    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [November 4, 1993]
    [Pages 1895-1903]
    [From the U.S. Government Publishing Office www.gpo.gov]

    [[Page 1895]]

    Remarks on NAFTA to Employees of Lexmark International in Lexington
    November 4, 1993

        The President. Thank you very much. You know, Roberta was nervous as
    a cat, but she did a good job, didn't she? Let's give her a hand. She
    did great. [Applause]
        I want to thank Marvin Mann for his remarks and for hosting us here
    today; my longtime friend and former colleague Governor Jones for his
    support and his kind remarks; your fine Congressman, Scotty Baesler, for
    his support of NAFTA. And I want to thank also--there are people here
    from at least four other operations, business operations, in this area I
    know of. Raise your hand if you're here so I'll know whether I've got it
    right. There are people here from Texas Instruments, I think. Where are
    you? Over here. From Monarch Tool and Manufacturing, from Rand McNally,
    and from DataBeam. Gosh, I can't believe they roped you off over here.
    They're afraid you'll pick up some trade secrets, I think. [Laughter]
        I wanted to come here to Kentucky and to this plant and to you folks
    today to talk about the North American Free Trade Agreement. I also
    asked to come to a place where I could spend some time with real
    American workers, men and women whose lives are on the line every day
    and whose children have a stake in the decisions that I must make and
    the Congress must make for you and for our economy.
        I came here mostly to answer questions. And I'm going to take some
    time answering questions when I finish my remarks, so I hope you'll be
    thinking of them, questions about this North American Free Trade
    Agreement, about our economy, about how they fit together. And if you
    have some hard questions just give them to me with the bark off. I'm
    used to it. One of the things that dealing with the distinguished
    Washington press corps back there does is to sort of harden you to the
    questions of daily life, and now I look forward to them every day.
        I also want to say to you this: Before I became President I was
    Governor of a State not all that much unlike Kentucky. My job was to try
    to create jobs and keep jobs. It was to try to educate people so they
    could do the jobs of today and tomorrow. For most of the time I was
    Governor, our unemployment rate was above the national average, but we
    kept working to export, to increase investment, both domestic and
    foreign, to improve our education and training programs. And in my last
    year in office, in every month we were first or second in the country in
    job growth after a long dry spell. We had plants shut down and move to
    Mexico when I was Governor of my State, at least three that I know of.
    I'm proud to say that we got one of them to come back, because our
    people were more productive and they were good at changing the product
    line on a quick basis when the demand required it.
        I say that to make this point, first and foremost: I spent most of
    the last 20 years around hard-working people who were struggling to
    survive and sometimes to get ahead in a tough global economy. I ran for
    President because I was worried about the future of our country and my
    own child's future moving toward the 20th century, because I thought we
    had three great problems: economic stagnation, a society that was coming
    apart with violence and other problems when it ought to be coming
    together, and a political system that was not facing up to the problems,
    where there was a huge gap between what people in public office said and
    what they did. And ever since I have been in Washington, I have been
    trying to change that. We've tried to give the economy some help by
    bringing the deficit down, getting interest rates down, getting the
    economy going again. We've had more private sector jobs come into this
    economy in the last 9 months than in the previous 4 years. We're
    beginning to turn it around.
        But I came here to talk about this trade agreement today for one
    simple reason: Every wealthy country in the world, including the United
    States, is having trouble creating jobs. Every wealthy country in the
    world in the last 10 years saw an increase in inequality. That is,
    middle class people's wages didn't keep up with inflation, while people
    who were particularly able to triumph in the global economy had their
    incomes go way up. So what had happened in America from World War II
    until about 10 or 15 years ago--which was we all got richer but we came
    together, the country was growing together--began to change, and we
    began to grow apart, so that a majority of our people were

