mission with a firm ally in the most important law enforcement agency in Mexico.
The Government of Mexico's initiatives, while addressing human rights problems,
will take time and continued effort to make a difference. The NAFTA will reinforce
Mexico's unprecedented efforts to reform its political institutions. It will bring great-
er public scrutiny to Mexican governmental actions and make the government more
accountable to its people. NAFTA also will promote the protection of worker rights
in Mexico, an area where protection previously was limited by being outside the ju-
risdiction of the national commission on human rights. The North American agree-
ment on labor cooperation provides mutual commitments to enforce national laws
concerning child laoor, health and safety, minimum wages, and industrial relations.
Importantly, it provides mechanisms to give the safeguards force by creating a com-
mission for labor cooperation to oversee implementation, encourage voluntary im-
provement, and impose sanctions in several domains.
In my work in coordinating global issues for the State Department, I have also
been deeply involved in the environmental aspects of the NAFTA. Environmental
questions transcend national boundaries. The NAFTA, together with its side agree-
ments, sets a historic precedent for the world in its treatment of environmental is-
sues. I would like to touch briefiy on some of the most important environmental as-
pects of the NAFTA.
The NAFTA embraces an emerging consensus that the international trading sys-
tem must be better harnessed with our priority for local, national and global envi-
ronmental protection. This treaty can and must serve as a model for future efforts
to harmonize environmental and trade objectives. The NAFTA is the first major
trade agreement to promote sustainable development and does so through a variety
of means, including:
ā¢ Rules for investment that argue against the lowering of environmental stand-
ards as a lure to investors and instead permit the imposition of environmental safe-
guards to govern investment activity. These rules remove the temptation for firms
to move to Mexico to escape U.S. environmental standards;
ā¢ Giving precedence to international environmental agreements, such as the
Montreal Protocol on Ozone Depleting Substances;
ā¢ Groundbreaking obligations to enforce environmental laws and dispute settle-
ment provisions that, in cases of persistent non-enforcement, allow the imposition
of sanctions;
ā¢ Creation of a North American Commission for Environmental Cooperation to
monitor and facilitate joint action to institutionalize the environmental promise of
NAFTA. o ^ J
All of this adds up to an environmental package of which the U.S. can be proud.
The North American Free Trade Agreement has received the strong endorsement
of environmental groups such as the National Wildlife Federation, World Wildlife
Fund, Audubon Society, Environmental Defense Fund, Natural Resources Defense
Council, and Conservation International, representing over eighty percent of mem-
bership of national environmental groups. These groups, as a letter to the Washing-
ton Post on October 3 confirms, support the agreement because they believe this
package is a major step forward in the effort to integrate environmental protection
and trade.
Mexico's new attention to environmental concerns is nothing short of extraor-
dinary. Mexico this year will spend almost one percent of its GDP on environmental
programs ā a massive increase over previous years and a hallmark for a developing
25
nation. The process of cleaning up our border will take time and a strong commit-
ment to mobilize significant amounts of capital. Investments in clean water, sewage
treatment, and waste disposal take many years, even in this country. NAFTA insti-
tutionalizes the strong commitment to tnis effort which exists on both sides of the
border. This commitment is highlighted by the recent agreement between the U.S.
and Mexico to establish two new mstitutions dedicated to facilitating clean-up ef-
forts in the border region. This innovative initiative will feature a border environ-
ment cooperation commission and a jointly-funded border finance facility. Both insti-
tutions will be used to mobilize public and private resources to clean up the environ-
ment in the border region.
Beyond these joint efforts, we believe NAFTA's promise for Mexico will enable
greater environmental investments. No country has ever made lasting environ-
mental progress without economic progress. Poverty is a powerful force for environ-
mental degradation. NAFTA will ensure that Mexico has the tools it needs to work
together with its neighbors to promote a healthier, more secure environmental fu-
ture.
We cannot have an adequate discussion of the environment or political and
human rights as they affect a people without also considering the totality of those
people's living conditions, including their economic status. The conditions in which
many Mexican workers live is not yet at a level which we ā or the Mexican people
themselves ā would like to see. Working class neighborhoods in Mexican border
cities do not have the level of public services which we would deem adequate,
though they are not as bleak as some NAFTA critics would charge. NAFTA, how-
ever, presents a real, tangible solution to improving those conditions. As increased
trade oetween the U.S. and Mexico results in a rising prosperity for the citizens of
both our nations, we should see an uplifting of the living standards for Mexican
workers ā not only along the border, but throughout that nation.
