[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

[[Page 1898]]

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-


[[Page 1899]]

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.