    [[Page 1896]]

    working a longer work week for the same or lower wages to pay more for
    the basics in life, health care, housing, education. And I was concerned
    about that.
        We can bring the deficit down; we can get interest rates down; we
    can get investment back up. But there is nobody anywhere in the world
    who has come forward with a good argument for any way to create more
    jobs and raise the incomes of working people without expanding trade.
    You've got to have more people to buy more products if you want to have
    the benefits of all the increasing productivity.
        When we were coming here today, Mr. Mann said, ``You know, we're
    producing a new product, and the workers really figured out how to
    produce it. We have a new way of dealing with defects, and they figured
    out how to do that. We now have all this empty space in this factory
    because they figured out how to do more in less space and increase
    productivity.'' Well, if you want the benefits of that, you've got to
    have more people to buy the things that you're producing, because
    productivity is the same person producing more in less time, right? No
    wealthy country can create more jobs and increase incomes, I will say
    again, without expanding world trade and global economic growth. Nobody
    has explained how that gets done. And nobody fighting this trade
    agreement has made an argument about how that gets done. It cannot be
    done.
        About a half of the growth of our economy in the last 5 years has
    come from exports. Jobs that are tied to exports, on average, pay about
    17 percent more than jobs that have nothing to do with exports. We do
    have trade problems in America, but they aren't with Mexico. Five years
    ago we had a $5.6 billion trade deficit with Mexico. This year we're
    going to have a $5.5 billion trade surplus with Mexico. The Mexican
    people collectively bought over $40 billion worth of American products
    last year. We have a big trade deficit with our trading partners in
    Asia, and I'm working hard to do something about that. I'm going out to
    Washington State to meet with the leaders of all the Asian countries
    later this month. But we need to know that right here at home, on our
    border, there are people who like American products who are dying to buy
    them.
        Let me just give you one example: This company produces components
    that go into personal computers. Three years ago Mexico bought 120,000
    computers from us, last year 390,000, this year 600,000. There are 90
    million people there. This trade agreement, NAFTA, takes the tariff on
    computers and for software from 20 percent to zero. In other words,
    instead of 600,000 computers, we can be selling millions there. That's
    just one example. It will create jobs for us. Exports from Kentucky
    alone have grown 350 percent to Mexico over the last 5 years because
    they've been bringing their tariffs down.
        Now, if this trade agreement passes, NAFTA, we estimate America will
    add another 200,000 jobs by 1995 alone. Why? For the following reasons:
    Number one, our tariffs today on Mexican products are much lower than
    their tariffs on ours, so when they take theirs down we'll gain more.
    Number two, they have a lot of domestic content requirements, especially
    on automobiles. In other words, they say, ``If you want to sell them in
    the Mexican market you've got to make this stuff here.'' That alone,
    that change alone, we estimate will enable our autoworkers here in
    America to go from selling only 1,000 cars in Mexico to 50,000 to 60,000
    cars in Mexico next year alone. This is a big deal.
        Now, the people who are against this, what do they say? They say,
    ``You don't want to have a trade agreement with Mexico because look at
    all the jobs that went to Mexico in the 1980's because they had low
    wages and lax environmental enforcement. And all this will do is to make
    that happen everywhere in the country. It will be a disaster.''
        That one fellow talks about the giant sucking sound. Let me tell you
    something, folks. I know a little about this. I was a Governor of a
    State that lost plants to Mexico. My State was small enough that if
    somebody shut a plant down and moved it to Mexico, there was a good
    chance I knew who they were, the people that ran the plants, the people
    that worked in the plants. I used to go stand at plants on the last day
    they were open and shake hands with people when they walked off the job
    for the last time. I know something about that. And I want you to
    understand this very clearly from somebody who's lived through this:
    This agreement will make that less likely, not more likely. If we beat
    this NAFTA agreement, anybody who wants to go down to Mexico, right
    across the line, for low wages, for lax environmental enforcement, can
    go right on doing it and can make products there and put it back into
    the

    [[Page 1897]]