A generational change is taking place in Mexico that has created a demand by
the Mexican people for better government. The reforms that President Salinas has
instituted are a product of that change; they are not the product of one man which
will wither with his departure. The modernization that NAFTA will help to bring
will increase the pace of change in Mexico to the benefit of both Mexico and the
United States.
The stakes on NAFTA are even greater than the potential direct impact in the
United States and Mexico. Democratic governments in the hemisphere, from Argen-
tina to Venezuela, correctly see NAFTA as our response to their efforts to open their
economies to trade and investment with the United States. If we turn our oacks on
these democracies, we run the risk of reversing the democratic tide which has swept
over most of the western hemisphere. NAFTA is a test of our leadership both at
home and in Latin America. We must not fail that test.
["NAFTA: Taking the U.S. Economy South," by the Transportation Trades Depart-
ment of AFL-CIO may be found in the committee's files.]
The Chairman. We welcome you back.
What happens, Ambassador Kantor, as I notice very dramati-
cally, that you have abandoned, I take it, the iob statistical gain?
Specifically, last month, they ran this ad in the Washington Post
analyzing where you had been maintaining that it would create
200,000 jobs, and I read the quote: The USTR official confirmed
that the 200,000 jobs estimate is, quote, not a net figure, although
it trumpets it like one.
Do vou agree it is not a net figure?
Ambassador Kantor. I have always said very carefiilly that is an
increase in jobs strictly related to increased exports to Mexico, and
never even intimated that it was not that figure, of course, not.
The Chairman. And that figure would be approximately 90,000
jobs?
Ambassador Kantor. No, a net figure, according to the Congres-
sional Budget Office, would be 170,000. Now, that is only exports.
We will grow other jobs in other areas as well.
The Chairman. Well, we have got to take imports.
Ambassador Kantor. If I could finish, Mr. Chairman.
26
The Chairman. I am talking about net.
Ambassador Kantor. Net, we will lose, according to the Congres-
sional Budget Office, not according to the administration, about
14,300 jobs a year due to NAFTA. In an economy that loses about
2 million jobs a year, that is not a major impact. We will grow
100,000 jobs each year in the first 2 years.
Let me just note, in the auto industry alone, we will export $2
billion more in products in the first year of NAFTA according to the
Commerce Department study that just came out last week.
The Chairman. Well, right quickly then, on not being a net fig-
ure, let us go to the jobs themselves. Now, as the Special Trade
Representative, I am sure you are confident with respect to GATT
studies that have been made, particularly with respect to textile
employ. In fact, the USTR had a special study made. They found
in the phaseout of the multifiber arrangement that there would
over 1.1 million jobs lost. That was deep sixed. They did not want
it revealed. That was not in your administration.
Thereafter, the industry then got the Wharton study. And the
Wharton study said 1.3 million jobs. And, of course, the textile ex-
ecutives come to me and say just generally, we cannot go along
with GATT and the 10-year phaseout because we will lose 1 million
jobs. Are you familiar with that?
Ambassador Kantor. Well, first of all, there is no such study at
USTR nor has there every been. At least, I have looked all over
The Chairman. Oh, I will bring it to you then.
Ambassador Kantor. God knows I have looked through every
drawer, and I cannot find it.
The Chairman. Well, it has been deep sixed over there.
Ambassador Kantor. That is No. 1.
Let me say, it was probably before January 20, if it ever existed,
Mr. Chairman.
The Chairman. They hid it down in the Archives, like they did
the rest of the stuff.
Go ahead.
Ambassador Kantor. Let me make it ā No. 1, the textile industry
supports, as you know, NAFTA.
The Chairman. Wait a minute. Let us get to the figure. I want
to get to the answers. We have got a lot here, and they are going
to have a rollcall. You are not familiar, then, with any special
study of losing 1 million jobs?
