groups in the country have endorsed NAFTA — EDF, the Environ-
mental Defense Fund, the Natural Resources Defense Council,
Conservation International, the Audubon Society, the World Wild-
life Fund, and the National Wildlife Federation — representing 80
percent of individuals in the United States who are members of na-
tional organizations that are environmental organizations.
I mean it is overwhelming in terms of the environmental support
In terms of going into the backyard of those who are opposed, as
you know, the Sierra Club is based in San Francisco. We had a
large town meeting yesterday in San Francisco at which not 100
or 200, but 1,400 people came to discuss where we were headed.
Senator Pressler. On NAFTA?
Mr. WiRTH. On NAFTA and a series of other issues.
We took a poll. We asked people, on a show of hands, in San
Francisco, where they were on NAFTA. And it was like 9 out of 10
for NAFTA. It is overwhelming there in that particular situation.
Now, I just wanted to point that out.
Senator Pressler. Was the President at this town meeting?
Mr. Werth. No, this was a town meeting of the State Depart-
ment on a series of things that we have been doing around the
Senator Pressler. Now, Tim, we are on the same side here. I am
trying to work together with you. I want to see the President go
out in the country and have these town meetings that he is so good
at, five or six of them, with core — now, you know the Sierra Club
is opposed to it — I would like to see him sit down with the environ-
mentalists who are opposed. The White House is very good at se-
lecting audiences. I am not picking on the President; I am on your
side. This is what we need to do to get this thing passed, in this
Tell the President that one bruised and bleeding Republican Sen-
ator is going to be with him, but I want him to get bruised a little
He needs to get out there with his core constituency. He is so
good at that with his health care. Why can he not do that with
NAFTA in five or six locations?
Ambassador Kantor. Senator Pressler, with all due respect
Senator Pressler. On national television.
Ambassador Kantor. We are considering a number of things and
we will do them. But in the last 7 days he made a speech in North
Carolina and he made a radio address to the Nation. He had the
products day yesterday. He met with over 60 Members of Congress
all strictly dedicated to NAFTA.
In the last 12 months he took on a very tough issue in his cam-
paign which put a number of States at risk when he came out for
NAFTA because he thought it was the responsible thing to do.
Senator Pressler. During the campaign he gave just as many
signals against NAFTA. I remember that very well.
Ambassador Kantor. On October 4, 1992 in Raleigh, NC, at
North Carolina State University he made a ringing endorsement of
NAFTA with the side agreements, with all due respect.
Senator PRESSLER. I have got some of his quotes here, his ringing
endorsements. The symbol of legitimate grievances of the American
people about they way they worked in the last 12 years, that is
what he said NAFTA is in his endorsement. Boy, I hope he does
not endorse me in my next election with that kind of language.
Ambassador Kantor. I do not think you have to worry about
that too much, Senator. [Laughter.]
Although we are happy to have your support on this one. [Laugh-
Senator Pressler. Good, I appreciate that. [Laughter.]
I want to ask a series of questions about the wheat producers.
You are well aware of our wheat producers concerns regarding Ca-
nadian trading practices in the U.S. and Mexican wheat markets.
What do you intend to do to address this matter?
Ambassador Kantor. First of all, we have used the Export En-
hancement Program in Mexico and China to try to address what
we consider unfair and even illegal subsidy practices by the Cana-
dian Government using the Western Grain Transportation Act, and
also using the Canadian Wheat Board, which has no transparency,
to subsidize Canadian durum wheat, which has now taken — Sen-
ator Dorgan, correct me if I am wrong with these numbers — 25 per-
cent of our market and 70 percent of the Mexican market.
Let me indicate, 2 years ago they had percent of the Mexican
market in durum wheat. I think those facts are correct. It has now
gone to 70 percent.
Now, with the EEP program, which we have used now in Mexico
and China, we are making inroads. We have not solved the prob-
lem. As you know, we were not in opposition to the end-use certifi-
cate legislation which was attached to the reconciliation bill, but
because of the Byrd amendment it was stripped out.
