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FOIA Number: 2017-0364-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council of Economic Advisers
Series/Staff Member:
Laura D'Andrea Tyson
Subseries:
OA/ID Number:
5060
FolderID:
Folder Title:
NAFTA [North American Free Trade Agreement] [Folder 4] [4]
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Section:
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Position:
S
20
6
11
2
Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001. memo
Sherman Robinson to Laura Tyson et al; re: NAFTA Failure
09/15/1993
P1/b(1)
Scenarios (1 page)
COLLECTION:
Clinton Presidential Records
Council of Economic Advisers
Laura D'Andrea Tyson
OA/Box Number: 5060
FOLDER TITLE:
NAFTA [North American Free Trade Agreement] [Folder 4] [4]
2017-0364-F
jp3829
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions [(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells [(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON, D.C. 20500
THE CHAIRMAN
October 8, 1993
MEMORANDUM FOR DORIS MATSUI
RAHM EMMANUEL
FROM:
LAURA TYSON David Typen
The attached news item by Chip Jones is a misrepresentation
of some general remarks I made in response to a question on the
changing composition of U. S. trade over time. He quotes me
correctly as observing that we have moved out of the export of
shoes, apparel and furniture over time and that our challenge is
one of gradually moving the American workforce into more secure
higher wage jobs. But as I recall, I certainly did not say that
NAFTA would be bad news for Virginia's textile workers and others
who make shoes and furniture. He took a large journalistic leap
--and a misleading one--in moving from my general observations
about the changing composition of U. S. trade--to his conclusion
that thousands of Virginia jobs will be threatened by NAFTA. As
usual in my remarks on NAFTA, I emphasized that there would be
net job gain, tiny dislocations effects, and more high-wage
opportunities for the American workforce.
As far as Virginia's employment prospects in the furniture
industry are concerned, it is important to emphasize that since
virtually all U. S. furniture imports from Mexico already enter
the United States duty free, NAFTA has little direct effect. On
the other hand, both Mexico and Canada have tariffs on imports of
furniture from the U. S. These tariffs are significant, and
their removal should increase U. S. exports to Mexico
significantly.
Since 1986, when Mexico started lowering its tariffs
unilaterally, U. S. exports of household furniture to Mexico have
grown rapidly, as have furniture exports generally, In addition,
U. S. imports of furniture from Mexico have also grown, so there
has been an increase in two-way trade in household furniture with
Mexico.
The recent experience of a Virginia furniture manufacturer,
Pulaski Furniture Corp is illustrative.
"The Mexican market is extremely important to Pulaski
Furniture. In fact, Mexico is the company's third largest
market. The company's total export sales have skyrocketed
over the past six years, growing by 78 percent to reach a
total of $9.8 million in 1992. Approximately 10 percent of
these sales are attributed to Mexico."
2
"Pulaski Furniture's Mexican sales directly support 250
U. S. jobs. In order to keep pace with Mexican demand, the
company has increased its purchases of raw materials from its
U. S. suppliers. These increased purchases support five more
U. S. jobs within the company."
-10-07-93 02:13PM
TO 93956947
HF MH
P002/002
TEL No.
2024294915 Oct 07.93 8:00 P.01
07.
93
10:36
PO2
482-3981
RICHMOND TIMES DISPATCH
Would NAFTA
September 30, 1993
affect Va. firms?
KIVIN:
WHAT IS GOING ON ??
Clinton adviser says prospects mixed
BYCHIP JONES
TOMES-DEEPATCH STAPP Warren
is THARE same THING
The proposed North American
Free Trade Agreement would help
Virginia's heavy industries but hurt
wa SHOULD 00?
the state's textile, apparel and funi-
ture companies, the chalrwonian of
President Clinton's Council a Eco-
namic Advisers said yeaterday.
Dr. Luitre Tyson said in a tele-
phone news conference that NAFTA
would boost Virginia companies that
Job
make transportation aquipment, in-
dustrial. machinery, primary metals,
plastics and chemicals.
GIRAND
She declined to name particular
companies, but many of the Rich-
mood area's major employers fit her
description:- Reynolds Metale Co.:
DuPosit Co. and AlliedSignal Corp. all
-
Nd4 make materials that have a variety of
industrial uses.
Lawrence A. Bossidy, chairman
THE FORECAST. Dr. Lawa Yyses
Brace Miller
and chief executive office of Allied-
esys the treaty would create jobs,
Signal, has been 1 NAFTA booster.
Bostidy, whose company has two
American jobs by 1998.
manufacturing plants and a research
"Mexico is & very poor country,
office Direton
complex to Chesterfield County and
but 00 1 per capita basis, Mexicans
Hopewall, testified this month before
buy more from the US" than the
Industrial trade staff
& House subcommittee on behalf of
Japanese, she said. Last year, Maxi-
the trade agreement.
cane spent $450 per capita on U.S.
Virginia Eas about 1,900 jobs that
Importer the Japanase, $385.
are supported by exports to Maxico,
Trade /Developmot
said Tyson, who added the total like-
Tyson scknowledged that NAFTA
bas been & hard sell in Congress.
ty would increase # the trade agree-
During last year's presidential race,
ment is signed.
Texas businessmen Rose Perot said
Tyson acknowledged that NAFTA
the trade agreement would create 1
would be bad news for the state's
Donald Hadgen
"sucking sound" of jobs leaving the
39,000 textile workers and thou.
country. Labor unions also have op-
sands of other people who makes
posed the bill.
482-33461voice) 482 -3981 (fax)
clothes, shoes and furniture.
"We've moved out of the export of
Faced with opposition, the Clintor
shoes and apparel," said Tyson, a
administration has been enlisting
former economics professor at the
support from the likes of Bossidy and
University of Callfornia at Berkeley.
former Chrysler chief Lee Incocca
"Our challenge is to move people
Former Virginia Gov. Gerald L
into high-wage industries."
Ballies also has lobbied for NAFT
"High -tech" farniture
By lowering the remaining trade
and said recently that "the gian
bacriers in Mexico, Tyson said, U.S.
sucking sound you hear is most likel
manufacturers will have more incom-
the VACUUID of knowledge that to
companies.
give to keep plants in this country.
many are eager to exploit."
While some job sectors will be
Gov. L. Douglas Wilder, a fallo
hurt by NAFTA, Tynon said her pro-
Democrat, has spoken against th
jections show 1 net gain of 250,000
agreement.
THE WHITE HOUSE
WASHINGTON
October 7, 1993
MEMORANDUM FOR LAURA TYSON
From:
Doris Matsui
Subject: Recent Article on NAFTA
As you might know, Public Liaison has been bringing in businesses
from various industries to answer questions and build support
around NAFTA. On Tuesday, representatives from the American
Furniture Manufacturers Association (AFMA) were briefed by the
Vice President, Secretary Bentsen and Bill Daley. They left the
White House very excited to work on our behalf for NAFTA.
However, the AFMA became very concerned after seeing a
September 30 Richmond Times Dispatch article which indicates that
NAFTA would hurt the furniture business.
The AFMA is under the impression that the furniture business will
not be affected by NAFTA. In an effort to respond to the AFMA's
concern we need confirmation from you as to the effects of NAFTA
on the furniture business. Please feel free to call me or have
someone on your staff call me on this matter, 456-2930.
Thank you for your help.
CC: Tom O'Donnell
RICHMOND TIMES DISPATCH
Would NAFTA
September 30, 1993
affect Va. firms?
Clinton adviser says prospects mixed
BY CHIP JONES
TIMES-DESPATCH STAFF WRITER
The proposed North American
Free Trade Agreement would help
Virginia's heavy industries but burt
the state's textile. apparel and furni-
ture companies, the chairwoman of
President Clinton's Council of Eco-
nomic Advisers said yesterday.
Dr. Laura Tyeon said in a tele-
phone news conference that NAFTA
would boost Virginia companies that
make transportation equipment. in-
dustrial. machinery, primary metals,
plastics and chemicals.
She declined to name particular
companies, but many of the Rich-
mond area's major employers fit her
description: Reynolds Metals Co.,
DuPosit Co. and AlliedSignal Corp. all
FRAM
make materials that have a variety of
industrial uses.
Lawrence A. Bossidy, chairman
THE FORECAST. Dr. Lawn Types
and chief executive office of Allied-
says the treaty would create jobs,
Signal, has been a NAFTA booster.
Bossidy, whose company has two
American jobs by 1998.
manufacturing plants and & research
"Mexico is a very poor country,
complex in Chesterfield County and
but on & per capita basis. Mexicans
Hopewell, tastified this month before
buy more from the U.S." than the
a House subcommittee on behalf of
Japanese, she said. Last year, Mari-
the trade agreement.
cans spent $450 per capita on U.S.
Virginia has about 1,900 jobs that
importe: the Japanese, $385.
are supported by exports to Mexico,
Tysen acknowledged that NAFTA
said Tyson, who added the total like-
bas been 4 hard sell in Congress.
ly would increase If the trade agree-
ment is signed.
During last year's presidential race,
Terms businessman Rose Perot said
Tyson acknowledged that NAFTA
the trade agreement would create a
would be had news for the state's
"sucking sound" of jobs leaving the
39,000 textile workers and thou-
country. Labor unions also have op-
sands of other people who makes
posed the bill.
clothes, shoes and furniture.
"We've moved out of the export of
Faced with opposition. the Clinton
administration has been enlisting
shoes and apparel," said Tyson, 8
former economics professor at the
support from the likes of Bossidy and
University of California at Barkeley.
former Chrysler chief Lee Iscocca.
"Our challenge is to move people
Former Virginia Gov. Gerald L.
into bigh-wage industries."
Baliles also has lobbled for NAFTA
By lowering the remaining trade
and said recently that "the giant
barriers in Mexico, Typon said, U.S.
sucking sound you hear is most likely
manufacturers will have more incon-
the vacuum of knowledge that too
tive to keep plants in this country.
many are eager to exploit."
While some job sectors will be
Gov. L. Dougles Wilder, a fellow
hurt by NAFTA, Tyson said her pro-
Democrat, has spoken against the
jections show a net gain of 250,000
agreement.