    American market with zero tariff as long as they're close enough to the
    border, if we beat it.
        If we adopt it, their tariffs will go down on our products; their
    requirements that we produce in their country to sell in their country
    will go down: less incentive to move factories there. They will get
    factories all over their country, not to import stuff to America but to
    produce for the Mexican market. That's what they get out of this.
        The short of it is everything bad that everybody tells you about
    with this agreement can go right on happening if we don't adopt it. If
    we do adopt it, it will get better. Why? Because wages will go up faster
    in Mexico if they adopt it, because they'll have more growth and because
    the trade agreement requires them to observe their own labor code, and
    the President has committed to raise the minimum wage every time
    economic growth goes up every year. Number two, for the first time their
    own environmental codes, which are pretty good on the books, will have
    to be enforced because they're in this trade agreement. This has never
    happened in the whole history of world trade where one country has said,
    you can put our environmental laws in the trade agreement and enforce
    them. We'll be able to do that.
        The third thing I want to say to you is that you know this here in
    Kentucky because you trade so much. Wage rates are not the only thing
    that determine where smart people put their plants. Otherwise there
    would be no plants at all in Kentucky, and Haiti would have no
    unemployment rate. Right? I mean, you don't even have to take the
    Americans' word for it. Look at where Toyota is. Pretty close to here,
    right? BMW, where are they? South Carolina. Mercedes just made a
    decision; where did they go? To Mexico? No, to Alabama. Why? Because a
    study recently concluded on the auto industry shows that you can
    manufacture a car in America and put it in an American showroom for over
    $400 less than you can manufacture it in Mexico and put it in an
    American showroom, because our workers are more than 5 times more
    productive, and the transportation cost is less, even though the labor
    costs are higher.
        We can compete and win. People talk all the time about the apparel
    industry because we phased out some of the protections on apparel and
    textiles. Do you know that we exported to Mexico $1.6 billion of
    textiles and apparels last year? We sent to them. They wanted to buy our
    stuff. Even there, we can compete when given the chance.
        Now, will some people be dislocated? Yes, they will. Some people
    will be dislocated if we do nothing. Every year, Americans lose their
    jobs. And one of the tough parts of the world economy we're living in is
    that now, unlike it was 10 or 20 years ago, when people lose their jobs,
    they don't normally get back the same job they lost. They normally have
    to find a new job. That means that we owe you, those of us who are in
    Washington, we owe you a system of education and training and investment
    incentives that will help people to find new jobs. We have to do that,
    and we are going to do that.
        The whole unemployment system today is a joke for the economy we're
    facing today. I know that, and I know we have to fix it. But that has to
    be done without regard to NAFTA. NAFTA creates jobs. NAFTA makes the
    problems we've got in our trade and investment with Mexico go down, not
    go up. NAFTA enables us--and this is the last point I want to make--
    NAFTA enables us to take this trade agreement with Mexico and extend it
    to other countries in Latin America who are democracies and believe in
    free market economics. And that's where the real jobs come in, when
    you've got a whole trading bloc from Canada all the way to the southern
    tip of Latin America, when you've got over 700 million people working
    together and trading together. And we know those people like Americans,
    like American products, and want to be a part of our future.
        It is our insurance policy. We hope that we will have a new trade
    agreement by the end of the year when all nations, from Asia to Europe
    and all around, lower their barriers to our products. We hope that. But
    we know the people in Latin America like our people, like our culture,
    like our products, will buy them if they get a chance, and are dying to
    do it. And they are going to look at Congress and how we vote on this
    NAFTA legislation, and they're going to decide whether America is going
    to be a trustworthy, reliable leader and partner in the years ahead to
    make this world what it ought to be.
        I have worked my heart out for this because I think it's good for
    your jobs and good for your children's future. And I don't think we can
    afford to cut and run. We cannot turn away

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    from the world. If I thought for a minute that we could run off from
    this agreement and all the others and build a wall around this country
    and make jobs stable again and raise incomes, well then I would
    certainly do it because it would be in your interest. But it won't
    happen. You cannot run and hide from the world we are living in. So we
    better just rear back and do exactly what this company's doing: We're
    going to have to compete and win. I think we can do it. This is a big
    vote.
        I compliment your Congressman for having the courage to be for this
    agreement. I hope you'll ask the other Members of the Kentucky
    delegation and the Senators to vote for it, because it will determine in
    large measure where we go as an economy over the next 10 years and
    whether we can escape this terrible trap that is gripping Japan and
    Europe and the United States of not being able to create enough jobs and
    not being able to raise people's incomes every year. We've got to turn
    it around. This is the first step, and I ask you to help us get it done.
        Thank you very much.
        We've got some microphones in the back. Who has the mikes? Raise
    your hands. Anybody have a question about this? There are some. Just go
    through and find people, and I'll go from mike to mike. Go ahead.

    [A participant asked if Mexico had similar tariffs on trade with the
    European Community and Asia and if Mexico might sign trade agreements
    with Europe and Asia if NAFTA did not pass.]