Ambassador Kantor. There is no such study about losing 1 mil-
lion jobs. In fact, in your own State of South Carolina, let me tell
you what has happened to textiles as Mexico has lowered its bar-
riers in the last 5 years. You have increased your textile exports
to Mexico 500 percent.
The Chairman. I am talking about GATT.
Ambassador Kantor. And in Gatt, our textile industry has met
with the European industry and has come to a basic agreement in
tying a multifiber arrangement phaseout to market access. They
would support that if those are tied together ā and we are insisting
upon it.
So, frankly, Mr. Chairman, we are getting the support of that in-
dustry, which we welcome.
27
The Chairman. Well, let us go to South Carolina and the support
of that industry. Do you agree with this? Mr. Walter Elijah of
Springs down there, on September 28, stated: But those low-wage
jobs were destined to be lost anyway. Elijah contends,"We will al-
ways lose the lowest paying, least productive firms in any indus-
try," the Springs executive said, "that is the free market system."
Do you agree with that?
Ambassador Kantor. Well, that is what has been happening in
a dynamic economy, with world competition. But, frankly, the tex-
tile industry is one of our most productive industries, and has re-
capitalized
The Chairman. Oh, I know about its productivity, but you
know ā wait a minute, do not dissemble ā ^you know what I am talk-
ing about. There are 1 million apparel workers that are going to
lose their jobs. Instead of $7.20 an hour, they are going down there
for 58 cents an hour.
Ambassador Kantor. No, sir.
The Chairman. You do not agree with that?
Ambassador Kantor. No, sir, I do not agree with that, with all
due respect.
The Chairman. So, in other words, all the labor folks that are
against it, particularly the ILGWU and the Amalgamated Clothing
Workers, they do not know what they are talking about. And they
are in opposition. You are talking about the textile industry.
Ambassador Kantor. Well, I learned a lot of what I know today
from Evry Dubrow, and so I am not going to say that she is ā they
are concerned because
The Chairman. You agree with Evry Dubrow?
Ambassador Kantor. No, I do not on this issue. I agree with her
on every other issue in life but this one. [Laughter.]
Let me make it clear to you that we have had a problem. We
have a problem in this country with lack of training, lack of edu-
cation, failure to invest in our people, not keeping the deficit down,
not having a low interest rate, not recapitalizing for business
The Chairman. We have got the trading. They are just put on
a special program about our industry. Overall, we are attracting
BMW and all the other blue chip corporations of America with a
technical training system that I instituted 30 years ago.
Ambassador Kantor. Because we have the most productive
workers in the world.
The Chairman. And you just stated that we are the most produc-
tive. Now, you are hollering that we are not educated. I mean,
which way do you mean to testify?
Ambassador Kantor. I am saying we are going to become even
better in the future and be able to compete successfully with
Japan, Taiwan, and China.
The Chairman. Well, ultimately, in the future.
Ambassador Kantor. Let me say that our problem is not with
low-wage countries, it is with high-wage countries. What is fas-
cinating is we have a trade deficit with a higher wage country,
Japan, and a trade surplus with a lower wage country, which is
Mexico. Productivity is the key. What is the cost per unit? That is
the key to making sure you are competitive in a world economy.
28
And, frankly, we are doing very well in Mexico and south, with
400 million consumers, the second-fastest growing economic region
in the world.
The Chairman. All right. Let us go to a real fraud, lacocca. Let
me quote him: Let us not twist the facts. NAFTA has nothing to
do with the jobs ā so forth and so on.
Now, he does not take anything substantial right along. I was
going to get into the cause, because we have got all the facts on
that. He is totally wrong. But now the Japanese and Europeans
think NAFTA is a bad deal.
Do you agree with that?
AmDassador Kantor. Well, Japanese business magazines have
been railing against NAFTA for a few months now. The reason is
they see NAFTA as building a trade preference zone which will be
the largest free market in the world, meaning Canada, the United
States, and Mexico. They think it will not be good for their compa-
nies, but be very good for their competitors in the United States.
And so, therefore, there is opposition from the Japanese to this
agreement.
I would think that should be some fodder for thought for all of
us.
The Chairman. Well, the Bank of Tokyo, bullish on Mexico. The
manufacturers that export to the U.S. market would obviously ben-
efit by locating in Mexico, where their products crossing the border
north would not be subject to tariffs, he said in a recent interview.
