    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [November 9, 1993]
    [Pages 1933-1939]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on Endorsements of the North American Free Trade Agreement
    November 9, 1993

        The President. Thank you. Thank you very much for being here. After
    what David and Kathleen said, I'm not sure there's much left for me to
    say. I thought they were terrific, and

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    I thank them for coming, for what they said, and for putting this issue
    squarely where it ought to be: on the questions of jobs and opportunity
    for the American people.
        We asked you to come here today in the hope that together you would
    help us to pass the NAFTA legislation through Congress, and that if you
    have questions about this you could ask them. So I want to basically
    spend this time to open the floor to questions to you. But I would like
    to make just a few remarks if I might by way of introduction.
        First of all, it's important to put this NAFTA agreement into the
    larger context of our Nation's economic strategy. And it's important
    that I at least tell you from my point of view how it fits. Our Nation
    is a churning cauldron of economic activity now, with a lot of
    opportunity being created and a lot of hardship being developed at the
    same time. The world is changing very rapidly. The American economy is
    changing very rapidly. For 20 years the wages of the bottom 60 percent
    of our work force, more or less, have been stagnant as people work
    harder for the same or lower wages. We know that over the last 20 years,
    as we've become more and more enmeshed in the global economy, the jobs
    have been changing more rapidly. We know now that when a person loses a
    job, for example, usually a person will find another job, but it's not
    the same old job. It used to be the normal course of events was you'd
    have a lay-off, but you wouldn't just lose a job. Those things are all
    changing now.
        We know that through the discipline of the market economy our
    productivity now is the highest in the world again in manufacturing and
    in many other areas. But we also know that there's been a whole lot of
    reduction of employment in many areas to get that higher productivity,
    with fewer people producing more output. So this is a time of enormous
    opportunity and enormous insecurity. We have to have a full-court-press,
    comprehensive economic strategy to achieve what should be the objective
    of every American, more jobs and higher growth rates.
        In our administration, we began with trying to get the deficit down,
    trying to drive interest rates down, and trying to keep inflation down.
    Those historically low interest rates have led to literally millions and
    millions of people refinancing their home mortgages, refinancing their
    business debt, increasing investment in our country. The result has been
    that even though we don't have as many jobs as we'd like, the private
    sector has produced more jobs in the last 10 months than in the previous
    4 years. And if we can keep interest rates and inflation down and
    investment up, we're going to have more and more and more growth. That's
    encouraging.
        The last budget bill provided special tax incentives for people to
    invest in new and small enterprises where most of the new jobs are being
    created. Extended research and development tax credits provided for
    extra incentives to convert from these defense technologies to domestic
    technologies. We recently took $37 billion worth of high-tech equipment
    off the restriction list for export so we could put American products
    into play in the global economy.
        But with all of that, no one has shown how a wealthy country can
    grow wealthier and create more jobs unless there is global economic
    growth through trade. There is simply no evidence that you can do it any
    other way. About half America's growth in the last 7 years has come from
    trade growth. And the jobs that are tied to trade, on average, pay about
    17 percent more than jobs which are totally within the American economy,
    so that it is impossible for all these other strategies to succeed--if
    by success you mean creating more jobs, more growth, and higher
    incomes--unless there is a level of global economic growth financed
    through expanded trade that Americans can take advantage of. We can't
    get there.
        So that brings us to NAFTA, and how does it fit, and why should we
    do it. This agreement will, as all of you know, lower American tariffs
    but will lower Mexican tariffs and trade barriers more than American
    tariffs, because ours are lower anyway. This agreement will help us to
    gain access to a market of 90 million people, which has shown a
    preference for American products unprecedented in all the world. Seventy
    percent of all the purchases by Mexican consumers of foreign products go
    to American products. This agreement will unite Canada, Mexico, and the
    United States in a huge trading bloc which will enable us to grow and
    move together.
        This agreement will also--and this is very important--produce most
    of its jobs by enabling us to use the Mexican precedent to go into the
    whole rest of Latin America, to have a trading bloc of well over 700
    million people, and will also--and I see some of you in this audi-

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    ence I know who are interested in this--this agreement, if adopted by
    the Congress, will increase the leverage that I, as your President, will
    have to get an agreement on the world trade round, the GATT round, this
    year with Europe and with Japan and with the other nations involved
    because they will see, ``Well, we want access to that big Latin American
    market, and the way to do it is to adopt a world trade agreement. We
    don't want America to have an overwhelming preferential treatment in
    Mexico and other countries, so we'll have to give them more access to
    our markets in Europe and Asia.''