THE WALL STREET JOURNAL THURSDAY, OCTOBER 7, 1993
Labor Take Note:
Contrary to popular myth, wages and
Not in the past 75 years has Mexico's
working conditions have been moving
elected leadership been SO staunchly and
steadily upward in Mexico. From 1988 to
outspokenly pro-U.S. If we drive Mexico
Nafta Means Jobs
1992, real compensation for Mexican work-
back into a shell of high tariffs and shel-
ers rose 19.3%. Meanwhile, under Mexico's
tered industries, our opportunity to seize
economic solidarity pact, wage and price
and shape the future may not recur.
For U.S. Workers
restraints have brought the annual infla-
tion rate down dramatically-from a stag-
Mr. Wright, a Texas Democrat, served in
By JIM WRIGHT
gering 150% to just over 5%.
the House from 1955 to 1989. He was speaker
What is best for America's working
On Sunday, President Salinas an-
from 1987 to 1989.
men and women? That is the standard by
nounced a 9.5% increase in the minimum
which I judged literally hundreds of deci-
wage, and productivity increases at Ford's
sions over the 34 years I served in Con-
three major production facilities as well as
gress. A lifelong advocate of percolate-up
elsewhere are boosting workers' buying
economics, I have never believed in
power this year by about 15%.
trickle-down.
A middle-income class is emerging in
The buying power of this country's
Mexico, SO long afflicted by extremes of
wage earners is the oil that lubricates the
wealth and poverty. The result is more and
machinery of our national prosperity, and
better customers for its own goods as well
whatever promotes that end is in Amer-
as ours.
ica's best interest.
Like it or not, our quality of life is
On the basis of that fundamental phi-
linked increasingly to the well-being of the
losophy, I support the North American
countries to our south. Halting the flow of
Free Trade Agreement. After much study
drugs depends upon the stability of gov-
and more than 20 trips to Mexico in the
ernments in Mexico, Colombia and else-
past five years, I have concluded that
where. And the only antidote to a tidal in-
Nafta serves the long-term cause of Amer-
flux of undocumented workers into our
ican labor.
country is the dramatic improvement of
If the net impact of Nafta were to re-
job opportunities in Mexico.
duce jobs or depress wages in the U.S.,
Like many in Congress today, I hate
that result would be bad for everyone.
to see U.S. factories lured out of the U.S.
What I see happening in Mexico tells me
by cheap wages. The U.S. has already suf-
the new relationship will create the re-
fered that in the movement of plants to
verse effect: lifting wages and conditions
Singapore, Taiwan, Korea, Malaysia, even
of work in Mexico while creating more jobs
mainland China. To the extent corporate
in both countries.
heads are drawn to invest in other coun-
tries, it is far better from our own selfish
The following considerations support
standpoint that those dollars go to Mexi-
that conclusion:
can or Canadian workers who spend a big-
To create more jobs in today's world,
ger share of their wages on American-
PRESERVATION
PHOTOCOPY
the U.S. must export more. Automation
made goods.
and corporate downsizing are taking as
*
many as 10,000 jobs out of the marketplace
Actually, with Nafta fully in place,
each month. Without the artificial stimu-
U.S. manufacturers will be less likely than
lus of Cold War military spending, the U.S.
at present to transfer production into Mex-
cannot hope to sustain its pres level of
ico. Take the automobile industry. For
employment unless we sell more U.S.-
years Mexico has arbitrarily limited the
made goods abroad.
importation of U.S.-made cars to only 1,000
Our natural outlet for exports is in the
a year. With Nafta, that restriction will be
growing markets of the Western Hemi-
lifted. General Motors executive Bill Hog-
sphere. Closer ties are in our economic in-
land believes U.S. auto makers can quickly
terest. With tight regional trading blocs
sell one million U.S.-built cars in Mexico.
developing in Europe and Asia, it makes
That would equal about 15,000 more jobs in
sense to close ranks with our neighbors to
this country.
the south.
Or take computers, for which Mexico is
Roughly 70 cents of every Mexican dol-
our second largest export customer. Those
lar spent on imports pays for U.S.-pro-
sales came to $1.3 billion last year. Today
duced wares. Clearly an economic revival
the 20% import fees tempt companies like
south of the border would expand the mar-
IBM and Tandy to open plants in Mexico to
kets for our products and increase job op-
avoid the duty. Under Nafta, that import
portunities in the U.S.
charge will be phased out over five years.
An old Mexican aphorism insists that
The incentive to move U.S. production fa-
whenever the U.S sneezes, Mexico comes
cilities southward will disappear.
down with pneumonia. The converse is
The most important consideration is
true as well. When Latin America falls into
the backlash of disillusionment that will
economic decline, it hurts us by drying up
spread throughout Mexico and Latin
markets for our manufactured goods. And
America if the U.S. rejects Nafta. Our re-
when Mexico prospers, we prosper.
jection will be interpreted as embracing
In just the past six years, U.S. trade
the unfortunate stereotypical slurs of vocal
with Mexico has more than tripled, to our
treaty opponents who portray Mexicans
country's benefit. In 1986, about 274,000
and their leaders as indolent, ignorant and
U.S. wage earners were employed produc-
corrupt. They are none of these.
ing products for Mexican consumption.
Last year, that figure had grown to almost
700,000. It is the healthiest trade surplus
Labor are Note:
working conditions have been moving
elected leadership been SO staunchly and
steadily upward in Mexico. From 1988 to
outspokenly pro-U.S. If we drive Mexico
Nafta Means Jobs
1992, real compensation for Mexican work-
back into a shell of high tariffs and shel-
ers rose 19.3%. Meanwhile, under Mexico's
tered industries, our opportunity to seize
economic solidarity pact, wage and price
and shape the future may not recur.
For U.S. Workers
restraints have brought the annual infla-
tion rate down dramatically-from a stag-
Mr. Wright, a Texas Democrat, served in
By JIM WRIGHT
gering 150% to just over 5%.
the House from 1955 to 1989. He was speaker
What is best for America's working
On Sunday, President Salinas an-
from 1987 to 1989.
men and women? That is the standard by
nounced a 9.5% increase in the minimum
which I judged literally hundreds of deci-
wage, and productivity increases at Ford's
sions over the 34 years I served in Con-
three major production facilities as well as
gress. A lifelong advocate of percolate-up
elsewhere are boosting workers' buying
economics, I have never believed in
power this year by about 15%.
trickle-down.
A middle-income class is emerging in
The buying power of this country's
Mexico, SO long afflicted by extremes of
wage earners is the oil that lubricates the
wealth and poverty. The result is more and
machinery of our national prosperity, and
better customers for its own goods as well
whatever promotes that end is in Amer-
as ours.
ica's best interest.
Like it or not, our quality of life is
On the basis of that fundamental phi-
linked increasingly to the well-being of the
losophy. I support the North American
countries to our south. Halting the flow of
Free Trade Agreement. After much study
drugs depends upon the stability of gov-
and more than 20 trips to Mexico in the
ernments in Mexico, Colombia and else-
past five years, I have concluded that
where. And the only antidote to a tidal in-
Nafta serves the long-term cause of Amer-
flux of undocumented workers into our
ican labor.
country is the dramatic improvement of
If the net impact of Nafta were to re-
job opportunities in Mexico.
duce jobs or depress wages in the U.S.,
Like many in Congress today, I hate
that result would be bad for everyone.
to see U.S. factories lured out of the U.S.
What I see happening in Mexico tells me
by cheap wages. The U.S. has already suf-
the new relationship will create the re-
fered that in the movement of plants to
verse effect: lifting wages and conditions
Singapore, Taiwan, Korea, Malaysia, even
of work in Mexico while creating more jobs
mainland China. To the extent corporate
in both countries.
heads are drawn to invest in other coun-
*
*
*
tries, it is far better from our own selfish
The following considerations support
standpoint that those dollars go to Mexi-
that conclusion:
can or Canadian workers who spend a big-
To create more jobs in today's world,
ger share of their wages on American-
the U.S. must export more. Automation
made goods.
and corporate downsizing are taking as
many as 10,000 jobs out of the marketplace
Actually, with Nafta fully in place,
PHOTOCOPY
each month. Without the artificial stimu-
U.S. manufacturers will be less likely than
PRESERVATION
lus of Cold War military spending, the U.S.
at present to transfer production into Mex-
cannot hope to sustain its pres level of
ico. Take the automobile industry. For
employment unless we sell more U.S.
years Mexico has arbitrarily limited the
made goods abroad.
importation of U.S.-made cars to only 1,000
Our natural outlet for exports is in the
a year. With Nafta, that restriction will be
growing markets of the Western Hemi-
lifted. General Motors executive Bill Hog-
sphere. Closer ties are in our economic in-
land believes U.S. auto makers can quickly
terest. With tight regional trading blocs
sell one million U.S.-built cars in Mexico.
developing in Europe and Asia, it makes
That would equal about 15,000 more jobs in
sense to close ranks with our neighbors to
this country.
the south.
Or take computers, for which Mexico is
Roughly 70 cents of every Mexican dol-
our second largest export customer. Those
lar spent on imports pays for U.S.-pro-
sales came to $1.3 billion last year. Today
duced wares. Clearly an economic revival
the 20% import fees tempt companies like
south of the border would expand the mar-
IBM and Tandy to open plants in Mexico to
kets for our products and increase job op-
avoid the duty. Under Nafta, that import
portunities in the U.S.
charge will be phased out over five years.
An old Mexican aphorism insists that
The incentive to move U.S. production fa-
whenever the U.S sneezes, Mexico comes
cilities southward will disappear.
down with pneumonia. The converse is
The most important consideration is
true as well. When Latin America falls into
the backlash of disillusionment that will
economic decline, it hurts us by drying up
spread throughout Mexico and Latin
markets for our manufactured goods. And
America if the U.S. rejects Nafta. Our re-
when Mexico prospers, we prosper.
jection will be interpreted as embracing
In just the past six years, U.S. trade
the unfortunate stereotypical slurs of vocal
with Mexico has more than tripled, to our
treaty opponents who portray Mexicans
country's benefit. In 1986, about 274,000
and their leaders as indolent, ignorant and
U.S. wage earners were employed produc-
corrupt. They are none of these.
ing products for Mexican consumption.
Last year, that figure had grown to almost
700,000. It is the healthiest trade surplus
we enjoy with any countrv.