        The President. The answer to both questions is yes. And let me
    explain that. Let's just take computers because that's an easy example.
    If you take computers, there's a 20 percent tariff on all computers made
    outside of Mexico for sale in Mexico, on our products, on European
    products, on Japanese products. If this agreement goes through, the
    tariffs will be phased out on American products; they will maintain the
    same tariffs on Japanese and European products. So we will get a trade
    advantage over them in the Mexican market, in return for which they will
    get more access to American investment throughout their country.
        If we don't do it, what will happen? They'll go get the money from
    Japan or Europe, and they'll give them the same deal. And they won't be
    nearly as concerned as we have been at what effect this has on American
    wages and on the environment, because they don't live next door to
    Mexico. I mean, what would you do? If I were the Finance Minister of
    Japan, on the day after Congress voted down the North American Free
    Trade Agreement, I'd get on an airplane and go to Mexico City and cut a
    deal. That's what I would do. And the risk of that is very high.
        That's one reason why, in addition to these others--I should have
    said this in my talk--every living former President, every living former
    Secretary of State, every living former Secretary of the Treasury, every
    living Nobel Prize-winning economist, and 41 of the 50 Governors have
    endorsed this. You know, these economists, they disagree on more stuff
    than all the living former Presidents do. You might think any one of us
    would do something wrong to you, but surely not all of us would at the
    same time, right? [Laughter] And that's one reason.
        Next question.
        Q. Can NAFTA help improve exports to Japan and the European
    Community as well?
        The President. It can indirectly, and let me tell you why. That's a
    very good question, and it's important. Let me explain, first of all,
    from the point of view of these other nations that have basically caught
    up to the United States since World War II. That's not all bad; that's
    enabled them to buy more of our products. But in Asia, most nations have
    developed by willfully keeping their wages down, getting very high
    savings rates, plowing back the savings into new plant and equipment and
    new products all the time. That's what they've done. When you do that,
    you don't have enough money to buy other people's products.
        So Japan has a big trade surplus with us. They've been very good
    about investing in our country and putting our people to work, but they
    still don't buy as many of our products. This year, for the first time,
    we're selling some rice to them, for example, which is at least popular
    back where I come from. China has a $19 billion trade surplus with us--
    we buy 38 percent of all the exports of China, all of us do--Taiwan this
    year about $9 billion, although it goes up and down. Europe will have a
    trade deficit or a trade surplus with us. Sometimes they buy a lot more
    from us than they sell us, but they have to be growing to do it. Now
    their economies are flat.
        Here's what I think will happen. I can't prom-

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    ise you this, but here's what I think will happen. If we adopt NAFTA,
    the rest of the world, Europe and Japan will see, ``Well, America might
    have a whole trading bloc, from Canada down to the southern tip of South
    America, and we could be really at a disadvantage there. So we better
    adopt this new worldwide trading agreement they wanted, lower our
    tariffs, lower our barriers, let them sell into our markets so we'll
    have at least some access to the rest of the markets.''
        So I think NAFTA will be a huge indirect incentive for Japan and for
    Europe to reach an agreement on a new world trading system by the end of
    the year that I've been pushing for hard and that we've been working
    for, for years and years. If that happens, you will see a very large
    increase in the number of manufacturing jobs in America in a short time,
    just because Europe and Japan have so much more money than Mexico does.
    I mean, there's more of them, and they've got more money. So I think
    that would really be a godsend, and I think there's a good chance that
    it will happen.

    [A participant asked about programs to help displaced American workers.]