We are now working with not only Senator Dorgan's staff but
Senator Conrad's staff. We would be glad to work with your staff
and Senator Baucus in trying to look at that end-use problem
Obviously there is, as you know, a recommendation sitting on the
Secretary of Agriculture's desk today regarding section 22. The Sec-
retary has not sent a recommendation to the President. We will all
give our recommendations to the President when that occurs.
This is a major problem, we agree. We are concerned about it.
We are certainly well aware and we have talked about it at many
different hearings both in public and in private.
The Chaerman. Senator Stevens
Senator Stevens. Thank you very much. Ambassador Kantor, I
thank you very much for the reply that you sent me yesterday to
the questions I posed to you, and I am going to ask the chairman
to put the questions and those replies into the record so I will not
Let me tell you where I am coming from. To start with, I see
Canada and Mexico as to very strong federal governments, over-
powering federal governments. We are a Federal Government of
limited powers with reserved powers to the States. And I fear and
I am concerned about what NAFTA and the side agreements do to
State powers. I think you are going to hear more and more about
that as we go along.
Let me ask you just a series of quick questions because I am one
that cannot come back. I am one of the comanagers of this bill after
You said in a letter 2 weeks ago to Bill Archer, we agree with
your assessment that the environmental side agreements are not
trade agreements negotiated pursuant to fast track procedures, and
we will not ask Congress to approve the supplemental agreements
as trade agreements pursuant to the fast track. My question to you
is. Will you ask Congress to approve them at all?
Ambassador Kantor. Oh, yes we will. They are executive agree-
ments, not trade agreements. Therefore, of course, they are the pre-
rogative of the executive, but we will ask them to be approved
along with the entire package.
Senator Stevens. But that is the fast track. I just checked on
that last night, and the language on the fast-track approval in fact
does incorporate by reference these two side agreements, which is
not what you told Bill Archer.
Ambassador Kantor. They incorporate them by reference, but
they are not trade agreements under the technical definition of a
fast-track agreement, but they can go along with the entire pack-
age — the implementation legislation, the statement of administra-
tive action, and the side agreements all in one package with the
Senator Stevens. Well, respectfully, now you agreed that they
were not — you were not going to ask for them to be approved pur-
suant to the fast track. They are in the fast-track bill. They are
going to be approved by fast track. We cannot amend this approval
legislation. They are going through here on the fast track.
Now, I would urge you to reconsider that. Either you meant what
you said when you told Bill Archer they would not be approved
under the fast track or you are going to have to tell Bill Archer you
Ambassador Kantor. No, it is not wrong. It is just the matter
that the implication that you are drawing from it is not
Senator Stevens. Are they going to be approved under the fast
track or not?
Ambassador Kantor. Yes, sir. During the fast-track procedure
you will get to vote not only on the NAFTA itself, not only on the
implementation legislation, not only on the statement of adminis-
trative action, but on the side agreements as well.
Senator Stevens. But if they are part of the fast track I cannot
offer an amendment. I cannot offer reservations to them. I cannot
offer any kind of limitation at all.
Ambassador Kantor. That is right, but we are going through
Senator Stevens. You are going to put them in the fast-track
Ambassador Kantor. Yes, sir.
Senator Stevens. Well, that is not what you told Bill Archer.
Ambassador Kantor. But they are not part of the NAFTA. They
are not a trade agreement. That is the distinction we are trying to
draw there. I admit it is a narrow and very technical distinction.
Senator Stevens. It is damn technical, pardon me, because it
means that those of us who have real reservations about the side
agreements are not going to vote for NAFTA. Now, I am going out
now. You just made me a confirmed opponent of NAFTA.
Let me ask you a series of questions.
Ambassador Kantor. Well, let me say, Senator Stevens, right
now we are going through a lengthy and detailed process in both
the House and the Senate in the nonmarkup process where we are
taking amendments which affect the NAFTA itself. And in fact, if
you have some concerns with these agreements you can affect that
by the implementation legislation.
Senator Stevens. You try it on the floor under the fast-track ap-
proval. You cannot do it on the floor. I do not happen to be on those
committees. I have got limited time, my friend.