Withdrawal/Redaction Marker
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001. memo
Sherman Robinson to Laura Tyson et al; re: NAFTA Failure
09/15/1993
P1/b(1)
Scenarios (1 page)
COLLECTION:
Clinton Presidential Records
Council of Economic Advisers
Laura D'Andrea Tyson
OA/Box Number: 5060
FOLDER TITLE:
NAFTA [North American Free Trade Agreement] [Folder 4] [4]
2017-0364-F
jp3829
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions [(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells [(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
SINTESIS
CUADRO 1.9 COMPARACION DE LOS RESULTADOS PRINCIPALES DE LAS
PROYECCIONES 1993-1998
1993
1994
1995
1996
1997
1998
1
2
3
4
CRECIMIENTO DEL PIB(%)
5
6
Basica
2.3
3.8
4.2
5.5
5.9
5.8
7
Alternativa 1
2.9
5.0
5.3
6.6
6.8
6.5
8
Alternativa 2
1.9
2.7
3.9
5.1
5.3
5.2
9
Alternativa 3
1.7
1.9
3.0
4.0
4.3
4.1
10
Proyeccion Basica, Marzo 1993
2.5
4.6
4.8
5.9
6.1
5.9
11
12
PRECIOS AL CONSUMIDOR A FIN DE PERIODO(%)
13
14
Basica
8.7
9.4
9.2
9.1
8.8
8.0
15
Alternativa 1
8.5
8.9
7.6
7.3
7.1
6.7
16
Alternativa 2
9.5
12.3
11.8
12.1
11.8
11.5
17
Alternativa 3
9.8
13.8
13.2
13.6
13.1
12.8
18
Proyeccion Basica, Marzo 1993
9.3
10.5
9.7
9.5
8.9
7.8
19
20
TIPO DE CAMBIO A FIN DE PERIODO(%)
21
22
Basica
2.3
4.6
4.4
4.2
4.0
3.9
23
Alternativa 1
2.3
0.0
0.0
0.0
0.0
0.0
24
Alternativa 2
4.1
9.0
7.7
7.7
7.7
7.7
25
Alternativa 3
4.7
11.2
9.2
9.1
9.2
8.8
26
Proyeccion Basica, Marzo 1993
2.3
4.6
4.4
4.2
4.0
3.9
27
28
INVERSION PRIVADA(%)
29
30
Basica
10.7
12.7
12.5
13.1
13.4
12.7
31
Alternativa 1
11.9
14.3
14.4
15.0
15.1
13.7
32
Alternativa 2
9.2
10.4
12.0
12.7
13.0
12.4
33
Alternativa 3
7.9
8.1
10.7
11.8
12.2
11.6
34
Proyeccion Basica, Marzo 1993
11.2
13.5
13.2
13.1
13.1
11.5
35
36
EMPLEO TOTAL(%)
37
38
Basica
-0.5
0.9
1.4
2.5
2.9
2.9
39
Alternativa 1
0.0
1.9
2.0
3.1
3.5
3.4
40
Alternativa 2
-0.7
0.0
1.1
2.2
2.5
2.6
41
Alternativa 3
-0.9
-0.6
0.7
1.5
1.9,
1.9
42
Proyeccion Basica, Marzo 1993
0.0
1.8
2.0
2.9
3.7,
3.5
43
44
GASTO PUBLICO TOTAL EN CUENTAS NACIONALES(%)
45
46
Basica
0.4
4.2
3.7
5.1
5.4
5.1
47
Alternativa 1
0.6
4.6
4.2
5.6
5.9
5.6
48
Alternativa 2
-0.2
3.8
3.1
4.5
4.8
4.5
49
Alternativa 3
-0.5
2.9
1.5
3.7
3.9
3.7
50
Proyeccion Basica, Marzo 1993
0.4
4.2
3.7
5.1
5.4
5.1
51
52
BALANZA EN CUENTA CORRIENTE(M. MILLONES DOLARES)
53
54
Basica
-23.9
-27.0
-27.3
-28.1
-27.4
-24.8
55
Alternativa 1
-24.3
-28.3
-28.8
-29.6
-28.8
-26.4
56
Alternativa 2
-22.9
-23.8
-23.9
-24.7
-24.0
-21.3
57
Alternativa 3
-22.7
-21.9
-20.5
-17.9
-13.7
-8.7
58
Proyeccion Basica, Marzo 1993
-25.4
-29.0
-29,3
-29.8
-29.0
-25.7
59
60
BALANZA EN CUENTA DE CAPITAL(M. MILLONES DOLARES)
61
62
Basica
25.6
28.2
28.0
29.3
28.3
24.8
63
Alternativa 1
26.5
29.9
29.7
30.9
29.7
26.6
64
Alternativa 2
21.2
23.3
24.0
25.5
24.6
21.2
65
Alternativa 3
18.8
19.3
19.7
21.3
20.6
16.9
66
Proyeccion Basica, Marzo 1993
26.9
28.8
28.6
29.7
28.7
24.8
67
68
DEFICIT FINANCIERO/PIB NOMINAL
69
70
Basica
-1.3
0.1
0.2
0.9
1.9
2.3
71
Alternativa 1
-1.4
0.2
0.3
0.7
1.7
2.1
72
Alternativa 2
-1.4
0.2
0.4
0.3
1.3
1.7
73
Alternativa 3
-1.4
0.1
0.3
0.2
1.1
1.5
74
Proyeccion Basica, Marzo 1993
-1.3
0.1
0.2
0.9
1.9
2.5
PREPARADA PARA LA LXXVIII JUNTA TRIMESTRAL DEL 14-16 DE JULIO DE 1993, AUSPICIADA POR LA DIRECCION GENERAL DE FOMENTO
ECONOMICO DEL GOBIERNO DEL ESTADO DE CHIHUAHUA Y DESARROLLO ECONOMICO DEL ESTADO DE CHIHUAHUA. CHIHUAHUA, CHIH.
CENTRO DE INVESTIGACION ECONOMETRICA DE MEXICO. 150 MONUMENT RD., SUITE 101, BALA CYNWYD, PA 19004.
TELEFONO (215) 667-7740. PARA USO EXCLUSIVO DE LOS SUSCRIPTORES. PROHIBIDA LA REPRODUCCION TOTAL 0 PARCIAL, SIN
AUTORIZACION ESCRITA PREVIA.
18
SERVICIO MACROECONOMICO DE CIEMEX-WEFA, JULIO 1993
SINTESIS
CUADRO 1.8 PRINCIPALES MACROINDICADORES
ALTERNATIVA 3
(CUADRO RESUMEN)
1990
1991
1992
1993
1994
1995
1996
1997
1998
1
2
Producto Interno Bruto
3
(*)
4
PIB Real (M.Mill.Pesos 1980)
5271.54
5462.73
5607.49
5704.10
5813.44
5990.05
6229.81
6498.55
5
6765.70
TASA (%)
4.4
3.6
2.6
1.7
1.9
3.0
4.0
6
4.3
4.1
7
Sector Primario
408.81
412.74
412.19
414.73
418.83
432.78
451.44
8
471.33
TASA (%)
5.9
491.69
1.0
-0.1
0.6
1.0
3.3
4.3
9
Sector Secundario
4.4
4.3
1738.50
1796.86
1846.57
1876.64
1921.40
1997.29
2086.99
10
2190.78
TASA (%)
2290.71
5.7
3.4
2.8
1.6
2.4
3.9
4.5
5.0
11
Sector Terciario
4.6
3124.23
3253.12
3354.16
3412.73
3473.21
3559.99
3691.38
3836.44
12
3983.29
TASA (%)
3.6
4.1
3.1
1.7
1.8
2.5
3.7
3.9
13
3.8
14
PIB en Dólares(M. Mill. Dólares)
244.51
287.74
334.35
383.38
420.51
458.38
512.74
572.17
15
635.79
TASA (%)
18.2
17.7
16.2
14.7
9.7
9.0
11.9
11.6
16
11.1
17
PIB Nominal (M.Mill.Pesos)(**)
686406
865166
1033224
1211731
1448002
1737788
2122229
2585081
18
3130230
TASA (%)
35.2
26.0
19.4
17.3
19.5
20.0
22.1
21.8
19
21.1
20
21
Oferta Monetaria
22
M1 (M. Mill. Ps) (**)
51048
112183
131221
150403
176351
207757
246296
292680
23
345710
TASA(%)
62.6
119.8
17.0
14.6
17.3
17.8
18.5
18.8
24
18.1
25
M4 (M. Mill. Ps) (**)
296419
387982
466112
551566
677065
826222
1024132
1280556
26
1585711
TASA(%)
46.4
30.9
20.1
18.3
22.8
22.0
24.0
25.0
27
23.8
28
Indices de Precios (1980=1.0)
29
30
Deflactor del PIB
130.2
158.4
184.3
212.4
249.1
290.1
340.7
31
397.8
462.7
TASA (%)
29.5
21.6
16.3
15.3
17.3
16.5
17.4
32
16.8
16.3
33
Consumidor Nacional
150.6
184.7
213.3
237.0
269.1
305.2
347.1
34
393.4
Promedio
443.3
TASA (%)
26.7
22.7
15.5
11.1
13.5
13.4
13.7
35
13.3
Fin de Período
12.7
TASA (%)
29.9
18.8
11.9
9.8
13.8
13.2
13.6
36
13.1
12.8
37
Mercado Cambiario
(***)
38
39
Tipo Libre: (Compra-Venta)
40
Valor Promedio Anual
2838.36
3016.16
3094.08
3.1640
3.4468
3.7947
4.1428
41
4.5223
4.9280
TASA (%)
14.3
6.3
2.6
2.3
8.9
10.1
42
9.2
9.2
9.0
43
Valor Fin de Período
2943.15
3074.95
3118.65
3.2651
3.6301
3.9643
4.3267
44
4.7236
5.1381
TASA (%)
9.8
4.5
1.4
4.7
11.2
9.2
45
9.1
9.2
8.8
46
Sector Externo (M.Mill.Dols.)
47
48
Balanza Cuenta Corriente
-7.114
-13.789
-22.809
-22.718
-21.909
-20.471
49
-17.965
-13.683
-8.658
50
Deuda Externa Total
101.859
104.828
98.915
105.498
112.128
118.220
51
125.085
130.935
135.043
Deuda Pública Externa Total
77.770
79.988
75.755
79.336
82.449
85.156
88.399
52
90.481
92.112
53
(*)
54
Sector Público (M.Mill Ps. 1980)
55
56
Gasto Público (Ctas. Nac.)
