indeed, it would reinvigorate

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    the American dream.
        We also want to redouble our efforts on the problem of excessive
    regulation. We all know the strangling effect that red tape and
    overregulation can have on businesses. Every time we write new laws,
    though, the laws require new regulations. Some of these regulations are
    needed, and frankly, some are not. We want to free our people from
    unnecessary regulations.
        The Council on Competitiveness, chaired by the Vice President,
    reviews all major new government regulations to ensure that the
    regulatory benefits outweigh the burdens imposed on the economy. The
    Council will look carefully at everything from the new clean air
    regulations to ways of approving new biotechnology products. We should
    not deny the people the benefits that come from products that improve or
    even save lives.
        I headed the Task Force on Regulatory Reform for President Reagan.
    And I recognize, having done that, that there are legitimate need for
    regulations. But I am worried about this, and I want to be sure--assure
    you, the financial writers of this country, that we are going to do
    everything that we can to have sensible handling of regulations. I don't
    like it when I see more and more pages in the Federal Register devoted
    to regulations. So, yes, we'll do what's right by spelling out
    regulations for the clean air bill or the new child-care bill, all of
    which are important, but I do not want to see us overregulate the people
    or the economy of this country.
        We've also sent up to the Hill--some of you know this, I'm sure--a
    financial industry reform bill. This is a comprehensive package, and it
    will put our financial services system on a sound footing and modernize
    our outdated banking laws. We've proposed reforming the McFadden Act.
    This means letting financial institutions compete across State lines.
    Reforming Glass-Steagle--this would let banks offer a broader range of
    financial services to its customers and in the process, to compete more
    effectively in international markets. And then, reforming deposit
    insurance--return it to its original purpose, which was to protect the
    average depositor.
        Next point, strengthening bank supervision, so that we might be able
    to intervene before banks fail. We've proposed a new way of regulating.
    It's simpler, and I think it will be more effective.
        It's time we brought this banking system of ours into the 21st
    century so that our banks can fuel economic growth. But in order to do
    that, we need comprehensive reform, not just a quick and narrow fix. And
    I'm going to work very hard with the Congress to try to get our
    proposals passed.
        These forward-looking proposals are only one part, then, of our
    vision for a strong and vibrant American economy. Our request to extend
    Fast Track procedures looks beyond our borders--right to the heart of
    the international market.
        In recent years, trade has kept our economy growing. Export business
    accounted for 84 percent--84 percent--of our economic growth last year.
    That's nothing new. Merchandise exports have risen 73 percent in the
    last 4 years--more than twice the rate of import growth.
        Recent, unparalleled growth in world trade has produced huge
    benefits for us. Our free trade agreement with Canada has opened up
    previously closed agricultural markets. I wanted to check my figures on
    the helicopter coming back from Maryland this morning. Just now, I
    called our Secretary of Agriculture, and he told me that our
    agricultural exports to Canada increased 35 percent over the last 2
    years because of this agreement. And we expect the growth to intensify
    as the agreement takes full effect.
        You go back and look at the legislative history--or the free trade
    agreement history, and you'll find many who were predicting a far
    gloomier outlook.
        Our trade strategy is simple: We want to build on the success of the
    Canadian FTA. The United States will continue to lead the world toward a
    system of free trade and open markets. That system makes American genius
    available to the whole world--and give Americans access to the good
    ideas and good products from abroad. Trade means economic growth. Trade
    means jobs for all Americans.
        That's why extension of our Fast Track procedures
    in these trade negotiations is ab- solutely critical. Fast Track lets us
    open up