Of course, the number of new factories built in Mexico by Japanese
companies will grow, on and on and on.
I was in the United Kingdom in the British-American Par-
liament ā and you can use Senator Heflin, you can use Senator
Mathews, you can use Senator Cochran, you can use Senator Gor-
ton here, or Senator Stevens ā they were unanimous, the United
Kingdom parliamentarians, there were 13, NAFTA, NAFTA,
NAFTA. They were all for NAFTA.
Of course, I faced them down and said, look, here, what Turkey?
I mean you do not mind having Turkey in NATO and fighting and
dying for you, but you just do not want them into the common mar-
ket to trade with you. And they thought that was an insult. I told
them it was a fact. [Laughter.]
And here we go now, they were absolutely 100 percent ā let us go
down the list here, with an eye on NAFTA, U.S. and Mexican firms
provide real estate services. We are seeing a dramatic increase in
the number of companies seeking locations in Mexico. Benswanger
said there had been a tremendous amount of movement by Euro-
pean, American, and Japanese companies into Mexico to take ad-
vantage of NAFTA.
You can see in Businessweek, Hong Kong companies are already
ready to cash in on NAFTA. They have got the largest yam spin-
ning plant down there. The Journal of Commerce has reported how
they are investing right and left.
We can go down ā China considers establishing textile plants in
the United States. Germany, Volkswagen poured in $1 bilHon in-
crease. Japan, Nissan is putting in $! billion increase on anticipa-
tion, both of them, not on the Mexican market with all those ex-
ports flowing down there, but on locating at a duty-free platform
29
into the richest market of the world ā namely, us, the United
States.
Now, where do you get these articles that ā you show me one ar-
ticle where they say they are worried about NAFTA.
Ambassador KA>rroR. We would be delighted to supply that.
No. 2, let me say, Mr. Chairman
The Chairman. All right, I want to see it. And I am going to
make a record of it, and the press will keep up with it.
Ambassador Kantor. Right.
The Chairman. Find and get some printed quick, because there
are not any.
Ambassador Kantor. I will have to go bum the midnight oil; will
I not?
The Chairman. You will have to go searching, yes, siree.
Ambassador Kantor. May I answer your question?
The Chairman. Please, do.
Ambassador Kantor. Yes, sir. Thank you very much. I appre-
ciate that. I understand the chairman's concern about this.
Let me say. No. 1, there is nothing to stop any company, foreign
or domestic, from moving to Mexico today and take advantage of
a free trade situation now but only going one way, from Mexico to
the United States.
Frankly, BMW and Mercedes-Benz have located in the United
States because they see us as having the most productive workers
in the world, who will even become more productive as we increase
our commitment to education, welfare reform, a balanced budget,
deficit reform, keeping interest rates down, and increasing the flow
of profit capital. All of those things happening make this an attrac-
tive place for people to locate. And that is why you are seeing BMW
and Mercedes come here.
But, without the NAFTA, you are induced to go to Mexico. Not
only Japanese companies and German companies, but U.S. compa-
nies. Because you can hide behind high tariff barriers, hide behind
unfair rules, locate in the maquiladora section which gives you an
unfair advantage against U.S. companies operating here.
Why in the world would we want to continue that unfair situa-
tion, which hurts American workers and American business? Let
us change it. Let us make it better. Let us make sure we are on
a level and fair plajang field. And we will grow jobs in this country
and send products, not jobs, south.
The Chairman. Well, you know you cannot get a level playing
field. We got one with Canada because they do have a free election;
they do not in Mexico. They do have a free market in Canada; they
do not in Mexico. They do have a free press in Canada; they do not
in Mexico. They have human rights in Canada; they do not have
them down in Mexico ā as the Secretary has just attested to. They
do have a revered judiciary in Canada; they have got a corrupt ju-
diciary down there in Mexico.
Mexico, No Te Wu, March the 29th, said a proposed North Amer-
ican Free Trade accord would boost his country's investments in
Mexico. Another article about a 25-percent tax writeoff, Chinese
textile companies are negotiating joint venture plants in Mexico
here, and I will read the one sentence: 'The Shanghai Textile Bu-
73-349 - 95 - 3
30
reau has brought 100,000 square feet of land in the Mexico Trade
Zone for a textile factory" ā and all. It is down and down the list.