836.31
846.86
842.74
838.80
862.99
875.89
57
908.08
944.04
978.85
TASA (%)
5.4
1.3
-0.5
-0.5
2.9
1.5
58
3.7
4.0
Como porcentaje del PIB
3.7
59
Balance Financiero
-3.9
1.8
3.4
1.4
-0.1
-0.3
60
-0.2
-1.1
Balance Económico Primario
-1.5
6.6
8.4
8.5
5.8
4.4
3.6
61
2.6
1.3
0.8
62
63
Sector Laboral
64
Salario Medio Anual/Trab.
65
66
(****)
67
Nominal (Miles de Pesos)
7476.0
9406.8
11916.6
13309.1
15338.2
17667.5
68
20410.3
23508.0
26949.0
TASA (%)
29.1
25.8
26.7
11.7
15.2
69
15.2
15.5
15.2
14.6
70
Real (Indice 1980=1.0)
0.62
0.64
0.70
0.70
71
0.72
0.73
0.74
0.75
0.76
TASA (%)
1.9
2.6
9.7
0.5
1.5
72
1.6
1.6
1.6
1.7
73
Empleo (Mil.Personas)
74
75
Empleo Sector Formal
22.584
22.697
22.636
22.436
76
22.304
22.463
22.810
23.252
23.708
TASA (%)
1.1
0.5
-0.3
-0.9
-0.6
77
0.7
1.5
1.9
2.0
Desempleo Abierto (%)
8.3
8.3
8.7
9.7
10.9
11.7
12.3
12.8
13.2
PREPARADA PARA LA LXXVIII JUNTA TRIMESTRAL DEL 14-16 DE JULIO DE 1993, AUSPICIADA POR LA DIRECCION GENERAL DE FOMENTO
ECONOMICO DEL GOBIERNO DEL ESTADO DE CHIHUAHUA Y DESARROLLO ECONOMICO DEL ESTADO DE CHIHUAHUA. CHIHUAHUA, CHIH.
CENTRO DE INVESTIGACION ECONOMETRICA DE MEXICO. 150 MONUMENT RD., SUITE 101, BALA CYNWYD, PA 19004.
TELEFONO (215) 667-7740. PARA USO EXCLUSIVO DE LOS SUSCRIPTORES. PROHIBIDA LA REPRODUCCION TOTAL 0 PARCIAL, SIN
AUTORIZACION ESCRITA PREVIA.
A PARTIR DE 1993:(*) MILL. DE PESOS NUEVOS 1980,(**) MILL. PESOS NUEVOS, (***) PESOS NUEVOS POR DOLAR, PESOS NUEVOS
SERVICIO MACROECONOMICO DE CIEMEX-WEFA, JULIO 1993
17
SINTESIS
CUADRO 1.5 PRINCIPALES MACROINDICADORES
PROYECCION BASICA
(CUADRO RESUMEN)
1990
1991
1992
1993
1994
1995
1996
1997
1998
1
2
Producto Interno Bruto
3
(*)
4
PIB Real (M.Mill.Pesos 1980)
5271.54
5462.73
5607.49
5738.56
5959.33
6212.35
6553.66
5
6941.16
TASA (%)
7344.52
4.4
3.6
2.6
2.3
3.8
4.2
5.5
6
5.9
5.8
7
Sector Primario
408.81
412.74
412.19
415.32
426.86
445.49
468.06
8
492.27
TASA (%)
518.04
5.9
1.0
-0.1
0.8
2.8
4.4
5.1
5.2
9
Sector Secundario
5.2
1738.50
1796.86
1846.57
1890.12
1972.98
2077.94
2207.52
2354.65
10
2502.94
TASA (%)
5.7
3.4
2.8
2.4
4.4
5.3
6.2
11
6.7
Sector Terciario
6.3
3124.23
3253.12
3354.16
3433.11
3559.49
3688.91
3878.07
12
4094.24
4323.54
TASA (%)
3.6
4.1
3.1
2.4
3.7
3.6
5.1
5.6
13
5.6
14
PIB en Dólares(M. Mill. Dólares)
244.51
287.74
334.35
383.85
433.71
485.24
547.95
622.96
15
706.12
TASA (%)
18.2
17.7
16.2
14.8
13.0
11.9
12.9
16
13.7
13.3
17
PIB Nominal (M.Mill.Pesos)(**)
686406
865166
1033224
1209597
1414180
1653058
1946870
2304332
18
2715086
TASA (%)
35.2
26.0
19.4
17.1
16.9
16.9
17.8
18.4
19
17.8
20
21
Oferta Monetaria
22
M1 (M. Mill. Ps) (**)
51048
112183
131221
149198
172201
198759
230230
267254
23
308004
TASA(%)
62.6
119.8
17.0
13.7
15.4
15.4
15.8
24
16.1
15.2
25
M4 (M. Mill. Ps) (**)
296419
387982
466112
545354
663794
794261
957754
1161019
26
1384407
TASA(%)
46.4
30.9
20.1
17.0
21.7
19.7
20.6
21.2
27
19.2
28
Indices de Precios (1980=1.0)
29
30
Deflactor del PIB
130.2
158.4
184.3
210.8
237.3
266.1
297.1
31
332.0
369.7
TASA (%)
29.5
21.6
16.3
14.4
12.6
12.1
11.6
32
11.8
11.4
33
Consumidor Nacional
150.6
184.7
213.3
234.2
256.6
281.1
307.3
335.0
34
Promedio
362.2
TASA (%)
26.7
22.7
15.5
9.8
9.5
9.5
9.3
35
9.0
Fin de Período
8.1
TASA (%)
29.9
18.8
11.9
8.7
9.4
9.2
9.1
36
8.8
8.0
37
Mercado Cambiario
(***)
38
39
Tipo Libre: (Compra-Venta)
40
Valor Promedio Anual
2838.36
3016.16
3094.08
3.1549
3.2642
3.4102
3.5565
41
3.7026
3.8486
TASA (%)
14.3
6.3
2.6
2.0
3.5
4.5
4.3
4.1
42
3.9
43
Valor Fin de Período
2943.15
3074.95
3118.65
3.1915
3.3375
3.4835
3.6299
3.7759
44
3.9219
TASA (%)
9.8
4.5
1.4
2.3
4.6
4.4
4.2
45
4.0
3.9
46
Sector Externo (M.Mill.Dols.)
47
48
Balanza Cuenta Corriente
-7.114
-13.789
-22.809
-23.902
-27.046
-27.338
-28.112
-27.359
49
-24.786
50
Deuda Externa Total
101.859
104.828
98.915
109.154
119.363
128.975
139.182
147.814
51
154.566
Deuda Pública Externa Total
77.770
79.988
75.755
81.109
85.752
89.681
94.155
97.267
99.882
52
53
(*)
54
Sector Público (M.Mill Ps. 1980)
55
56
Gasto Público (Ctas. Nac.)
836.31
846.86
842.74
846.45
881.85
914.12
960.41
1012.06
1063.56
57
TASA (%)
5.4
1.3
-0.5
0.4
4.2
3.7
5.1
5.4
58
5.1
Como porcentaje del PIB
59
Balance Financiero
-3.9
1.8
3.4
1.3
-0.1
-0.2
-0.9
-1.9
-2.3
60
Balance Económico Primario
6.6
8.4
8.5
5.4
3.8
2.8
1.4
0.1
-0.3
61
62
63
Sector Laboral
64
Salario Medio Anual/Trab.
65
66
(****)
67
Nominal (Miles de Pesos)
7476.0
9406.8
11916.6
13265.0
14895.3
16748.5
18844.0
21166.8
23625.9
68
TASA (%)
29.1
25.8
26.7
11.3
12.3
12.4
12.5
12.3
11.6
69
70
Real (Indice 1980=1.0)
0.62
0.64
0.70
0.71
0.73
0.75
0.77
0.79
0.82
71
TASA (%)
1.9
2.6
9.7
1.4
2.5
2.6
2.9
3.0
3.3
72
73
Empleo (Mil.Personas)
74
75
Empleo Sector Formal
22.584
22.697
22.636
22.525
22.726
23.037
23.604
24.285
24.990
76
TASA (%)
1.1
0.5
-0.3
-0.5
0.9
1.4
2.5
2.9
2.9
77
Desempleo Abierto (%)
8.3
8.3
8.7
9.6
10.4
11.0
11.3
11.5
11.6
PREPARADA PARA LA LXXVIII JUNTA TRIMESTRAL DEL 14-16 DE JULIO DE 1993, AUSPICIADA POR LA DIRECCION GENERAL DE FOMENTO
ECONOMICO DEL GOBIERNO DEL ESTADO DE CHIHUAHUA Y DESARROLLO ECONOMICO DEL ESTADO DE CHIHUAHUA. CHIHUAHUA, CHIH.
CENTRO DE INVESTIGACION ECONOMETRICA DE MEXICO. 150 MONUMENT RD., SUITE 101, BALA CYNWYD, PA 19004.
TELEFONO (215) 667-7740. PARA USO EXCLUSIVO DE LOS SUSCRIPTORES. PROHIBIDA LA REPRODUCCIÓN TOTAL o PARCIAL, SIN
AUTORIZACION ESCRITA PREVIA.
A PARTIR DE 1993:(*) MILL. DE PESOS NUEVOS 1980, (**) MILL. PESOS NUEVOS, PESOS NUEVOS POR DOLAR, PESOS NUEVOS
14
SERVICIO MACROECONOMICO DE CIEMEX-WEFA, JULIO 1993
Long-Term Outlook for the
Mexican Economy With and
Without a NAFTA*
Lucinda Vargas
This analysis of NAFTA's Impact on the Mexican economy covers the period 1992-2002 and is
based on results obtained from CIEMEX-WEFA's econometric model of Mexico. An alternative
scenario considers Mexico's economic outlook under the assumption that a NAFTA does not
materialize. The purpose of looking at Mexico's economic future with and without a NAFTA is to
evaluate quantitatively the solidness of the Mexican economy in the absence of the much-awalted
free-trade deal between Mexico and its developed-country counterparts in North America. Thus, this
analysis attempts to address the following question: If the NAFTA does not come through, will
Mexico still be an attractive and healthy economy 10 years from now?
