April 29, 1992 PRESIDENT BUSH ON THE NORTH AMERICAN FREE TRADE AGREEMENT +quot;The United
April 29, 1992
PRESIDENT BUSH ON THE
NORTH AMERICAN FREE TRADE AGREEMENT
"The United States will continue to lead the world toward a
system of free trade and open markets... Trade means
economic growth. Trade means jobs for all Americans."
President George Bush
May 1, 1991
"We have before us the opportunity to expand growth and
prosperity for all Americans... [the] agreement with Mexico
is in our fundamental interest."
President George Bush
March 5, 1991
Summary
o President Bush is committed to obtaining a North American
Free Trade Agreement (NAFTA) that will increase trade and
create jobs in the U.S., lower prices for American
consumers, and stimulate the economies of the United States,
Canada and Mexico.
o A NAFTA will mean greater access to the dynamic and growing
Mexican market through the removal of tariffs and import
permits, a more open services and investment regime, and the
protection of intellectual property rights. A NAFTA will
place the United States in the middle of a North American
market of over 360 million consumers and an annual output of
$6 trillion.
A NAFTA Will Increase U.S. Exports and Create U.S. Jobs
The U.S.-Canada Free Trade Agreement Serves as a Model for NAFTA
Negotiations:
o President Bush has overseen the successful implementation of
the U.S.-Canada Free Trade Agreement (CFTA). The free trade
agreement between the United States and Canada has
substantially increased exports for U.S. industries,
attracted investment and jobs to the United States and
Canada, and facilitated business between the two countries.
o Trade has grown dramatically since the inception of the
agreement. Merchandise exports to Canada totalled $85.1
billion in 1991, a gain of 42 percent over 1987. American
workers who can attribute their jobs directly to trade with
Canada are over two million strong. 28,000 jobs were
created by trade growth with Canada in 1991 alone.
o The CFTA has facilitated all manner of business exchange
between the two countries. For example, as a result of the
CFTA, more American companies are eligible for, and winning,
Canadian government contracts; businesses have better access
to customers north of the border; and American service
providers have a guaranteed access to the Canadian market.
o The advantages of the CFTA will be reinforced and expanded
under the NAFTA.
A NAFTA Will Increase U.S. Exports:
o A NAFTA will ensure U.S. access to the growing Mexican and
Canadian markets. The citizens of Mexico today import more
American goods per capita than the citizens of the European
Community. With its population of 88 million (almost three
times larger than Canada's) expected to grow to 100 million
by the year 2000, an economically surging Mexico could
become an increasingly important market for the United
States.
o U.S. exports to Mexico are growing more than twice as fast
as U.S. merchandise imports from Mexico. Since 1987,
exports have grown at an average annual rate of 23 percent;
merchandise imports have grown at 11 percent. In 1991, the
U.S. ran a trade surplus with Mexico for the first time in a
decade.
o Since Mexico started to liberalize trade in 1986, U.S.
merchandise exports to Mexico have increased more than 169
percent -- from $12.4 billion in 1986 to $33.3 billion in
1991.
o Mexico purchases two-thirds of all its imports from the
U.S., and for each dollar of Mexican GNP growth, fifteen
cents is spent on U.S. goods. Increased production in
Mexico and Canada will enable these countries to earn U.S.
dollars with which they can buy U.S. exports.
A NAFTA Will Increase U.S. Jobs:
o A NAFTA will strengthen the Mexican economy, which in turn
will increase Mexico's demand for U.S. goods. This
increased demand for U.S. products and services will create
American jobs.
o Merchandise exports to Mexico have increased by more than
169 percent, generating over 300,000 new American jobs. The
Commerce Department estimates that 650,000 American jobs are
related to U.S. exports to Mexico.
o Nearly 20 formal economic studies have concluded that a
NAFTA will be favorable to overall U.S. employment. Many
American manufacturers have already noted that joint
production arrangements with Mexico have saved U.S. jobs and
created new ones.
A NAFTA Will Increase U.S. Competitiveness
o A NAFTA will benefit U.S. producers and workers through
increased sales opportunities, improved operating
efficiencies, and strengthened competitiveness in the world
economy.
o The U.S.-Mexican joint ventures and cooperative production
efforts promoted by a NAFTA will give these producers a
comparative advantage by combining the U.S. advantage in
technology, research and innovative development with Mexican
production operations. These U.S. producers thus become
more competitive in the world economy.