If I may, respectfully, I would just like to move on. Let me re-
mind you, and my friend from Colorado too, back at the time when
we got the pipeline approved by one vote in the U.S. Senate, Can-
ada sent plane loads of parliamentarians and lobbyists down here
to prevent the passage of the pipeline legislation. They did that be-
cause they want the oil from Alaska's north to come down the Mac-
kenzie River so that the oil that has been proved up in the Beau-
fort Sea can come to market.
Now we understand them, but I want to know literally now what
does this side agreement on the environment do as far as the por-
cupine herd, which Ambassador Wirth or Counselor — whatever we
call you Tim, knows very well.
Now, the porcupine herd is used by the opponents of developing
the Arctic as the excuse for not developing the oil and gas in the
Arctic. It is now subject to being reviewed by Ambassador Wirth
or Counselor Wirth and others.
What does this commission have to do with the porcupine herd?
That is the only transcontinental resource that I know we have
with Canada, and it is covered by the side agreement.
Ambassador Kantor. On transboundary questions which you
have raised, if I follow your question correctly. Senator, the answer
is the environmental side agreement does not authorize the council
or any other body to implement domestically recommendations the
council makes pursuant to article 10 regarding transboundary and
environmental issues. If those are going to be changed, they are to
be done by the Congress of the United States. They cannot be done
by this council or commission.
Senator Stevens. Well, now that gets me to my other series of
questions because that is what is implied in your answers you gave
me last night.
What effect then do these side agreements have as far as Federal
law is concerned? Do they modify any Federal laws?
Ambassador Kantor. No, they do not. What they do is they in-
duce and force each of the participants to enforce their existing
Senator Stevens. You are asking they be ratified in this agree-
ment. The side agreements will be included by reference, I was told
last night, in this fast track. And that makes them in effect ap-
proved by Federal law. Do they have the status of Federal law?
Ambassador Kantor. They have the status but all they do is
commit us to enforcing our own laws.
Senator Stevens. An Executive agreement not subject to any
participation by Congress has the effect of Federal law. Do you
know what that does to my State law; do you not?
Ambassador Kantor. It has no effect.
Senator Stevens. Under the supremacy clause it means sud-
denly we have amended State laws whether the States like it or
Ambassador Kantor. Senator, with all due respect, there is
nothing in these side agreements of NAFTA that does not allow the
State full freedom to pass laws in the environmental area, the
standards area, other areas which have been more stringent or
even less stringent than they have right now. There is nothing in
here that requires that. These recommendations are just that.
Senator Stevens. Now, wait a minute. I consider you a good
friend. I want you to be specific now. One of the agreements says
that States would not be prohibited from having higher standards
than the Federal Grovernment.
Ambassador Kantor. That is right; yes, sir.
Senator Stevens. But are they prohibited from having lower
standards than the Federal Government where there is no federal
government lower than Mexico or lower than Canada in terms of
our laws? We have specific laws that we reserve to the States. We
have got Federal standards in some instances. In other instances
we defer to the States for their individual standards.
For instance, water quality. Water quality is reserved to the
States under our law, it is not under Canada's. Now, I think that
by incorporating this agreements by reference, negotiated executive
agreements between two very strong federal governments, you are
negating a lot of States' rights.
Ambassador Kantor. No, sir. Let me say it very clearly. Govern-
ments remain free under the NAFTA to determine the level of en-
vironmental protection they determine appropriate. Accordingly, a
government could provide a waiver or other derogation because it
determined that it was appropriate in light of the level of environ-
mental protection it desired rather than for the purpose of encour-
aging investment. That is clear.
The States are free to change their laws and so is the Federal
Government. What we are talking about in the side agreements is
enforcing under the dispute settlement process the enforcement of
your — ^your, meaning Mexico, Canada, the United States — existing
laws. That is what is going to raise the standards. That is the pur-
pose of the side agreements, not to create some supernational au-
thority which invades the sovereignty of any one of these govern-
ments, or State governments for that matter.