Scenario With NAFTA
a NAFTA makes capital markets react negatively,
forcing the authorities to take a more flexible stance
The anticipation and materialization of a NAFTA -
on exchange rate policy. After this immediate effect,
which we assume will be ratified in mid-1993 and
however, the absence of a NAFTA does not prove
implemented in 1994 - has a favorable impact on
catastrophic for Mexico. Investment flows resume an
Mexico. A NAFTA allows for a dynamic pattern of
upward trend, though their levels are below those
capital inflows, pushing economic growth to rates
achieved with a NAFTA. Still, the economy without a
above 5%, on average, during the period
NAFTA manages to show a healthy average annual
1992-2002. In addition, a NAFTA helps in the anti-in-
growth rate of 4.2% during 1992-2002. Inflation,
flation effort, as the inflation rate is finally brought
though not reduced to the single-digit range as in a
down to single digits. In essence, a NAFTA facilitates
NAFTA scenario, registers a low-two-digit rate.
the achievement of Mexico's twin goals: high,
sustained economic growth and price stability.
Forecast Highlights: A Comparison
Scenario Without NAFTA
of the Two Scenarios
The forecast results for the NAFTA and no-NAFTA
A no-NAFTA scenario considers the possibility of an
scenarios are summarized in Table 3.1. Some high-
unfavorable U.S. congressional vote on the agree-
lights are as follows:
ment. Although we assign only a slight probability to
this event (20%), analyzing a Mexico without a
Growth. With a NAFTA, real GDP registers a 5.4%
NAFTA allows us to see just how solid the economic
annual average growth rate during 1992-2002. The
fundamentals are in the absence of what seems a
corresponding growth rate without a NAFTA is 4.2%,
key and final step in Mexico's restructuring and
or 1.2% below the NAFTA scenario. So although
economic liberalization process.
higher growth results through a NAFTA, Mexico still
grows at respectable rates without a NAFTA. How-
Mexico would undoubtedly face some short-term
ever, if the 1.2% annual difference between the two
obstacles if a NAFTA is rejected. Initially, the lack of
"Presentation given on June 25, 1992, at the Univesity of Texas at Austin, as part of the Mexican Business Program seminar series organized by the
University of Texas at Austin and the Instituto Tecnolgico y de Estudios Superiores de Monterrey-Maxico City campus.
THE WEFA GROUP FEBRUARY 1993 U.S. ECONOMIC OUTLOOK
SPECIAL REPORTS
Table 3.1
The NAFTA's Macro Impact on the Mexican Economy, 1992-2002(1)
average annual rates
Without NAFTA
With NAFTA
Difference
Real GDP (%)
4.2
5.4
1.2
Consumer Price Index (%)
14.5
9.7
-4.8
Private Investment (%)
9.6
10.7
1.1
Foreign Direct Investment (billion dollars)
6.0
9.2
3.2
Three-month Mexican Treasury Bills (%)
18.3
13.0
-5.3
Nonoil Merchandise Exports (%)
12.9
14.7
1.8
Merchandise (%)
8.3
10.4
2.1
Current Account (billion dollars)
-10.7
-14.9
4.2
Capital Account (billion dollars)
10.6
14.7
4.1
Deported Mexican Workers
1,586
1,289
-297
(Thousands) (2)
Undocumented Mexican Migration
3,172
2,578
-594
(Thousands) (2) and (3)
Notes:
(1) Assumes the implementation of the NAFTA in early 1994. Includes a ten year gradual removal of tariff and nontariff
barriers. Increases in foreign direct Investment flows are assumed to be channeled to export-oriented industries.
(2) At the end of 2002.
(3) Based on the assumption that, for every Mexican deported, two enter the U.S. Megally.
Preliminary estimates, not to be reproduced or quoted without prior written permission.
scenarios is accumulated over the 10-year period
continue through 1993. The buy rate, which has
1992-2002, the NAFTA allows for a real GDP level
been fixed at 3051.20 pesos per dollar since Novem-
12% higher by 2002 than that achieved without a
ber 1991, will remain unaltered this year. Exchange
NAFTA.
rate policy will turn more flexible only in 1994, when
the buy rate will join the sell rate in experiencing a
Inflation. The much-hoped-for single-digit inflation
40-centavo daily slide against the dollar (which will
rate is achieved (though barely) with a NAFTA, as
then, in "new" peso terms, be equivalent to 4
the average annual increase in the price level totals
one-hundreths of a centavo). This move will coin-
9.7% during 1992-2002. Without a NAFTA, it be-
cide with the initiation of the NAFTA. In the event the
comes harder to bring prices below the two-digit
NAFTA is rejected, a reduction in capital inflows, and
rate since the NAFTA's absence takes away some of
consequently in international reserves, is expected
the downward pressure on prices derived from
at the time of such an announcement at midyear.
greater import competition. Still, even without a
These developments will place pressure on ex-
NAFTA, Mexico is able to manage a somewhat low
change rate policy, and the authorities react by
two-digit inflation rate, 14.5%.
widening the peso's flotation band for both the buy
and sell rates: the daily rate of depreciation is
Exchange Rate. With a NAFTA, our assumption for
raised to 80 centavos as of July 1993.
foreign exchange rate policy is that the 40-centavo-
per-day depreciation of the peso's sell rate will
3.2
THE WEFA GROUP FEBRUARY 1993 U.S. ECONOMIC OUTLOOK
SPECIAL REPORTS
Private Investment. During 1992-2002, the average
affords multiple opportunities, even if those opportu-
annual growth of private investment is 10.7% with a
nities do not come via a NAFTA.
NAFTA and 9.6% without a NAFTA. As with real GDP
growth, the situation for private investment is more
Three-Month CETES (Mexican Treasury Bills). A
attractive with a NAFTA, yet it's by no means
NAFTA allows for lower real rates of interest. Three-
disastrous without a NAFTA. Under the no-NAFTA
month CETES will average a real rate of 3.3% on an
scenario, news of a NAFTA rejection does bring a
annual basis during 1992-2002 under a NAFTA sce-
brief downturn in investment (1993-94). However,
nario. Without a NAFTA, the rate is a higher 3.8%.
investment thereafter resumes a positive trend,
Essentially, two developments under a NAFTA pro-
albeit at rates lower than under the NAFTA scenario.
duce a situation of lower real interest rates. First,
the NAFTA will bring greater competition from for-
Foreign Direct Investment. Focusing on the foreign
eign financial institutions, pushing the cost of money
direct investment component of private investment,
downward. Second, NAFTA generates greater cer-
we find that the NAFTA, once again, acts as a
tainty and confidence among economic agents, who
catalyst to spur foreign direct investment to annual
perceive Mexico as a lower investment than in a
levels higher than would otherwise be. With a
no-NAFTA situation. Consequently, the interest
NAFTA, foreign direct investment levels average
rate, or premium, that Mexico would have to pay
$9.2 billion a year during 1992-2002, while without a
investors is lower in the NAFTA case.
NAFTA, the average level is a lower $6.0 billion.
Although foreign direct investment does experience
Nonoil Merchandise Exports. A more dynamic
a short-term dip in the no-NAFTA scenario - falling
growth trend is expected for nonoil merchandise
from a level of $4.38 billion in 1992 to $3.44 billion in
exports with a NAFTA than without. This export
1993 and $3.80 billion in 1994 - it recovers begin-
subcategory is expected to average 14.7% growth
ning in 1995, when the level goes back up to $4.28
per year during 1992-2002 with a NAFTA versus
billion.
12.9% growth without a NAFTA. The 1.8% differential
between the two cases is minimal, however. In the
Moreover, the $6 billion average for foreign direct
absence of a NAFTA, Mexico is still expected to work
investment achieved over the long term in the no-
toward promoting its exports. First, the industrial
NAFTA scenario reflects an improvement relative to
reconversion currently under way will continue, es-
the foreign direct investment picture of recent
tablishing a more competitive and export-oriented
years. For example, during 1989-91 - the first three
production structure in Mexico regardless of NAFTA
years of the Salinas administration - foreign invest-
developments. Also, foreign exchange rate policy is
ment rose to an average level of $3.9 billion a year.
expected to be more flexible without a NAFTA, as
Comparing the foreign direct investment picture
the authorities will be careful to maintain Mexico's
without a NAFTA against a greater historical per-
export competitiveness.
spective, the no-NAFTA scenario shows an average
level four times higher than the $1.5 billion annual
Merchandise Imports. As expected, a NAFTA allows
average recorded during 1983-88. Thus, even if
for a greater penetration of imports. Average growth
Mexico is unable to consolidate its trade opening
of merchandise imports is 10.4% per year during
with a full-fledged free-trade agreement with its
1992-2002 under a NAFTA. Without a NAFTA,
North American partners, the substantial unilateral
growth is in single digits, 8.3%, as the lower eco-
trade opening Mexico has undertaken so far has
nomic growth resulting from this scenario dampens
already produced the positive reaction expected
the country's ability to import. Also, without a
from foreign investors. In addition, a no-NAFTA
NAFTA, imports are not expected to flow in as easily
scenario still assumes a trajectory of freer trade and
since existing tariffs would probably be preserved or
investment measures - that is, a further opening
would take longer to be reduced or eliminated.
relative to the current situation. For instance, a new
and more open foreign investment law will come to
Current Account. The more dynamic performance
of imports in the NAFTA scenario brings about a
pass even if a NAFTA doesn't. Thus, foreign inves-
tors should still be attracted to a scenario that
higher current account deficit. Thus, while the cur-
THE WEFA GROUP FEBRUARY 1993 U.S. ECONOMIC OUTLOOK
3.3
SPECIAL REPORTS
rent account deficit averages an annual level of
mented Mexicans in the United States. The assump-
$14.9 billion with a NAFTA, the deficit without a
tion on migration incorporated into our model is
NAFTA is lower at $10.7 billion.
based on 1977 estimates by U.S. immigration offi-
cials, who claim that for every apprehension of an
Capital Account. The NAFTA spells out a more open
illegal alien, two more succeed in entering the
trade and investment picture for Mexico. Although
country.