        The President. He said there's a big difference of opinion about
    what will happen in the long and the short run. Even if it's good for us
    in the long run, will we lose some jobs in the short run? What did we do
    for people who lost their jobs when I was in Arkansas? And what have we
    proposed to do with this NAFTA agreement? All good questions.
        First, let me say what I think will happen in the long and short
    run, then let me answer the other two questions. And this is a
    complicated thing. There will still be people from the United States who
    will vest in factories in Mexico if this agreement goes through. But
    today when people invest in factories in Mexico, they invest along the
    American border in factories for the purpose of producing there and
    selling here. What the Mexicans want is to, in effect, erase that
    borderline and get investments in Mexico City to put people to work
    there to produce for the Mexican market, not for the American market.
    That's what they get out of this deal. And obviously, the more
    investment they get down there and the more jobs that are created and
    the more they sell to themselves, the higher their incomes will be and
    the more they'll be able to spend money on foreign products, too.
        Today--this is an astonishing thing--Mexico buys more American
    products per capita than any country in the world except Canada, even
    though it's still a poor country. That's because 70 percent of all the
    money they have to spend on foreign products gets spent on American
    products. So what I think will happen is, there will be more investment
    by Americans in Mexico, but instead of being along the border to make
    products to sell back here, it will be down in the country to make
    products to sell in the country. That will put more people to work. It
    will stabilize the population. Over the long run it will reduce illegal
    immigration and will increase their ability to buy our products.
        Now, will some people be dislocated? Probably, because nearly every
    trade agreement that creates jobs costs some. When that happened at
    home, what we did was several things. First of all, we'd go into a
    community if it had high unemployment and actually offer to invest money
    at the State level to help attract new industries to that town. Then we
    would offer to share the cost of training the workers. And if it was a
    distressed community, we would also give them an enterprise zone that
    would give extra tax incentives to invest there.
        What we're doing at the national level is to provide much more money
    for job retraining, number one. Number two, we're going to set up a
    development bank to try to get funds for indigenous businesses to start
    in areas that have been hurt by this, which I think is very important.
    And number three, we're going to have something we now--we don't call
    them enterprise zones, we call them empowerment zones at the Federal
    level--that we're going to locate in some of the most distressed
    communities in this country that will give huge incentives for people in
    the private sector to put Americans back to work in high unemployment
    areas. There is not enough Government money to fix all these problems.
    You've got to get the private sector to invest and put people back to
    work. So those are the three things we're working on doing now. That's a
    very good question.
        Q. Since this is basically an extension of the U.S.-Canada trade
    agreement, what numerical benefits has the U.S. gained from the U.S.-
    Canadian trade agreement?
        The President. Well, the trade agreement we have with Canada is--it
    is an extension of it, but what we did with Canada was to basically

    [[Page 1900]]

    take more and more of our trade and put it into a free trade zone, that
    is, we took quotas off, we lowered tariffs. But Canada and the United
    States are both quite well-developed countries. So the main benefit that
    we got out of the Canada-U.S. trade agreement is we got to sell more of
    the things that we were really good at producing or had a low cost
    advantage in, they got to sell more of what they were good at producing
    or had a low cost advantage in, so that we essentially got to play to
    our strengths. And the volume in trade in both countries went way up.
        Our trade with Canada is more or less in balance. But even when
    trade is in balance, it can be a great benefit to both countries if, by
    putting it in balance, it grows faster than your economy would have
    grown otherwise. In other words, if we added more economic growth and
    they added more economic growth, we both came out ahead. And that's been
    the primary benefit there.
        In the case of Mexico, because they're at a different point in their
    development, in all probability we will continue to have a trade surplus
    with them, and they will get an investment advantage from us in the rest
    of their country. So I do think that the two countries are not too
    analogous now. I think 30 years from now they will be. But I think in
    the meanwhile--let me just say, the people in Mexico who are not for
    this deal, and there are people in Mexico who are not for it, they're
    not for it because they think that they're giving us a permanent trade
    surplus with them in return for having access to our capital, because
    Mexicans like American products so much.
        So there will be a difference there. In other words, they can't
    possibly quite enter into the same relationship with us that Canada did
    because they're not capable, their economy's not big enough or diverse
    enough yet. The Mexican economy, even though 90 million people live
    there, is about the size of the California economy from Los Angeles to
    the Mexican border. That's about how big it is, about one-twentieth the
    American economy.
        Q. Good afternoon, Mr. President. Thank you for coming to Lexmark.
    We certainly appreciate it. I'd like to take us into the future, say,
    maybe 1996, the month October, Hillary is ahead by maybe five points in
    the--no, I understand that you'll be running for reelection; hopefully,
    Congressman Baesler will be right there with you.
        The President. I don't know; this has turned out to be a hard job.
    [Laughter] Go ahead.

    [The participant then asked about possible legislation to help displaced
    workers.]