        It will also make a statement that America intends to go charging
    into the 21st century still believing we can compete and win and that we
    intend to lead the world in expanding horizons, not in hunkering down.
    And believe you me, no one knows quite which way it will go. This is why
    the NAFTA agreement has acquired a symbolic and larger significance even
    than the terms of the agreement, because we know that if the United
    States turns away from open markets and more trade and competition, how
    can we then say to the Europeans and the Japanese they must open their
    markets to us, they must continue to expand? So the stakes here are very
    large indeed.
        Now, let's deal with the arguments against NAFTA. The people who are
    against it say that if this agreement passes, more irresponsible
    American companies will shut their doors in America and open doors in
    Mexico because the costs are cheaper and this agreement allows them to
    do that all over the country. To that I answer the following: Number
    one, I was the Governor of a State for 12 years that had almost 22
    percent of its work force in manufacturing. I saw plants close and go to
    Mexico, brought one back before I left office. I know why they did it. I
    know how they did it. I understand the pressures, particularly on the
    lower wage companies with low margins of profit.
        But my answer to you is, there is the maquilladora system now in
    practice in Mexico. If anybody wants to go down there to produce for the
    American market, they can do that now. And if we defeat NAFTA, they can
    continue to do that, and it will be more likely that they will do that.
    Why? This is the nub of the argument: Because clearly, with the
    agreements we have on labor committing Mexico to enforce its own labor
    code and make that a part of an international commission on the
    environment, clearly, we're going to raise the cost of production in
    Mexico. Clearly, when Mexico lowers its domestic content requirement on
    automobiles, for example, we'll be able to go from 1,000 to 60,000
    American-made cars sold in Mexico next year. There will be less
    incentive to go to Mexico to produce for the American market, less
    incentive, not more.
        What does Mexico get out of this then? What they get out of it is
    they have 90 million people there now producing for themselves. What
    they want is American investment in Mexico to hire Mexicans to produce
    goods and services for Mexicans so they can grow their economy from
    within. Is that bad for us? No, that's good for us. Why? Because the
    more people down there who have jobs and the better the jobs are, the
    more they can buy American products and the less they will feel a
    compulsion to become part of America's large immigration problem today.
    So that is good for us.
        This is very important. I would never knowingly do anything to hurt
    the job market in America. I have spent my entire life, public life,
    trying to deal with the economic problems of ordinary people. I ran for
    this job to alleviate the insecurity, the anxiety, the anger, the
    frustration of ordinary Americans.
        Tonight there will be a debate that a few people will watch on
    television in which, with a lot of rhetoric, the attempt will be made to
    characterize this administration as representing elite corporate
    interests and our opponent as representing the ordinary working people.
    Let me tell you something, this lady, I wish she were going to be on the
    debate against Mr. Perot tonight. He wouldn't have much of a shot
    against her because she so obviously disproves the argument. This is a
    debate about what is best for ordinary Americans.
        Look around this room. The rest of us are going to do fine, aren't
    we? Let's not kid ourselves. If this thing were to go down, everybody in
    this room would figure out some way to be all right. That's true, isn't
    it? I mean, most of you are here as influence centers in your
    congressional district because you'll figure out a way to land on your
    feet. Unless the whole country goes down the tubes, most of you will
    figure out a way to be innovative and work around whatever the rules
    are. We are doing this because it allows our country as a whole to
    expand, to grow, to broaden its horizons, the people

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    who can't be here.
        You know, it's an amazing thing. Again I will say, the resentments,
    the hurts, the anxieties, the fears that have been poured into this
    debate are real and legitimate and deserve a response. And we should all
    recognize that. You just think how people feel when they've worked for
    20 years and they get a pink slip, and they're just treated like a
    disposable can of soda pop. I mean, this is a tough deal. Think about
    the Members of Congress that are being asked to vote for this agreement
    when they've got 15 percent, 20 percent unemployment in their districts
    and they represent these big inner-city neighborhoods or these big,
    distressed rural areas where there's no investment going into their
    areas. There are legitimate problems out there.
        What is wrong is that they have made NAFTA the receptacle of their
    resentment instead of seeing it as one step toward alleviating the
    problem. And that is my point, not that there's anything wrong with the
    worries and the fears and the hurts that are brought to this table but
    that this country has never, never run from competition, except one
    time, and it helped to bring on the Great Depression. And with every
    evolutionary stage of the global economy in this century, we have always
    led the effort to broaden opportunity and always welcomed the rigor of
    competition and felt that we could do it. And we have got to do that
    again.