Mexico without a NAFTA is still expected to pursue a
relatively open trade and investment route, a NAFTA
adds a guarantee for investors that makes them
Sectoral Impact
more confident of the permanence of any new
The question is often raised as to which sectors will
measures. Thus, the higher investment levels (es-
be the winners and losers in a NAFTA scenario. Our
pecially foreign) expected with a NAFTA generates a
simulations have considered the following aggre-
higher surplus in the capital account. Whereas the
gated sectors: agriculture, forestry, and fisheries;
NAFTA case shows an average $14.7 billion capital
mining; manufacturing; construction; electricity;
account surplus per year during 1992-2002, the
commerce (wholesale/retail trade): transportation
case without a NAFTA shows a lower average level
and communications; financial services; and social
of $10.6 billion per year. In both cases, however, a
services. Manufacturing, in turn, is subdivided into
"sufficient" surplus in the capital account finances
eight subsectors: food, beverages, and tobacco;
the current account deficit.
textiles and apparel; lumber and wood products:
Migration. A final impact considered in these NAFTA
paper and paper products; chemicals; nonmetallic
minerals; basic metals; and machinery and equip-
simulations was that on Mexican migration to the
ment.
United States. Although migration is not directly
addressed in the negotiated agreement, there are
Although the model fails to capture the NAFTA's full
migration implications behind the agreement. Essen-
impact on these sectors (it does not consider inter-
tially, the flow of illegal immigrants from Mexico into
industry relationships and gains from specialization
the United States is expected to be reduced by a
and efficiency), it does capture the effects on pro-
NAFTA. Mexican authorities have repeatedly stated
duction of the added investment and trade flows
that they are pursuing a NAFTA because it will
implied by NAFTA for each sector. Table 3.2 gives
improve employment opportunities at home and
the performance of sectoral GDP with and without
raise the general population's standard of living. It is
NAFTA over the period 1992-2002. Two groups can
because of the limited employment opportunities
be identified here: those that gain either more than
existing in Mexico relative to the size of its growing
or less than the 1.2% rate of additional GDP growth
work force, and also because of the low wages in
provided by a NAFTA. Those sectors that gain above
the country, that a sizable migration from Mexico to
1.2% can be labeled larger winners; those that gain
the U.S. has been the rule over the years.
at 1.2% or less can be labeled smaller winners.
Thus, our simulations do not show any sectors as
A faster-growing economy with a NAFTA than with-
out translates into more job opportunities in Mexico
long-term losers if NAFTA is in place.
and, consequently, into a decreased possibility that
Certainly in the short term the NAFTA will mean
workers will flow across the border. Our forecast
contractions in production for some sectors owing to
results show that net migration from Mexico to the
greater import competition and continued restructur-
United States would indeed be reduced with a
ing: yet our long-term view suggests that the
NAFTA in place, by about 60,000 persons annually
NAFTA's ultimate impact on all sectors will be posi-
during 1992-2002. This means that by the year
tive, since virtually all exhibit higher production
2002. there will be nearly 600,000 fewer undocu-
growth rates with a NAFTA than without.
3.4
THE WEFA GROUP FEBRUARY 1993 U.S. ECONOMIC OUTLOOK
SPECIAL REPORTS
Table 3.2
Sectoral GDP: Large and Small Winners (No Losers)
average annual rates, 192-2002
Without NAFTA
With NAFTA
Difference
Basic Metais
4.3
6.3
2.0
Construction
6.3
8.2
1.9
Machinery & Equipment
7.3
8.9
1.6
Transportation & Communication
5.6
7.1
1.5
Financial Services
4.6
6.1
1.5
Commerce
5.2
6.6
1.4
Agriculture, Forestry & Fishing
4.2
5.5
1.3
Electricity
6.4
7.7
1.3
Lumber & Wood Products
3.2
4.3
1.3
Paper & Paper Products
3.7
4.7
1.0
Nonmetallic Minerals
5.2
6.3
1.1
Mining
3.2
4.0
0.8
Textiles & Apparel
4.4
5.2
0.8
Social Services
2.8
3.6
0.8
Food, Beverages, & Tobacco
3.8
4.4
0.6
Chemicals
4.4
5.0
0.6
Conclusion
on the conservative side are the gains derived from
North American specialization rather than just Mexi-
Our long-term simulation results point to NAFTA's
can specialization, as well as the greater domestic
favorable impact on the Mexican economy. Growth,
savings that would be forthcoming under a more
investment, and trade are higher with NAFTA than
open and competitive financial system.
without, while inflation is lower. GDP by sector is also
pushed to higher rates with the NAFTA in place.
Just as we see that the NAFTA has a favorable
Given that our model does not incorporate the
impact on the Mexican economy in the long term,
dynamic effects of specialization gains, we feel that
we see also that the absence of a NAFTA does not
our results are on the conservative side. In other
prove catastrophic for Mexico. Without a NAFTA, the
words, our estimates should be taken as the lower
country is still able to achieve respectable growth
limits of any production gains achieved through
rates with a relatively stable price level. Although
NAFTA.
investment and trade proceed less dynamically than
with a NAFTA, they also still manage important
The same holds true for our assumption regarding
growth rates without a NAFTA. in answer to the
capital flows. These flows may end up higher than
question posed at the beginning of this analysis, if
what we have estimated here, and therefore even
the NAFTA does not come through, Mexico will still
more positive results would be the case for the
be an attractive and healthy economy ten years
general numbers. Other factors keeping our results
from now.
THE WEFA GROUP FEBRUARY 1993 U.S. ECONOMIC OUTLOOK
3.5
SEP-15-93 WED 16:26
NVCA
FAX NO. 17033515268
P.01
NAFTA
NATIONAL VENTURE CAPITAL ASSOCIATION
1655 North Fort Myer Drive
LOT
Suite 700
Arlington, Virginia 22209
Tel.: 703/351-5269
Fax: 703/351-5268
CCi Sherman
FACSIMILE TRANSMISSION
9-15-93
'DATE:
FROM:
Dan Kingsley
ATTENTION OF:
Laura D'Andrea Jyson
COMPANY:
national Economic ouncil
FAX NUMBER: 395-6947
OFFICE NUMBER 395-5042
NUMBER OF PAGES INCLUDING COVER SHEET: 4
SHOULD YOU ENCOUNTER ANY TRANSMISSION PROBLEMS, CALL 703/351-5267.
FYI
SEP-15-93 WED 16:27
NVCA
FAX NO. 17033515268
P.02
NATIONAL VENTURE CAPITAL ASSOCIATION
1655 North Fort Myer Drive
Suite 700
Arlington, Virginia 22209
Tel.: 703/351-5269
Fax: 703/351-5268
September 13, 1993
William J. Clinton
President of the United States
The White House
1600 Pennsylvania Avenue, N.W.
Washington, DC 20500
Dear President Clinton:
I want to tell you how much, both personally and as President of the National Venture Capital
Association, I enjoyed having lunch with you on September 8. Your willingness to share with
us your goals on both NAFTA and health care was very much appreciated, as was your interest
in our concerns.
The NVCA membership recognizes that the targeted capital gains initiative is a reality because
of your determination to see it incorporated into the final reconciliation bill. As I mentioned at
the luncheon, however, the corrective amendment relating to Section 212 expenses was not
made part of the bill even though both the House and Senate approved this change in the 1992
tax bill and it continues to be a "noncontroversial and revenue neutral issue." Incorporation of
the Section 212 change in your upcoming budget would cure this problem.
The second item I spoke with you about was the recent exposure draft from the Financial and
Accounting Standards Board concerning the accounting treatment of stock options. I cannot
stress how important this issue is to the companies we finance. the very companies which are
generating jobs in America today.
FASB's proposed accounting rules will significantly reduce the amount of stock options granted
to employees in growing companies and will be a serious impediment to their growth and their
ability to create additional jobs. This clearly is contrary to your Administration's policy, nor
is it necessary. When seven men in Connecticut, FASB, have one view of the world and the
accounting firms, companies, stockholders and venture capitalists have a different view, I'm not
sure you can call the result "generally accepted accounting principles" (GAAP). FASB is
virtually independent, but the Securities and Exchange Commission can and should overturn
FASB pronouncements which are irresponsible and damaging to this country. We need high
level White House support on this crucial issue and hope that you will designate a member of
your senior staff to see that this problem is resolved.
SEP-15-93 WED 16:27
NVCA
FAX NO. 17033515268
P. 03
September 13, 1993
Page Two
Your vision for the United States is one of change and growth. Entrepreneurs and venture
capitalists are agents of such change to create growth. Let's not let FASB make us take two
steps back to move one step forward.
Again, thank you for your time. As a result of our talk, we have taken action to support you on
NAFTA.
Sincerely,
NATIONAL VENTURE CAPITAL ASSOCIATION
William P. P.Egan
William P. Egan
President
SEP-15-93 WED 16:28
NVCA
FAX NO. 17033515268
P. 04
September 17, 1993
American Entrepreneurs for Economic Growth (AEEG)
ACTION ALERT
Notify Your Senators and Congressmen to Support the
North American Free Trade Agreement (NAFTA)
FROM:
well
Edward R. McCracken
Rolint Elkura Robert N. Elkins
President and CEO, Silicon Graphics
Chairman and CEO, Integrated Health Services
Co-Chairmen, American Entrepreneurs for Economic Growth
ACTION REQUESTED:
Urge the Senators and Congressmen where your business, where your employees and
where you reside to support the North American Free Trade Agreement.
Addressing Correspondence:
To a Senator:
To a Representative:
The Honorable (name)
The Honorable (name)
United States Senate
U.S. House Of Representatives
Washington, DC 20510
Washington, DC 20515
Dear Senator
:
Dear Congressman
:
BACKGROUND:
A very large percentage of entrepreneurs support the idea of free trade. Anything that unleashes entrepreneurs to do what
they
do
best
create jobs, produce innovative products and services, and locate new and changing markets is good.
The elimination of trade and investment barriers among Canada, Mexico and the United States will create a strategic
economic alliance and the largest and richest market in the world.
Canada and Mexico are top U.S. customers, accounting for 30 percent of total U.S. exports. This year Mexico surpassed
Japan as the second largest market for U.S. manufactured exports. Canada is our largest market.
NAFTA recognizes the increasing integration of the North American economies and removes barriers to trade and
investment growth. Market access will be increased as Mexico will immediately eliminate tariffs on nearly 50% of all
industrial goods imported from the U.S., including highly valued machine tools, medical equipment and electronic
equipment. Simultaneously, NAFTA provisions provide timely, effective relief to American workers and firms needing
time to adjust to imports from Mexico and Canada.