        The President. The people who are specifically displaced, there are
    only three things you can do for them in my opinion, that I can think
    of, anyway. And I've been working at this now for the better part of 20
    years, on and off. One is, they should have access to a system of
    training and education that is much more effective than the one we have
    today. The Federal Government's got 150 different employment training
    programs. The unemployment system, as all of you know, still works like
    it used to: You get an unemployment check, and you're supposed to
    basically check around and see if you can find a new job. But the idea
    is, people wait until the benefits run out, hoping their old employer
    will call them back. That used to happen; it doesn't happen much
    anymore. What we're going to do is to construct a system that will give
    anybody who loses their job because of a trade-related dislocation
    access to a much better training program, much more quickly, tied to
    identifying those areas where the jobs are growing in number anywhere
    within driving distance of them, first thing.
        Secondly, we're going to have a development bank, a North American
    development bank which will concentrate its activities in areas where
    there have been substantial job losses to try to start new job
    enterprises there.
        The third thing we're going to do is to develop special investment
    incentives targeted to those areas where the jobs have been lost. Those
    are the only things that I can think of that we can do, except to give
    you a healthy economy that's producing more jobs.
        One of the things that makes this so frightening to people is that
    it used to be--I mean, when I was a kid, when somebody lost their job,
    when the country had a 3 percent unemployment rate, that was like having
    zero unemployment, because there were 3 percent of the people who were
    moving around all the time. Now when people lose their jobs, they're
    afraid they'll never get another one or they'll never get another one
    paying as much as the one that they just lost. So we have a much heavier
    responsibility.
        The answer to your question is that you should be able to see these
    specific programs

    [[Page 1901]]

    on the books not by October of '96 but by the end of the budget cycle in
    '94; we should have passed these programs and put them in place for
    those folks, because that's when you'll begin to see it. In other words,
    when we adopt the trade agreement the end of this year, we have $90
    million set aside right now for extra training investment for those
    folks in the short run, to buy us a year and a half to enact a new
    training program and investment strategy. But we should be able to get
    it done by the end of '94 when Congress goes home; that's our goal. And
    if I could plug my wife a bit, if we provide health care security to all
    of them, that'll also be a huge incentive, because then at least they
    won't lose that for their children.
        Q. Welcome to Lexmark, Mr. President. My question is, do you have
    any concerns, if there are any concerns, about Canada's recent
    leadership change being--and it is an anti-NAFTA leadership change. Are
    you concerned about that?
        The President. Basically, no. We've had a lot of conversations with
    the new leader of Canada and the new party. He raised a lot of the same
    questions about NAFTA that I did. And when I called him--I mean, what I
    wanted to do with this trade agreement, and I guess I ought to tell you
    that, I wanted to have three things added to the agreement, which have
    been added. One is, I wanted to know that there would be some device by
    which we could make sure the Mexicans were moving to enforce their own
    labor code so that we would raise labor standards on both sides of the
    border. We have that now.
        Secondly, I wanted to know that they would enforce their
    environmental laws, because they weren't now. Their environmental code
    is actually pretty good, but it's not being enforced. So we set up a
    mechanism for doing that and a financing mechanism to get the money to
    do it.
        The third thing I wanted was a provision that would take account of
    unintended consequences. And that really goes to something that two or
    three of you have asked about. That is, suppose all these brilliant
    people who have been negotiating this turn out to be wrong about
    something, not just for us but for them, too? I mean, suppose within a
    year after this deal takes effect, there's some small but not
    insignificant part of their economy or ours that seems to be on the
    verge of just vanishing like that, something no one foresaw? This
    agreement has a provision to put the brakes on that and to reinstitute
    the former system as it applies to that sector of the economy for a
    period of 3 years while we work it out. So there's a protection against
    unintended consequences.
        And the last thing I guess I ought to say is, suppose any party
    becomes convinced that the others are proceeding in bad faith; you can
    pull out with 6 months notice. That's another thing most Americans don't
    know. This is not the enemy. In other words, if somebody turns out to be
    lying or some development turns out to be unanticipated, there are ways
    to correct this.
        Now, to go back to your specific question, Canada likes what we did
    on the environmental agreement, on the labor agreement; they wanted that
    done. They now have substantially, to the best of my knowledge, no more
    problems with Mexico. They have some outstanding problems with us in
    trade, which we are negotiating through now. We do not believe that it
    will be in any way necessary to reopen the agreement to resolve those
    problems, and we're working hard on them and we have been this week. So
    I feel pretty optimistic that it'll be okay.
        Let's get over here. Give equal time to the other folks here.
        Q. Mr. President, many Americans and American companies are
    concerned with intellectual property rights, and particularly in the
    Mexican market. Has there been any provision in NAFTA to address that?
        The President. Yes. The NAFTA agreement offers protections for
    intellectual property rights and for investment, which I think are quite
    important. You know, the intellectual property rights may sound esoteric
    to some of you, may sound like somebody wants to write a book and not
    have it copied, and that's part of it. But it's also part of the
    software business and part of anything that comes out of people's
    creative skills. It's a big part of America's economic advantage in the
    world is that we develop all these ideas.
        And I've just been working to try to open other markets for a lot of
    our products that were closed during the cold war because we were
    worried about letting other people get our technology or our ideas. And
    we've just taken the wraps off $37 billion a year worth of computers,
    supercomputers, and telecommunications equipment. And we're looking at
    some others,