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    new markets and new opportunities.
        Fast Track really is another term for ``good faith.'' It means that
    we will consult closely with the Congress. Congress has some
    constitutional responsibilities here. We have been and we will consult
    closely with Congress, and also the private sector during these trade
    talks. It means that we will not tinker with trade agreements worked out
    by our negotiators and their foreign counterparts.
        It gives everyone a fair say in trade talks. It does not take away
    Congress' power to have the final say, to review these trade agreements.
    Congress will have its say. It will have a final vote on accepting or
    rejecting agreements as written, and it will conduct that vote within a
    reasonable period of time.
        It gives the American people a fair say. We will take all the time
    necessary to address the issues that concern Americans. And there are
    some issues that concern Americans, and we have to have good answers for
    those questions, and I believe we do.
        Fast Track lets us treat our foreign counterparts fairly. It
    promises that we will not attach amendments or make changes, since to do
    so could force negotiators to call off talks or start again from square
    one.
        Our trading partners consider Fast Track an essential ingredient for
    successful trade talks. We've had Fast Track authority since 1974, and
    we will need it. And we need to keep it if we hope to pursue these vital
    trade agreements--the Uruguay round of the GATT talks, the North
    American free trade agreement, and of course, the Enterprise for the
    Americas Initiative. Without Fast Track, very candidly, we jeopardize
    those agreements. And we jeopardize trade. And we jeopardize American
    jobs.
        Right now, we have the chance to look forward, to expand economic
    growth, to expand opportunity from the Yukon to the Yucatan. The North
    American free trade agreement with Canada, our largest trading partner,
    and Mexico, our third-largest trading partner, would create the largest,
    richest market in the entire world. Think about it--360 million
    consumers and $6 trillion in annual output.
        A unified North American market would let each of our countries
    build on our strengths. It would provide more and better jobs for U.S.
    workers. It would stimulate price competition, lower consumer prices,
    improve product quality. The agreement would make necessities such as
    food and clothing more affordable and more available to our poorest
    citizens. It would raise productivity and produce a higher standard of
    living throughout the world. And the resulting economic integration will
    strengthen American businesses in the global marketplace.
        Let me just try to illustrate the stakes that are involved in the
    Fast Track debate by discussing the Mexican component of the North
    American free trade agreement. Trade with Mexico has helped both our
    countries. Just 4 years ago, we had a $4.9 billion trade deficit with
    Mexico. And since then, Mexico's President Carlos Salinas has slashed
    tariff rates. He came in determined to shake things up in Mexico and
    he's done a great job at that. He slashed the tariff rates. Our exports
    to Mexico have increased nearly 130 percent to $28 billion, and our
    trade deficit has shrunk two-thirds to $1.8 billion.
        This export boom has created an estimated 264,000 new jobs in the
    United States. And each additional billion dollars in exports creates
    nearly 20,000 new jobs here in the United States. And meanwhile, the
    trade boom has offered new opportunities for Mexican workers. It's
    offered prosperity to those who before had lived in squalor.
        Some people are concerned about these negotiations with Mexico. And
    just this morning--in the spirit of working closely with Congress, which
    I am determined to continue--we sent a detailed report to Chairman Lloyd
    Bentsen of the Senate Finance Committee; to Congressman Dan
    Rostenkowski, the chairman of the Ways and Means Committee; and to the
    majority leader, Richard Gephardt, who, incidentally, has just come back
    from Mexico. And I believe that this letter and our report responded to
    the concerns, the understandable concerns, that they have raised. I gave
    them my personal commitment to close bipartisan cooperation in the
    negotiations.
        While economic studies show that a free