Senator Stevens. Well, respectfully, you state a nice case but
that is not the case under these agreements because we have no
way of assuring that. These are now going to have the status of
Federal law without any review by those of us who represent
Now, my time is running out. Let me move on to one other sub-
Ambassador Kantor. If I could just make one more point if you
do not mind. Senator, really quickly. It is only a pattern of non-
enforcement that goes into the dispute settlement, not individual
cases. It has no effect in the area that, with all due respect, you
are referring to.
Senator Stevens. Well, we can argue about that later, at some
time I hope. But there is another issue that bothers me consider-
My State led the fight against driftnets. I introduced a bill to
outlaw driftnets within a 200-mile limit. Congress passed it. We
went to the U.N. for a moratorium. We got it. We finally got a total
ban on driftnets. And part of the law we passed following that was
the High Seas Drift Net Enforcement Act. We can ban imports
from nations that do not follow that ban, and we have other provi-
sions under the Federal law concerning fishery products. This is in
the areas outside the 200-mile limit in particular.
Now, our communities are now saying that this NAFTA agree-
ment means that we could not enforce these sanctions under our
laws and other laws against Canada or Mexico because of the pro-
visions of NAFTA. In particular, we have automatic sanctions
against countries that do in fact sanction the use of driftnets.
Now, you may want to put this in the record, and my time is
over I think. Yes, it is. I can tell you that the particular provisions
of Federal law that give us the protection against Canada and Mex-
ico are, in my opinion, emasculated by the combination of NAFTA
and that environmental agreement, and I think that is wrong. And
I intend to pursue it further on the floor. And you have just made
me a confirmed opponent, Mr. Chairman, of NAFTA. I intend to
Ambassador Kantor. I tried not to be that persuasive. Senator,
but let me just say the laws you are referring to are exempt from
the dispute settlement process under this agreement.
Senator Stevens. Well, it just so happens in this case I think I
am joined by the environmental community. They are the ones that
basically have raised the concern as well as my State.
Ambassador KA>rroR. Well, what you referred to in your letters,
and it was well put, article 45(2)(c) and article 45(2)(b), it is abso-
lutely clear they are exempt and there is no doubt about it on the
part of any one of the three countries that reached this agreement.
The Chairman. Senator Burns.
Senator Burns. Thank you, Mr. Chairman. That is a hard act to
follow, two of them in a row, three of them, and it always marvels
me about this place here that before we finally pass something we
can always say it is absolutely clear that this is going to happen,
and then after it happens then all the fog arises. That is why I
think still our best kick is to close every law school in America for
the next 20 years and write some smaller words.
There are a couple of things that I want you to clear up because
you already know what my problem is. My problem is with sugar,
and there is no use to beat that horse to death here today. We have
already had a private meeting, and I appreciate your openness and
your being candid with us, also with the grains and that has in-
And so when we start talking about the practical application of
sacrificing States' rights, I think it is pretty clear our States, the
border States on Canada, have little or nothing to say about how
we could impact it or our markets get impacted. So, I would say
But I want you to clarify two things. It has been in the news and
I am not clear on it, but I wanted to let you give your version of
it. Are the transportation fees to replace the $2.3 billion loss if our
tariffs, if those walls go clear down? How are you going to replace
that revenue, and also the cost of the displaced labor force that you
have recommended, if you would clarify that for this committee?
Ambassador Kantor. Yes, sir, and I will be very quick. I know
you are running out of time, Mr. Chairman.
On the first, we have put an option in front of both Ways and
Means and the Senate Finance Committee. We are trying to work
with them to come to the best solution.
We are looking at hopefully — one-half of what we have to do in
the pay-go system to make up in the static budget concept, which
really makes it very difficult, as you know, would be in cuts and
savings, and one-half would be in raising fees, which have not been
raised since 1986.
We have now cut the fee, the increased fee from $5 to $2.50 on
passenger travel on airlines and boats. The reason we have done
that is to lessen any burden on travel. We have doubled the fees,
which are very small, on trucks and railcars, because they will be
the big winners, as you know, in the NAFTA now.