        So I ask you as earnestly as I can to remember that you are speaking
    for the very people who may think they're arguing against this. This is
    about what's going to happen to our country. There is no evidence, I
    will say again, there is no evidence anywhere in the world that you can
    create jobs, raise income, and promote growth in an already wealthy
    country unless there is global growth, financed and fueled through
    expanded trade. There is simply no evidence for it.
        I want to go out to meet with the President of China and the Prime
    Minister of Japan and the heads of all of those Asian countries and tell
    them we're happy to buy their products, they ought to buy more of ours,
    and they need to stimulate their economy. I want to go to the Europeans
    and say, ``Okay, give us the world trade agreement. You don't have to
    hunker down and close up. You can expand, and we'll do it together.''
    But if we don't do this with our closest neighbor, it's going to be hard
    for us to have the credibility to make the case for the world.
        Thank you very much.
        Q. Mr. President, one of the concerns of the United States, as
    you're well aware, concerns the potential for job loss. We've all heard
    how the passage of NAFTA will create job loss in the United States. I'd
    like to share with you a different view, and that is that the passage of
    NAFTA will actually create jobs. I'm with the World Trade Center
    Association, and we're actually inundated by requests from our Pacific
    rim members, asking us to identify locations in the United States where,
    after NAFTA is passed, they can come in and build industry to protect
    their market share in the United States. They see NAFTA as taking jobs
    away from the Pacific basin, and they want to be able to counter that by
    coming over to the United States and actually building industry to
    satisfy this market share.
        The President. That's a good point. You all heard what he said,
    didn't you? He just said that he's with the World Trade Center, and he
    gets a lot of requests for information about sites in the United States
    where people in Asia would look at putting up operations to protect
    their share of the American market if NAFTA passes.
        Let me give you another example, more indirect, something I think
    you'll see a lot of. Mattel toy factory announced that they would in all
    probability move an operation from China to Mexico and buy all their
    products of plastic from the United States instead of from Asia. So
    there will be an indirect job benefit there. But there are millions of
    these things; it's incalculable. That's what always happens if you
    decide you're going to expand opportunity and growth and then let the
    ingenuity of the marketplace work for the interest of ordinary people.
        Let me just say one thing about that. Every major study but one has
    predicted a job gain for NAFTA in the United States. And the major study
    that predicted a job loss predicted it in large measure because they
    estimated that there would be fewer immigrants coming into this country
    and taking jobs here as a result of it. So that still may not be a net
    increase in unemployment. All the others estimated net job gains.
        Now, there obviously will be people who lose their jobs, as there
    are today. We're talking net. When somebody says there's a net job gain
    of 200,000, you say, ``Well, if you gain 210 and

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    lose 10, the 10 who lose feel more pain than the 210 who gain,
    arguably.'' What does that mean? That means that this administration has
    an obligation, and the Congress, I want to emphasize has an obligation
    and the business community has an obligation to support a legitimate
    strategy for retraining all these workers at a high level of quality in
    a relevant way and developing a strategy for investment across this
    country. That is what we're working on. That's what we're going to give
    the working people.
        The other point that needs to be made is there is no power to
    protect the people of this country from the changes sweeping through the
    global economy. I mean, the average 18-year-old is going to change work
    eight times in a lifetime anyway, whatever we do. But we do have an
    obligation to help them, those who are in difficulty, and we will meet
    that obligation.
        Q. Thank you, Mr. President. As an African-American, I have a basic
    question. As you know, historically, African-Americans have experienced
    high unemployment, lower pay. In fact, we created the phrase, ``Last
    hired, first fired.'' I would further suggest to you that we're probably
    the most vulnerable members of this society. Given those set of facts, I
    would like to hear your response to why African-Americans, in general,
    and African-American politicians should support NAFTA.
        The President. African-Americans, in general, and African-American
    politicians should support NAFTA, first of all, because it means more
    jobs. Secondly, as we found when we had our products fair here, it means
    opportunities for a lot of small businesses. As Ms. Kaminiski said,
    there will be tens of thousands of small businesses who will be--and
    minority entrepreneurs, by and large, are smaller businesses. They
    should support it because anything that increases the job base of
    America will help; and finally because, even though this gentleman is
    from Utah, most of the big service industries that will expand their job
    base in America because of the opportunities in Mexico are located in
    larger cities and have a substantial percentage of their hires coming
    from the minority community.
        And having said that, let me make one other point. That will not
    solve all the problems. We've got a crime bill. We've got to have a
    family strategy. We've got to have a whole economic strategy for the
    distressed areas of this country. We have to have a reemployment system
    instead of the unemployment system we've got. It will not answer all of
    the problems. But it is not an argument to vote against NAFTA that it
    doesn't solve every problem. In other words, that's what the other
    side's done. They've loaded all of the problems of the 1980's onto this
    NAFTA vote, which actually makes them better. We don't want to get in a
    position of overclaiming for it. This doesn't solve all of the problems
    of the American economy, but it does solve substantial ones that ought
    to be addressed.