And yet, you have got that fraud lacocca saying, "Look, the Japa-
nese and the Europeans, trying to raise that straw man," just like
the administration tried in the morning New York Times ā "Clinton
uses Japan to sell Mexico."
Come on. You folks are putting on the durnedest act I have ever
seen.
Let me yield here. We are going to have to keep time here if we
are going to get through before 1 1 o'clock.
Senator Pressler. OK. Well, I will move right along.
First of all, I do not know if I can follow that strong performance,
but I am a strong supporter of NAFTA, but I have a feeling that
the President is trying to waltz through this dance without holding
the girl very close. And I would like to see him take some steps
that he would hold the girl a little closer.
Now, you cited to me that the President had, in his AFL-CIO
speech, endorsed it. Indeed, he did have a sentence in his speech
endorsing it. But he also ā but I have got some newspaper articles
saying that, really, if you listen to the whole speech, you would
think he was against it.
At one point, Clinton said NAFTA has become "the symbol of le-
gitimate grievances of American working people about the way
they have been worked over in these last 12 years." That is what
I think. I think these grievances are legitimate, and so forth. So,
if you listened to his speech at the AFL-CIO convention, it would
have been hard to know which side of it he was on.
Now, let me just continue.
Ambassador Kantor. By the way. Senator, I do not agree with
that, as you know.
Senator Pressler. OK, that is fine. But the point is, in my
State ā and I am for NAFTA ā but in my State, the Farmers Union,
which is our largest farm organization, is strongly opposed to it. All
the Perot people are opposed to it. He got 33 percent of the vote
in my State, which is unusually high. And if we took it ā all the ref-
erendums at the State fair and so forth came out against NAFTA.
So, recently, I held a meeting with all the Farmers Union people
around me. I could feel them breathing on my neck. But they are
strongly opposed to it. So, I a bruised and bleeding Republican Sen-
ator supporting my Democratic President.
But I want to see him hold one of his town meetings out in
Michigan, Ohio, or New York City, with local labor people, because
these locals are where the opposition is coming from. Now, the
labor organizations, I think they will concede that there are going
to be more jobs created, but they are not going to be union jobs.
That is their problem. A lot of the new jobs created are going to
be nonunion. That is why the unions are opposed to it, in my opin-
ion.
But, still, to pursue my point, I would like to see him ā and
maybe Secretary Wirth can get him to do this ā to hold a nationally
televised town meeting with all the environmental leaders who are
opposing this. And the White House can identify them. And I am
not putting the President on the spot, but this needs to be done.
Maybe he can get the former Presidents up here. But that looks
31
like that is a Presidential prerogative, Presidents supporting each
other. Most of the former Presidents there were Republicans.
That does not move a single local labor ā if you have ever tried
to talk to a local labor union, they do not pay much attention to
what their leaders or the President says or what I say. They have
their opinions.
But I want to see the President hold about a half dozen of these
town meetings that he holds so well on health care and everything
else. Go out to Michigan and gather around him labor union lead-
ers. Go to San Francisco and get all the environmental leaders who
are opposed to it. Go to Florida and get the citrus growers who are
opposed to it. And have an exchange with them.
Now, that is the kind of leadership we need. That is what the
rest of us are doing. White House things are fine. This inside the
Beltway ā I was there yesterday. All tne corporate leaders were
there. He can tell them.
But there have been several articles that have suggested ā and I
am quoting from one ā "For all his zeal, Clinton misses opportunity
after opportunity to make the case for NAFTA." And this raises a
suspicion that he is playing a finesse game. Surely he wants the
treaty ratified, but not if it means confronting core constituency
groups in the Democratic Party opposed to NAFTA, such as orga-
nized labor.
So, I do not want to see the President continue to waltz through
this without holding the lady a little closer.
Do you see what I am saying?
Mr. WiRTH. Senator Pressler, if I might, just for a minute.
You mentioned a number of times meeting with the leadership
of the environmental groups opposed to NAFTA. I think it is impor-
tant to point out that six out of the seven major environmental