This agreement also will promote export-driven growth in America's high technology sector by providing the highest
standards of protection for intellectual property - patents, trademarks, copyrights and trade secrets - available in any
bilateral or international agreement.
A majority of Republican Senators and Congressmen support NAFTA. The Clinton Administration also favors the
agreement. However, it is very uncertain at this juncture whether there are enough votes, particularly in the House of
Representatives, to secure passage of NAFTA. Thus, your initiative in writing your Senators and Congressmen is
extremely important.
American Entrepreneurs for Economic Growth (AEEG)
1655 North Fort Myer Drive Suite 700 Arlington, Virginia 22209 351-5269
Contact: Mark Heesen or Teresa Kelley
450 per copins
Mexus -
more Tun
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
more afflent Ju
September 9, 1993
Ey washes
correrer
TO:
LAURA TYSON
ALAN BLINDER
by fun US
JOE STIGLITZ
FROM:
SHERMAN ROBINSON
SUBJECT:
Talking Points for NAFTA Cabinet Briefing
Laura is scheduled to talk about "The Economic Imperative of NAFTA" along with Bob
Rubin at a Cabinet Meeting tomorrow. A few talking points:
NAFTA is a trade agreement. It opens up Mexican markets to U.S. exports and U.S.
markets to Mexican exports. Currently, Mexican import protection levels are much higher
than U.S. levels -about 2.5 times as high (4% compared to 10%, not counting import
quotas which are more pervasive in Mexico).
NAFTA is part of a process of globalization of production that has been going on for
decades and is very much in the economic interests of the U.S. Since WW II, the U.S. has
consistently supported the achievement of an open, multilateral trading system through
various rounds of GATT negotiations, the formation of the U.S.-Canada free trade
agreement, and the evolution of the European Common Market.
The experience of the last half-century indicates that these policies have been
extremely successful. World trade has increased enormously, and trade has been a major
"engine of growth" for the world economy. Contrast this period with the 1930s where
protectionism exacerbated and helped spread the great depression. specialy a two And now D
NAFTA is consistent with our support of a liberalized world trading system under
GATT. The idea is to be inclusive and to lower barriers, not to build a "Fortress North
America." NAFTA and the new GATT agreement, which we intend to complete by
December, will be complementary. It is certainly NOT in the interests of the U.S., or any
other country, to have the world divide into inward-looking, regional, trading blocs. The
sort of isolationism being preached by Pat Buchanan would be a disaster for the U.S. and the
world. NAFTA is part of a consistent U.S. policy to open markets around the world and to
foster increased trade, to the benefit of all. compete not retruat
Mexico unilaterally lowered its protection against U.S. exports starting in the mid-
1980s. Since then, U.S. exports to Mexico have shot up, rising 228% since 1986, reaching
$40.6 billion in 1992. These are significant numbers, supporting a lot of U.S. export jobs
2
(about 700,000 in 1992). With NAFTA, we expect further increases in U.S. exports, and
more good, export-related jobs in the U.S.
U.S. protection against exports from Mexico has never been very high. Thus, further
trade liberalization under NAFTA will benefit the U.S. more than Mexico. However, note
that the protection levels are not very high in either country. The changes under NAFTA
can be seen as the end of a process of trade liberalization that has been going on for some
time. NAFTA is NOT a big shock but part of an ongoing trend.
and to prosper good export fon deer
NAFTA is also an investment agreement. It will facilitate increased investment in
Mexico that will enable Mexico to continue to open its economys It will also remove
Mexican requirements that U.S. companies locate in Mexico in order to sell there.
Aggregate investment in Mexico should increase, but there will also be increased exports
from the U.S. as U.S. companies find it more advantageous to produce here and sell there
rather than be forced to produce there. prould
How an they
be? bel ?
For the U.S., virtually all studies agree that, in the words of the CBO report
a
(Summary): "NAFTA should provide net economic gains to all three countries. Gains for
low low age
the United States should be fairly small, although clearly large enough to outweigh the
proclect
expected budgetary and private-sector costs that would follow in NAFTA's wake. Contrary
b
yearsate
tp some commonly expressed concerns, NAFTA should have relatively little impact on jobs
c
way cosh
and the location of manufacturing." The CBO report states (p. xi): "A thorough review of
pet don't
the myriad changes brought about by NAFTA, and of their interactions, leads to the single
no Her That
resounding conclusion that the net effect on the U.S. economy would be positive and very
much
small."
Even of entre 1 in I on Rexio cme fun v-, would m to any
are
1-27 for rat I sing - - 27 of our loange fews market
asket
today's wine
Again, the net effects of NAFTA on the U.S. should be positive but small. The
adjustment costs should also be small and manageable and the Clinton Administration is
committed to managing these adjustments.
Thet help wonher move from low waye to high age
job offts - from fobs I today to rose P for
For Mexico, NAFTA is an important part, but only a part, of its new long-run
development strategy designed to open the economy. Since 1986, Mexico joined GATT,
unilaterally greatly lowered import protection levels (both tariffs and quotas), and started a incementy
major program of privatization. The shift in strategy has been successful, and Mexico is
well on its way to recovering from the debt crisis, runaway inflation, and deep recession of
the early 1980s.
All studies indicate that a prosperous Mexico is good for the U.S. We gain from
increased trade with Mexico, and it potentially represents an important market for U.S.
goods. Pe cop in ugs h Mucko fear UJ alread laya
The notion that increased investment in Mexico will lead to jobs lost in the U.S. is
flat wrong. Increased investment in Mexico will largely support increased Mexican growth,
serving the Mexican market. It is a profound fallacy to argue, as Perot and Choate have
3
argued, that if Mexico generates more jobs, the U.S. must somehow lose jobs. The number
of jobs is NOT fixed between the two countries. Increased trade benefits all participating
countries. A growing Mexico benefits the U.S. Following the Perot/Choate line of
reasoning, the U.S. should never have implemented the Marshall Plan, but instead should
have prevented Europe from recovering after WW II because that would somehow take jobs
away from the U.S. Wheravely, m deadyed world our prospecty defend on prospeulos
of others-
Macro studies (e.g., the CBO report) indicate that increased investment in Mexico
will have a negligible effect on aggregate investment in the U.S. The Mexican capital
market is very small relative to the U.S. capital market, and the U.S. is also open to world
capital markets. Any increased flow of U.S. investment to Mexico simply generates a flow
from the rest of the world to the U.S. The CBO report states (p. 25). "Even if the entire
flow of additional Mexican investment -perhaps $15 billion a year- were funded out of
U.S. capital sources, it would amount to only 1 percent to 2 percent of U.S. annual saving,
and less that 2 percent of the U.S. market for loanable funds.
Opposter to NAFTA
DRAFT
DRAFT 6:50pm
Statement of Ambassador Mickey Kantor
United States Trade Representative
NAFTA AND THE PEROT-CHOATE BOOK
September 2, 1993
With the supplemental agreements completed last month,
the public and Congressional debate over NAFTA begins in earnest.
It is important to cut through the mountain of misinformation
and sheer lack of understanding of this complex issue to
recognize what is at stake. in NAFTA
The foremost commitment of President Clinton, and this
Administration, is to rebuild the strength of our economy, to
create new and better jobs and opportunities for United States American
workers and for their children who will be entering the work
force.
We plan to do that through an integrated, economic
strategy that begins by facing up to our problems at home:
starting with the President's economic program, passed by the
Congress last month, continuing with the drive to reform the
health care system in America, and complemented by the effort to
re-invent government, spearheaded by Vice President Gore. Trade
agreements are no substitute for dealing with fundamental
domestic problems that have weakened our country for too long.
But in the intense and competitive global economy, X
trade policy is an indispensable part of our economic strategy.
The President and I have repeatedly stated the objectives of our
trade policy: to compete, not retreat behind our borders, and to
insure that the markets of other countries are as open to our
products and services, as the U.S. market is to the products and there.
services of our trading partners. Our prosperity and that of
our children, depends on our ability to compete and win in the
global marketplace. We will not accept an unbalanced trading
relationship, and we will no longer subordinate our economic
interests to foreign policy and defense concerns.
seeh reprocuty
The companies, farmers and workers of the United States
And louidern from
are world-class competitors. We lead the world in everything
our
from computers and telecommunications, to financial services and tradey
soybeans. We have regained our position as the world's leading partners
exporter. But assuring that markets are open for our
manufactured goods, our services, and agricultural products is
absolutely critical to building our economic success.
This Administration did not negotiate the NAFTA.
Moreover, Bill Clinton as a presidential candidate was critical
of the economic and trade policy of his predecessors. When we
studied NAFTA during the presidential campaign, we approached it
skeptically. There were powerful political reasons for opposing
it.
But when we studied it, we found that NAFTA
strengthened by supplemental agreements would be in the
NAFTA
economic interest of the United States. N
is
not
a
favor
that
we were doing Mexico. It is in our economic interest. And It is
a piece of the economic strategy that we were putting in place to
grantinguild
build a high-wage, high-skill competitive economy.
That wntelrecently
has
It is no secret that we have been negotiating the
supplemental agreements, and the White House had to focus on
getting the economic package through Congress. The opponents of
NAFTA have had the field pretty much to themselves. That has No longer.
changed starting now. The Administration has the now embraces Re
responsibility of convincing Congress and the country that NAFTA
is in the national economic interest, and we intend to do SO.
welcomes the opportunity to
We will do so because we have the facts on our side,
but also because we understand as least as well as our
about
opponents do the fears of American working people that their
economic future and their children's are not secure; that their
tandard of living has declined; and that their prospects are
not
diminishing.
NAFTA is part of the solution, rather than part of
the problem, and we intend to show it.
we
interel
strapated
offortunities
I have spent a significant amount of time over the last
denon to thate
few days reading through and thinking about the Perot/Choate
book. The book contains several major themes with which I
that
fundamentally disagree:
PEROT THINKS AMERICAN WORKERS CAN'T COMPETE
At the heart of Perot's book is the belief that U.S.
workers can't compete with low wage countries like Mexico.
President Clinton believes that American workers and businesses
can compete anywhere that the rules are fair and markets are
open.
Wages competitiverors are one factor, but they wages are not alone do not
determinàtive. We compete based on the productivity and the
skills of our workers, the excellence of our products and
services, and the strength of our transportation and
communications system. That is the formula for success that
Germany and Japan have followed, and that is the natural path for
our country.