        Q. Mr. President, I'm from Texas, and I'm very concerned about the
    environment on the border. How will NAFTA affect the borders?
        The President. It will improve the environment on the border. That's
    why we've gotten so many environmental organizations to endorse this.
    Not all the environmental groups are for it, but most of the
    environmental groups that are against it are against it for something
    that often happens to progressives: They're making the perfect, the
    enemy of the good. That is, they think it ought to be better, but it's
    very good.
        This agreement, first of all, requires every nation to enforce its
    own environmental laws and can make the failure to do so the subject of
    a complaint through the trade system. Secondly, to support this
    agreement, the World Bank has committed about $2 billion in financing,
    and we have agreed to set up a North American development bank to have
    $2 to $3 billion worth of infrastructure projects in the beginning on
    both sides of the border.
        So there are substantial environmental problems associated with
    maquilladora operations, substantial. They are significant; they are
    real. They affect Mexicans; they affect Americans. If this trade
    agreement passes, this will be the most sweeping environmental
    protection ever to be part of a trade agreement, and it will make the
    environment better, not worse. And by the way, it will create jobs for a
    lot of people on both sides of the border in cleaning up the
    environment, jobs that won't happen and environmental clean-up that
    won't happen if we vote it down.
        Q. Mr. President, I'm a manufacturer from the great State of
    Arkansas. Is there anything in the agreement that's going to keep China
    from putting in a factory and importing into Mexico and then turning the
    goods right straight back to us?
        The President. There is nothing in the agree-

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    ment that will prohibit other countries from actually hiring people, but
    there are rules of origin. What we do have protection against, and what
    we are actually strengthening now, is using Mexico as a way station to
    get around, like, the multifiber agreement, which provides a lot of
    protection to our apparel manufacturers. All the agriculture people are
    concerned about it, too. Everybody is concerned about the fact that if--
    well, let me back up, and for the benefit of everybody else, let me say
    this: Most of the trade restrictions that Mexico has and most of the
    restrictions we have on them are in the form of tariffs. Our tariffs
    don't amount to much; they're 4 percent. Mexican tariffs run between 10
    to 20, by and large. They amount to much more. So we get a huge break on
    the tariff thing.
        In the case of apparels and one or two other things, including some
    agricultural products, there are nontariff restrictions, like the
    multifiber agreement, that will give Mexico some greater access to the
    American market in apparels. The real problem there would be--but it's
    done over a 10-year period, as you know, it's phased in gradually over a
    10-year period. The real legitimate problem would be, is if Mexico
    becomes a transshipment point for either beef, for jackets, for
    anything. And I want to be candid here: One of our big challenges is
    going to be to make sure that we have enough customs officials to stop
    the abuses that might happen in transshipment in agricultural and in the
    manufacturing sectors of our economy that are protected by things other
    than tariffs. We are working right now on setting up a special customs
    department section to do nothing but that. And I think we'll be able to
    satisfy the American people about it.
        Let me make one other comment about that. There is a big incentive
    for Mexico not to let its country become a transshipment point, which is
    that under this agreement anybody who wants to can withdraw from it with
    6 months notice. There's another big incentive in this agreement that
    almost no one has talked about. The term of art is called ``surge.'' But
    basically what it means is, under this agreement, if there is an
    unanticipated adverse impact, bad impact on some sector of our economy
    or the Mexican economy, either side can raise that and say, ``Listen, we
    talked this through, nobody anticipated this happening; this is
    terrible.'' And that portion of the economy can, in effect, be shielded
    for a period of 3 years while we work that out.
        So there are some good protections built in here from both our side
    and from their side against adverse reactions. Again, fairly unique
    things, but we owe you a good customs section, and we're doing our best
    to set it up.
        Q. Mr. President, I'll try not to make this sound like a speech, but
    we've been weaving fabrics in central Pennsylvania since 1896. We have
    fifth-generation employees. I have been courted by the State of
    Mississippi to move there for years, but we're not going to; we're
    staying in Pennsylvania. My people have suffered job loss because of
    flawed trade policy for many, many years. They understand that NAFTA is
    the first trade policy that opens markets for us. They understand the
    security that that brings. And I've committed to them to bring back some
    of those jobs we lost when Congress approves NAFTA on the 17th or
    whenever they make up their minds to do so. So thank you.
        The President. Good for you. Thank you.
