[Weekly Compilation of Presidential Documents Volume 29, Number 45 (Monday, November 15, 1993)]
[Pages 2303-2310]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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 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

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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 audience 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

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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 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

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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 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 av- 

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erage 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 agreement 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,

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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 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've 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?

[[Page 2309]]

    The President. Well, let me tell you, let me answer the question 
this way: NAFTA requires Mexico and the United States and Canada to 
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 other 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.

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