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    trade agreement would produce jobs in the United States as well as
    greater exports and output, I know that there's a concern--not just on
    Capitol Hill but in many of the labor halls around this country--about
    job loss. And our negotiators will address these concerns in provisions
    of the North American free trade agreement. We will ensure an adequate
    transition period for workers in import-sensitive industries. We will
    work with Congress to see that dislocated workers receive proper
    assistance and retraining. I believe we have the answers to the
    questions that are being raised by the labor unions and by some on
    Capitol Hill.
        At the same time, it is worth noting that the agreement will create
    high-wage, high-skill manufacturing jobs in the machinery, computer,
    telecommunications, and electronic industries. As Mexico develops
    further, it will need even more of these high-tech goods and services.
    Those goods and services are more likely to come from the United States
    than from anyone else in the world.
        And secondly, President Salinas and the Mexican people have no
    interest in allowing their country to become a pollution haven for U.S.
    companies. Because economic growth goes hand-in-hand with environmental
    protection, we will expand environmental cooperation programs parallel
    to the free trade talks. I can assure you, having dealt with him and
    talked to him quite recently in Houston, Texas, on this very problem,
    that President Salinas is deeply concerned about the problems facing the
    environment. He has already ordered shut down the major pollution
    refinery, the PEMEX refinery, in Mexico. And that is strong evidence of
    his good faith because he had to take on some very powerful people to
    make that happen.
        I will share with you a story that maybe some of you heard me refer
    to before, but it made a real impact on me when we were talking about
    the environment. And he says that when the schoolchildren around Mexico
    City, where they have that high smog content--when the schoolchildren
    paint the sky, they don't show the stars. They paint it gray or black.
    And they can't see the stars. And he said, ``My ambition is that these
    young children in Mexico will paint in the stars.'' And I think that
    says, as emotionally as I could possible say it, something about this
    man's commitment to doing something about the environment.
        And so we are concerned, but we believe that the environmental
    cooperation programs that we have in mind and that we've discussed with
    him can satisfy anybody who's reasonable on this question.
        And finally, President Salinas has also made it clear that this
    agreement will improve opportunities for Mexican working people. Mexico
    has strong laws regulating labor standards and workers' rights. Beyond
    those, we will also begin new initiatives to expand labor cooperation
    between our two countries.
        None of these things will happen, though--none of this can happen if
    we cannot bargain in good faith. If the Fast Track procedures that we
    have employed for 17 years--Republican and Democrat administrations
    alike--suddenly are withdrawn or weakened, the United States must
    continue to open new markets, create new technologies, and seize new
    opportunities before us. I am confident, and so are the American people,
    that we can and will prevail in this exciting and challenging world. And
    I am confident that as we head into the next century--the next American
    century--a strong and healthy America will lead the way.
        Thank you all very much for listening and having me over to this
    most prestigious forum. I'm delighted to have been here. Thank you all.
        Moderator. Thank you, Mr. President. We understand you'll take a
    couple of questions.
        The President. That's his understanding, not exactly mine, but go
    ahead. [Laughter]

    Japanese Trade With Mexico

        Q. As you know, the Japanese do a lot of low-cost manufacturing in
    Japanese assembly plants in the maquiladora system right now. Have the
    Japanese expressed any concerns that the U.S.-Mexico trade agreement
    might cut them off from Mexico and----
        The President. I've talked trade with Prime Minister Toshiki
    Kaifu, and it did not come up in our discussions. But whether

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    that's been represented to our trade negotiators, to Ambassador Hills,
    or others, I simply don't know the answer to your question. I'm sorry.
    They shouldn't be worried about it. I mean, there will be new factories,
    new markets, new products. I mean, I don't think they should worry about
    that.

    Fast Track Authority Extension

        Q. In addition to the concerns about the environment and displaced
    workers, a lot of small manufacturing companies in this country who are
    suppliers to big assemblers are concerned. What advice have you sought
    and obtained from such companies in devising your strategy for dealing
    with Congress towards the Fast Track approval?
        The President. I don't know about individual companies, but our
    dealing with the trade organizations has gotten strong support from the
    small business groups--National Federation of Independent Businesses,
    and other groups as well. And so our dealings, at least the White House
    dealings, have mainly been with these organizations that represent the
    smaller businesses. But perhaps our trade negotiators themselves have
    been in touch with individuals. I just don't know. I know when we were
    in Mexico we met with some Mexican business people and American business
    people. Some of them were very large businesses, but there were some
    small businesses involved there, and we got their input. But whether
    there's a concerted effort to approach all these companies, I'd have to
    leave that to the Departments to give you the answer.