        Let me just say, I want to emphasize this. The evidence is, the
    evidence is clear: We have seen a productivity increase in the American
    manufacturing sector at 4 and 5 percent a year for more than a decade
    now. You'd have to look real hard to see any example like that of
    economic improvement of performance.
        Now, why didn't it manifest itself in economic growth? Because one
    way we got more productive was we used more machines and fewer people,
    we used more technology, and it takes time for those kinds of changes to
    manifest themselves in economic opportunity. But you just heard him make
    the point: The only way you can be both productive and expand your
    employment base is if you got more people to buy your stuff, which means
    you either have to raise the incomes of the jobs of the people in your
    own country. And even when you do that, if you're a wealthy country,
    it's not enough, you have to have global markets.
        I really appreciate what you said, sir.
        I can take one more, I think.
        Q. Mr. President, will NAFTA allow for labor organizations to--
    [inaudible]--its support, or help labor organizations move into Mexico
    and bring the standard of the Mexican labor up?
        The President. Well, let me tell you, let me answer the question
    this way: NAFTA requires Mexico and the United States and Canada to

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    follow their own labor laws. Mexico has a very good labor code on the
    book. But President Salinas would be the first one to tell you, it has
    been widely ignored. The Salinas government has also promised, in
    addition--but let me just explain what this means. It means that if
    there is evidence that they are violating their own labor laws, that
    that can be the subject of a trade complaint and can be worked through
    the trade system just like putting up a trade barrier.
        There is no precedent; no trade agreement has ever done this before.
    I know a lot of my friends in labor say, ``Well, it ought to be
    stronger. It ought to have this, that, and that other thing.'' There has
    never been a country ever willing to subject its labor code to trade
    sanctions before, never happened. So I think it's a pretty good first
    step.
        The other thing they've agreed to do is to raise their minimum wage
    on at least an annual basis as their economy grows. And their wage
    structure works just like ours: When you raise the minimum wage, it
    bumps up through the whole system. And their wages have been growing
    rather rapidly.
        Right now all the basic analyses show--and this is ultimately the
    best hope that I think will happen in the apparel industry over the next
    10 years--is that our productivity edge is slightly greater than their
    wage edge. And if we can keep growing at a normal rate in terms of
    productivity--that is, our productivity is roughly a little over 5 times
    greater than theirs and our wage levels on average are about 5 times
    higher than theirs. But if our productivity continues to grow, their
    wages are rising much more rapidly than ours, as they would because
    they're on such a low base. I think over the next 10 years what their
    objective is, is to grow into a full partner, like Canada, where the
    cost of living is about the same, the trade is more or less in balance,
    but the volume is huge. I mean, that's really what our objective ought
    to be. Canada has the biggest two-way trade relationship with the United
    States of any country in the world. And it benefits both countries
    because both of us have about the same cost of living.
        And what we've tried to do is to get this thing worked out right,
    including putting the labor code in there, so that Mexico can't do what
    so many Latin American countries have done before to kill their economic
    programs and their political programs. They've given up on democracy,
    and they haven't had the courage to develop a middle class. This
    government is committed, I believe, down there to developing a middle
    class, and they've certainly done more than any government in history to
    do it. And they can't do it without observing their labor code.
        Q. [Inaudible]--to support strikes and labor actions?
        The President. Yes. That's what the labor code requires. Their labor
    code permits that. And they'll have to honor that now or just be
    constantly caught up in all these trade actions. And again I say, I know
    our friends and my friends in the labor movement wanted Mexico to agree
    to put the average manufacturing wage into the trade agreement. But you
    have to understand, they have allowed us to have a trade agreement that
    gets into their internal politics more than any country in history on
    the environmental policy and on labor policy. Also, I will say again, we
    can compete with these folks. We can do it. And I need your help to
    convince the Congress. Thank you.
        Before I go, let me ask you one more time: Please personally contact
    the Members of Congress about this, whether Republican or Democrat. This
    is not a partisan issue, this is an American issue. I had a little
    trouble when I got here, but I'm determined by the time I leave that we
    will see economic policy as a part of our national security and we will
    have a bipartisan economic policy, the way we had to have a bipartisan
    foreign policy in the cold war. We have got to do it, and expanding
    trade has got to be a part of it.
        Thank you.

    Note: The President spoke at 11:55 a.m. in Room 450 of the Old Executive
    Office Building. In his remarks, he referred to David Boyles, senior
    vice president of operations and systems, American Express Travelers
    Check Group, Salt Lake City, UT; and Kathleen Kaminiski, co-owner,
    Triseal Corp., Chicago, IL.