A NAFTA Will Include Transition and Safeguard Provisions
Transition Measures:
o In order to avoid dislocations to industries and workers
producing goods that are import-sensitive, a NAFTA will
provide a gradual schedule for the elimination of tariffs
and non-tariff barriers on such products. In isolated cases
where the lengthy phaseout period fails to prevent injurious
increases in imports, the Administration will retain the
ability to reimpose duties and other restrictions.
o In determining import sensitivity, the Administration will
rely heavily on the advice of the U.S. International Trade
Commission, the Congress, and the private sector.
Strict Rules of Origin:
o The Bush Administration will negotiate effective rules of
origin to ensure that the benefits of a NAFTA do not flow to
third countries that establish "screw-driver" operations
exporting their products to the U.S. with only minimal
assembly in Mexico or Canada.
Increased U.S.-Mexico Cooperation on Labor
o The U.S. Secretary of Labor and her counterpart from Mexico
signed a Memorandum of Understanding in May, 1991 which
provides for cooperation and joint action on a number of
labor issues which are being implemented in parallel with
the NAFTA negotiations.
o These issues include health and safety measures; work
conditions, including labor standards and enforcement; labor
conflicts; labor statistics; and other areas of concern to
the United States and Mexico.
A NAFTA Will Improve Environmental Standards in Mexico
o A NAFTA will assist Mexico in meeting environmental
standards closer to those adhered to by the U.S. and Canada.
As President Salinas has made clear, Mexico has no interest
in becoming a pollution haven for U.S. companies.
o In parallel with the NAFTA negotiations, President Bush is
pursuing an ambitious program of cooperation on a wide range
of environmental matters, including the design and
implementation of an integrated border environmental plan.
o The Bush Administration has committed $143 million in the
current fiscal year for implementation of the border
environmental plan, and a further $241 million is in the
President's proposed budget for Fiscal Year 1993. The
Mexican government has budgeted $460 million for the 1992-
1994 phase of the plan.
o Mexico's comprehensive environmental law of 1988, which is
based on U.S. law and experience, is a solid foundation for
tackling its environmental problems. All new investments
are being held to these higher legal standards, and an
environmental impact assessment is required.
o Standards for imported food items will not be lowered.
A NAFTA Will Enhance Competitiveness of Import-Sensitive Sectors
Steel:
o Mexico's demand for steel products is expected to increase
dramatically in the coming decades as the Mexican economy
grows. Mexican steel producers, however, are not expected
to have sufficient capacity to meet domestic demand for a
number of products. A NAFTA will enable U.S. steelmakers to
take advantage of this surging market by lowering Mexican
tariffs on U.S. steel products, which previously have been
cited by U.S. steelmakers as the greatest impediment to
increasing exports to Mexico. U.S. steel exports to Mexico
totaled nearly $800 million in 1991 and will expand further
as the Mexican economy grows and tariff rates are reduced.
o The American Iron and Steel Institute and the Steel
Manufacturers Association have endorsed negotiation of a
NAFTA.
o The United States has maintained a large trade surplus with
Mexico in steel products. U.S. exports of steel products to
Mexico increased 64% in 1991 -- the U.S. exported three
times as much steel to Mexico as it imported in 1991.
Textiles and Apparel:
o Since Mexico began to liberalize trade in 1986, U.S. textile
and apparel exports to Mexico have increased at an average
annual rate of 25 percent, climbing to approximately $1
billion in 1990. A NAFTA will further reduce trade barriers
and enable U.S. exports to Mexico to expand as the Mexican
population grows and their standard of living increases.
o For two of the last three years, the United States has
maintained a surplus with Mexico in textile and apparel
products. This trend is expected to improve further as
trade barriers come down.
o The Bush Administration will seek to negotiate a NAFTA that
eliminates Mexican and Canadian tariffs and non-tariff
barriers; phases out U.S. barriers gradually over a
sufficient transition period so that U.S. companies and
workers will have time to adjust; establishes strict rules
of origin and appropriate safeguards; and contains measures
to prevent illegal transshipment and fraud.
Autos and Auto Parts:
o A NAFTA will increase exports of U.S. motor vehicles to
Mexico by removing restrictive Mexican trade and investment
barriers.
o A strong rule of origin will ensure that Mexico and Canada
are not used as export platforms to the United States by
third-country producers.
o A NAFTA would not drain U.S. jobs and investment because
lower labor costs in Mexico are offset by costs associated
with Mexico's underdeveloped infrastructure and lower
productivity. Labor costs are a decreasing component of
automotive manufacturing cost.
Other Advantages
o A NAFTA will reduce incentives for illegal immigration into
the United States by increasing Mexican wages and production
and growth.
o A NAFTA will send a strong and encouraging signal to other
countries in Latin and South America, resulting in new trade
relationships that will open new markets for U.S. goods.
E-Mail Fredric L. Rice / The Skeptic Tank