    [[Page 1902]]

    some software and things like that. And one of the problems is
    protecting the intellectual property rights of our people around the
    world. But I think you will find that the provisions there on
    intellectual property substantially improve what happens now there.
        Q. Mr. President, I haven't seen too many things in my life that
    Republicans and Democrats have agreed on. You may have noticed some of
    that in Washington. Doesn't it scare you when your opponents suddenly
    become friendly? And also, are there some human rights demands in this
    thing?
        The President. He's worried about the agreement because the
    Republicans and Democrats agree on it, right?
        Let me just say, first of all, back when I was a Governor I had much
    less partisanship to contend with than I do in Washington. It seems to
    be a disease that grips the water up there. But I think what happens, I
    think all these people who have served as President, when they get out
    and they have no other personal agenda really, by and large, and they
    look on their country and they look at the rest of the world, and most
    people, after they've been President and they can't run for anything
    else or do much else in terms of their personal ambition or politically,
    I think that they really are saying what they honestly believe to be in
    the best interests of the country.
        Now, there are a lot of people who have criticized the NAFTA
    agreement, coming out of the labor movement, particularly, on the
    grounds that there are violations of human rights in Mexico or the
    Mexican system is not as democratic as ours is. It is different from
    ours and not as open and democratic as ours is. But it is becoming more
    democratic. Again, I think if we shut them off from us, it is likely to
    become less democratic.
        We do a lot of trade with a lot of other countries that are not as
    close to us politically as they are. I mean, we've had a lot of
    political problems, for example, with China after Tiananmen Square. But
    we keep buying a lot of products from them, and most American business
    interests have asked us to continue to do it. And many American labor
    interests have asked us to continue to do it because we're beginning to
    invest over there and get some markets over there.
        I think we have to be mindful of that. And if we think that there
    are abuses of human rights anywhere, we should stand up to them. And
    I've tried to do that. But I don't think, given the dramatic
    improvements in the people who, on that score, who are operating in
    Mexico in the last several years, I don't think that that's a good
    argument to run away from this trade agreement.
        That is, to me, the Salinas government and the man who was there
    before him started a move away from their anti-American, single-party,
    hunker-down, isolate-from-the world, operate-in-ways-that-we-don't-
    consider-acceptable system, to one that's more pro-American, more open,
    and more democratic. I think they are moving in our direction. I think
    if we reject them, they will develop a different strategy, and it'll
    make it less likely that they will grow in human rights and democracy
    observance.
        Q. It's been estimated that this is going to require $2.4 billion in
    funding over the next 5 years. How do your propose that we generate that
    funding?
        The President. I don't think it will. What will it require the money
    for? What's the money going to be spent on? They keep throwing these
    dollars around. What money will be required?
        Q. The lack of tariffs, what we're charging on tariffs now, funding
    for the programs that would be for the displaced jobs, et cetera.
        The President. Over the next 5 years, I'll tell you what I think it
    will cost. The tariffs are a tax, essentially, and we're going to reduce
    the tariffs; that costs $2.5 billion over 5 years. The package that we
    sent up to the Congress will replace those tariffs by having a temporary
    fee of $1.50 on foreign travel, air travel coming into the United
    States, and by changing some of the ways we collect customs and things
    of that kind. They will make up the $2.5 billion.
        Then, we think that the training programs will cost about $90
    million in the first year, and then thereafter more. But they will be
    funded next year in the budget cycle, in the ordinary course of planning
    the Federal budget, not massive amounts.
        On the environmental cost, we've now got an agreement with the World
    Bank to finance through appropriate loans several billion dollars' worth
    of environmental cleanup in Mexico which will be paid back presumably by
    the polluters themselves in Mexico; they have to work out the repayment
    terms.
        Now, that will be the lion's share of it. There may be some
    environmental obligations on us