    Mexico-U.S. Relations

        Q. Mr. President, critics of the proposed free trade agreement with
    Mexico have cited their concerns over environment, labor laws, and
    possible job losses in this country--all of which you have addressed
    today and responded to. I think there may be an area that's sort of been
    given short shrift. Every year $1 billion-worth of stolen cars, trucks,
    and airplanes are transported to Mexico. Yet Mexican officials are doing
    nothing to stop this illegal trafficking and may, in fact, be thwarting
    efforts to stop it. Don't you think it may be a little inconsistent for
    this country to further open its borders with Mexico while such chronic
    and basic law enforcement problems exist and aren't being dealt with?
        The President. No, I don't think so. I think that problems like
    this, problems of illegal drugs, that you could have mentioned and
    didn't, that are coming across the border that concern our citizens need
    to be solved. There's no question about it. But I think a more
    prosperous Mexico and a more prosperous border on the United States side
    would be one antidote--would be one thing that would be helpful.
        But, look, we have got to enforce existing laws. We have got to do
    better in terms of interdiction. And I think we are. And one of the
    reasons we are doing better is that in this administration under
    President Salinas we are getting--I think most of our law enforcement
    people would tell you--superb cooperation.
        Now, having lived in Texas, why, I know that it's not--we face some
    of the same problems along our border that Arizona does. And so I would
    say that they ought not to use the existing problems to hold up--
    problems of crime going across borders, or border brutality, or drugs
    coming in--to hold up an important trade agreement.
        And if, indeed, this does benefit the people of Mexico, and if you
    then have a little higher standard of living along the Mexican side of
    the Mexican border, I would argue with my critics that this would be a
    sure-fire way to reduce illegal exit or crime or whatever.
        That's the way I'd respond to it. But I don't want you to think from
    the answer that we are unconcerned about the violations of the law.
        Last one. Here we go.

    The Economy

        Q. You have fought very hard to lower the interest rate as a way to
    stimulate the economy. Yet two million more people are unemployed this
    year than last year. And the construction industry is not doing any work
    at all. People can't borrow money because they're overextending from
    their small savings already. How can just dropping the interest rate get
    us out of a reces-

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    sion if----
        The President. In the first place, I think we're going to be coming
    out of the recession, particularly with this drop in interest rates. So,
    I would argue with the people that disagree that we will. Most of the
    indicators--I think most of the economists, most of the blue-chip
    forecasters agree with what I've just said.
        Secondly, I think dropping interest rates is the best way to
    stimulate economic growth and to create new jobs and new opportunity.
    Remind me what was the predicate again--that two million----
        Q. The fact that two million more people are unemployed--we can't
    seem to stimulate the economy no matter what the industries are. And
    people are already too heavily in debt in this country.
        The President. New jobs is the answer, isn't it, then, to those that
    don't have a job. And the way you get new jobs is you go for a growth
    agenda like I tried to answer here today. And we will come out of this
    recession, which isn't, fortunately, as deep as some in the past, and
    when we do come out of it you're going to see growth. And growth is
    going to create new jobs. And that two million or whatever the figure is
    will decline. I'm absolutely convinced of it. That's what's happened in
    every other recession.
        And so the unemployment figures--anytime it's--my view is--they
    always ask me, what's acceptable unemployment? For the guy who doesn't
    have a job, nothing. No percentage is acceptable. I will say,
    historically, the unemployment figures have been a lot worse in this
    country. And when the recessions that they were part of ended, people
    went back to work in large numbers. So, I think the best answer for hope
    for the people that are unemployed lies in economic growth, new
    opportunities.
        Q. When do you predict the end of the recession?
        The President. I can't give you an exact time. But would you settle
    for a general ``sooner rather than later''? [Laughter] Because it's
    going to--wait until you see the effect of these rates. I mean, I don't
    really know the answer to your question. And if I did, I wouldn't tell
    you because the last thing a President needs to be doing is predicting
    interest rate levels or levels of where the stock market ought to be, or
    something of this--I just couldn't get into it. But I do--I believe, as
    do most of the forecasters, that the recession will not be a long and
    deep recession. And I think I'd go with the average of the blue-chip
    forecasters who seem to indicate that we'll be out of it fairly soon.
    But I've got to stop short of a definitive date.
        Thank you all very, very much.

                        Note: The President spoke at 12:07 p.m. in the
                            Ballroom at the Washington Marriott Hotel. In
                            his remarks, he referred to Jim Kennedy, Sandy
                            Duerr, Randy Smith, and Susan Thomas, secretary,
                            president, vice president, and former president
                            of the Society of Business Editors and Writers;
                            Vice President Dan Quayle, Chairman of the
                            Council on Competitiveness; Secretary of
                            Agriculture Edward Madigan; President Carlos
                            Salinas de Gortari of Mexico; Senator Lloyd
                            Bentsen; Representatives Dan Rostenkowski and
                            Richard A. Gephardt; Prime Minister Toshiki
                            Kaifu of Japan; and U.S. Trade Representative
                            Carla A. Hills.