Your second question — I am sorry, it had to do with
Senator Burns. Worker displacement.
Ambassador Kantor. There is an 18-month program.
Senator Burns. It sounds Hke an entitlement program to me,
and I am very cautious.
Ambassador Kantor. Well, Senator, I have got to tell you that
we have a problem in this country. Forget about NAFTA just one
second. We lose 2 million jobs a year because of global competition,
new technology, dynamic economy. It is going to happen.
We have got to work with those folks who are displaced for re-
training, reeducation, job placement, and income supplements in
order to make sure we are faithful to the people who have worked
hard and played by the rules and through no fault of their own get
displaced in this country, and we are trying to develop a program
overall in this administration to address that, regardless of why
someone loses their job.
In the meantime, all we are trying to do is, until we have a com-
prehensive program that makes sense, is to have a bridge program
with NAFTA to make sure no one is insecure because they might
lose their job due to NAFTA. That is all we are doing.
Senator Burns. OK Then my last question, and if you would ad-
dress this, because of being where we are, we are watching the
trend of what has happened politically in Canada.
The election comes up on the 25th of this month. We think right
now, and the polls would indicate, that there is going to be a
change up there, and some of the liberals and along with the new
Democratic Party up there have indicated that they will not — if
they are successful in the elections this month will not go along
with NAFTA, will not ratify NAFTA.
We are getting that indication, and I am listening to Canadian
radio, Calgary radio, Leathbridge, whatever, and the Canadian
Broadcasting System. That is what I am listening to.
I would like for you to comment on that. Are we going through
an exercise here that could be deep sixed, so to speak, by Canada
as a result of these elections?
Ambassador Kantor. With your forebearance, and with due re-
spect, if I could be somewhat cautious in my answer, we are in the
last 4 or 5 days, or 6 days of another country's election campaign.
I would rather not comment on that issue in terms of the politics
of it. First of all, I am not an expert in Canadian politics — some
would say not even in U.S. politics, given my track record — but I
do not want to comment.
I will comment on this. We believe strongly we are not going
through any futile exercise here.
Senator Burns. OK I was just wondering why Senator Lott
perked up. I mean, where it is OK to put fees on trucks, airlines,
railroads, but he does not want any on boats. [Laughter.]
Thank you, Mr. Ambassador. I appreciate that very much.
Ambassador Kantor. I think I will let you two talk about that.
I am not going to get into that.
The Chairman. The vote was moved to 11:20. I have Bryan, Gor-
ton, Hutchison, Dorgan, Mathews, Exon, McCain, Lott. Senator
Senator Bryan. Thank you very much, Mr. Chairman. This has
been a fine performance. I am glad Counselor Wirth joined us on
the other side of the table.
I would like to pursue one line of questions that you just engaged
in with the Senator from Montana, and that is the financing of the
$2.3 million. As you know, Mr. Ambassador, the paper has been re-
plete with much coverage of that this week.
The taxes that are being contemplated with respect to air pas-
sengers is something that is of concern to me. You know where I
live, and you know where our economy is with tourism, so the im-
pact of this could fall disproportionately on my own State.
Currently, as you know, we have a 10-percent ticket tax, we have
a $6 international departure tax, a customs fee of $5, an immigra-
tion fee of $5, an agricultural fee of $2, and many airports have
passenger facility charges as well. The notion that somehow this
offset is to be financed with increased fees on the airline industry
is something that I find troublesome, particularly in light of the
fact that, as you know, earlier this year the President, I think quite
appropriately, convened the Baliles commission.
Several Members that are here today on this panel served as
nonvoting members on that panel, and although the airline indus-
try appears to be having a better third quarter, as you know, that
industry has been hemorrhaging severely, and the purpose of con-
vening that commission was to make sure that we do not lose
major carriers, which is an important part of the travel and the
business infrastructure of America.
Could I get you to expand on your answer to Senator Burns with
respect to the rationale for imposing these additional fees, particu-
larly on airline service, because as you know, that is an industry