    [[Page 1903]]

    that are not yet fully paid for, but they won't get up to anywhere near
    the figure you mentioned. And we have a border commission with some
    money in the till there, a few hundred million dollars, and some other
    bonding options that we have to fund the environmental costs. So we've
    covered the loss of tariffs in the bill now before the Congress, the
    training programs will be covered as part of the training initiative I
    present to the Congress next year, and the only other issue we have to
    worry about is whatever comes up over the next 5 years in environmental
    costs that we have to pay for in America; that is usually done by asking
    the people who do the pollution to pay the lion's share of cleaning it
    up through making bond payments. So I think we're going to be okay on
    that.
        A lot of the costs have been way overstated, in my view, based on
    what we know.
        Marvin Mann. I hesitate to interrupt this important discussion, but
    we here at Lexmark have a serious problem.
        The President. You've got to go back to work? [Laughter]
        Mr. Mann. Our laser printers are so hot in the marketplace that
    people want more of them than we can build. And so these people are
    going to be mad at me. They're going to be upset at me if I don't let
    them get back to work soon. [Laughter] So please take one more question,
    and then we probably ought to close.
        Q. It's my understanding that some tariffs will still be in place
    after the agreement comes into effect. My question is what percentage of
    goods going each way will still have tariffs on them immediately after,
    and then after 5 years?
        The President. Most of them will be all gone after 5 years. I can't
    answer that, but I'll get you an answer. If you give me your address,
    I'll sent you a specific answer to it.
        Let me tell you, this was a part of the negotiation, but some of the
    particularly sensitive items that were clearly felt by one side or the
    other to need a longer period of time to get to where they could fully
    compete were given more time. There are a few things where the phaseout
    goes all the way to 7 years or 10 years. But by and large, there are
    substantial reductions in the tariffs immediately, and almost all the
    reductions occur within the first 3 years.
        And let me just back up and say, while the products that we've
    mentioned here, and I think all the products that are produced by any of
    these folks at these five companies that could be sold into Mexico, have
    a 20 percent tariff, some Mexican products are less. And the average
    Mexican tariff is just a little over 10 percent. But a lot of the stuff
    where we've got real hot opportunities, that's a 20 percent tariff. So
    that's why I've been so interested in them. Our average tariff on their
    products is 4 percent.
        Where there is a longer phaseout period, it's normally because we
    have something called a nontariff barrier, that is, an absolute limit on
    how much can come in. That's normally on textiles and apparel. So
    there's a longer period of phaseout there to make sure that there's more
    of an opportunity to adjust to whatever the competitive developments
    are, so that we don't just throw cold water on them.
        I wish I could stay all day. You guys have been great. I hope you
    will support this. It means more jobs for this country.
        And also, don't forget, one of the things I want to emphasize again,
    it didn't come up in the questions. When I was at the United Nations a
    few weeks ago, I had a reception for the leaders of all the other Latin
    American countries who were there. And I can tell you that Argentina and
    Chile and Venezuela and Colombia and Bolivia and a lot of other
    countries that are struggling to maintain democracy want to open up
    markets with us, and they want to buy our products. Tiny Colombia, in
    the last 2 years, has increased their purchase of American products by
    69 to 64 percent a year. This is a big deal. But if we don't do NAFTA,
    they'll wonder whether we're really serious about embracing all of Latin
    America.
        Again, I say I hope you will support it. I do believe that it will
    give us in the short term a competitive advantage over the Europeans and
    the Japanese. But the most important thing is it will pressure them to
    adopt a new worldwide trade agreement. American workers are now the most
    productive in the world. You've got to believe in yourselves. We can do
    this. We can compete. We can win if we have access to the markets.
    That's what this gives us.
        Thank you very much. We need your help.

    Note: The President spoke at 1:45 p.m. on the production floor. He was
    introduced by employee Roberta Canady. In his remarks, he referred to
    Marvin L. Mann, president and chief executive officer, Lexmark
    International, Inc. A portion of the question-and-answer session could
    not be verified because the tape was incomplete.