It was certainly hard to compete when Mexico's markets
were completely closed to our products, as they were prior to
1986. But since Mexico began opening its markets, we have
transformed a $5 billion trade deficit with Mexico into a $5.4
billion trade surplus. Mexico has already become our third
leading export market, and the second leading market for our
manufactured exports. We have succeeded even though Mexican
trade barriers tariff and non-tariff remain far higher than
ours. This is clear evidence of our ability to compete.
PEROT CHOOSES THE STATUS QUO OVER CHANGE
In opposing the agreement, Perot is opting for the
status quo which operates to the disadvantage of U.S. workers and
companies. Despite Mexican progress in voluntarily opening
markets, Mexican tariffs remain, on the average, 2 1/2 times
higher than ours. Numerous Mexican non-tariff barriers, such as
performance and trade balancing requirements, force U.S.
companies to move to Mexico in order to sell there. Maquiladora
industries distort U.S. business decisions to the disadvantage of
U.S. workers. The lack of intellectual property protection
hampers our motion picture and recording industries, as well as
computer software and others. Meanwhile, Mexico enjoys virtually
unlimited access to the U.S. market.
This unacceptable status quo is what the opponents would
lock in. Our alternative is NAFTA, which brings down Mexican
trade barriers, levels the playing field for U.S. companies and
workers; it will no longer be necessary for companies to move to
Mexico to sell there. The Big Three auto companies, which
presently export only 1,000 cars to Mexico annually, predict an
increase to 60,000 cars from the U.S. in the first year.
Through the supplemental agreements, NAFTA gives us new ways to
insure that Mexico will enforce the strong environmental
protection and labor laws that it has on the books.
Jran
PEROT CHOOSES PROTECTIONISM AND DEFEATISM OVER EXPANDED MARKETS
AND EXPANDED GROWTH
Perot--by opposing NAFTA--chooses a defeatist path
which will reduce U.S. economic growth and job creation. In the
past few years, export-led growth has been the brightest spot in
the U.S. economy---accounting for [ ] % of the total growth.
Mexico, and Latin America beyond it, represent potential markets
of 400 million people. By calling for the defeat of NAFTA, and
in fact advocating higher tariff walls against products from
Mexico, Perot risks the gains we have seen, as well as additional
gains we expect from NAFTA and the completion of the Uruguay
Round.
In seeking to raise the walls around our economy, Perot
ignores the lessons of history. More than 60 years ago, when our
economy was much more self-contained, the United States tried to
insulate ourselves from competition through high tariffs. The
Smoot-Hawley tariff contributed to the Great Depression. Today,
with about one quarter of our economy involved in trade of goods
and services, the course of action Perot advocates would be
devastating to the U.S. and the world economy.
This is clearly the wrong path for America. The issue
before us is simple: how do we create good jobs and competitive
industries in a rapidly globalizing economy. We believe this can
only be done by reaching outward, not looking inward, and by
opening the markets of the future. As President Clinton has said,
we must compete, not retreat behind our borders.
PEROT RELIES ON INACCURACIES AND MISLEADING INFORMATION
Beyond the major misconceptions in the Perot book, it
is riddled with mistakes, misconceptions, and oversights we
found over [ ]. Among the most serious:
O
Perot states that 5.9 million jobs are "at risk" because of
NAFTA. The methodology for reaching the 5.9 million figure
is fundamentally flawed. The authors simply identify, from
Census data, industries where wages account for more than 20
percent of the value of output. Under the Perot/Choate
service ulatable canol that moor
scenario, the "at risk" jobs include high wage, high skill
jobs in our most competitive sectors, including aerospace,
medical equipment, and sonar equipment--sectors where we are
in no danger of losing jobs and in fact will increase
employment with NAFTA. The authors also describe as "at
risk" jobs which face no competition from Mexico such as
Me
sold
bakers and wood-pulp millers.
The book quotes the previous Secretary of Labor stating that
NAFTA will cost 150,000 U.S. jobs. The book ignores the
fact that the same Secretary of Labor, citing the same
study, went on to say the NAFTA will create 325,000 jobs--a
net increase of 175,000.
Perot states that NAFTA will lower U.S. health and
environmental standards. In fact, nothing in the NAFTA
could even be construed as lowering any federal, state or
local standard. NAFTA specifically insures the ability of
each country, including its state and local governments, to
maintain as stringent environmental and health standards as
it considers appropriate. Moreover, the supplemental
agreements include specific commitments from the three
nations to harmonize standards upwards--not downwards.
Perot claims that the U.S. auto industry is on the
"endangered" list. In fact, independent studies done by the
Congressional budget office and the Office of Technology
Assessment show that U.S. auto companies and workers will
both gain under the NAFTA, thanks to the dismantling of the
Mexican performance, trade balancing, and local content
requirements, as well as the elimination of Mexico's current
20% tariff on auto imports. Indeed, the OTA study found
that the total cost of delivering a car to the U.S. market
is higher for a plant in Mexico than for one located in
Michigan--despite the wage differential.
The book creates a thrilling-but fictional-scenario about
the Administration sneaking an extension of fast track
authority for NAFTA through the Congress this year. In
fact, fast track authority for NAFTA was obtained after a
spirited and extended public debate in 1991 and no
extension was needed for NAFTA. This years fast track
extension pertained only to the Uruguay Round of the GATT.
Perot once again criticizes but fails to provide specific
alternatives. He only offers platitudes like "Do not
violate National Sovereignty," and "Negotiate with Complete
Integrity." The one specific recommendation he suggests is
to impose a "social tariff." Yet increasing tariffs is
exactly the opposite the aim of NAFTA's. The experience of
Smoot-Hawley in the 1930s, and the depression which
are
followed, teaches us that high tariffs and protectionism
defeatist and harms economic growth.
The book claims that NAFTA jeopardizes the safety of
American travelers by opening U.S. roads to trucks and
drivers who do not meet U.S. minimum safety standards. In
fact, no provision of NAFTA exempts Mexican and Canadian
vehicles or drivers from U.S. environmental or safety
standards. This means that Mexican trucks must comply with
all U.S. regulations on length, weight, and disclosure for
transport of hazardous materials. Each country retains the
right to enforce standards that are more stringent than
standards in effect in other countries.
The book states that the NAFTA deal on agriculture is a
terrible deal. In fact, U.S. agriculture and the American
farmer are big winners under the NAFTA. Conservative
estimates show an expected increase of between $2.0 to $2.5
billion in U.S. agriculture annually by the end of the NAFTA
transition period. Those exports alone will create over
50,000 new farm related jobs in the United States and boost
farm incomes.
The book claims that NAFTA has the potential to increase
immigration, not decrease it. In fact, nothing could be
more important to reducing immigration to the U.S. from
Mexico that increasing economic opportunity in Mexico. Even
the Economic Policy Institute, which opposes NAFTA and is
a
major source for the Perot/Choate book, claims NAFTA will
reduce immigration by more than 1.4 million person in the
next six years.
A more detailed compendium of misstatements is attached.
Almost every date used in the Perot book is wrong, including
the release date. Some dates are off by months, including
the date the full text of the NAFTA was made available to
the public. Specifically, the book states the NAFTA was
initialed on October 18, 1992. The real date was October 7,
1992. The book states the text was signed on December 18.
The actual date was December 17. The book states the text
was released on January 20, 1993. The actual date was
September 18.
Extra
NAFTA creates a level playing field under which American
products and services can be sold in Mexico as easily as Mexican
products are sold in the United States. Presently, Mexican
barriers for U.S. goods are two and one-half times as high as
U.S. barriers to Mexican goods. Nevertheless, we have been and
will continue to compete effectively with Mexico.
The NAFTA will unleash economic activity that will lead to
200,000 new, high-paying, export-related jobs in the United
States. It unlocks access for U.S. products to Mexico-a growing
market which thirsts for U.S. goods and services.
We believe that NAFTA will create thousands of high-skill,
high-wage jobs, and independent studies support our view.
Approximately 700,000 U.S. jobs are currently supported by
merchandise exports to Mexico--over 400,000 of since 1986.
Moreover, these jobs pay approximately 12% more than non-
export related jobs. The Congressional Budget Office, the
International Trade Commission, and the Brookings
Institution have each performed thorough assessments of the
vast economic literature on the NAFTA--each concludes that
NAFTA will be a net job creator. U.S. workers and
businesses will win with the NAFTA.
CORRECTING THE RECORD: A RESPONSE OF THE U.S. TRADE
REPRESENTATIVE'S OFFICE TO THE PEROT/CHOATE NAFTA BOOK
DRAFT #5
9-1-93, 6:45 p.m.
Page
Book says
Reply
3
"NAFTA gives Mexican investors a
This book misses the fundamental
distinct competitive advantage in
point. Mexico's trucking market is
the U.S.-Mexican trucking industry
now closed to the United States.
in that it does not allow
NAFTA will open that market by
U.S.-owned trucks to cross into
phasing out Mexico's restrictions.
Mexico for three years, even
This will eliminate rather than
though Mexican trucks already are
create the competitive advantage
allowed to move goods into U.S.
for Mexican trucks that the authors
border areas."
describe. NAFTA is the solution;
the status quo is the problem.
3
" NAFTA jeopardizes the safety
These statements are dead wrong.
of American travelers by opening
No provision of the NAFTA
U.S. roads to trucks and drivers
exempts Mexican or Canadian
who do not meet U.S. minimum
vehicles or drivers from U.S.
safety standards.
environmental or safety standards.
The United States made it clear
"
Under NAFTA, Americans can
from the beginning of the NAFTA
expect to see overloaded Mexican
negotiations that Mexican and
trucks that will crush our
Canadian trucks will have to
highways."
comply with all applicable safety
and environmental standards when
they are operating in our country
and that these standards will be
enforced with the same stringency
applicable to U.S. operators. This
is true for regulations regarding
trucks (such as size and weight,
brakes and out of service criteria),
drivers (including language, and
hours of service) and the
environment (fuel and emissions
standards). Mexican drivers are
tested for licensing according to a
standard fully comparable to that
used in the United States. Mexican
drivers and equipment must comply
with U.S. regulations today, and
they will have to comply
subsequent to implementation of
the NAFTA.
Page
Book says
Reply
4, 5
"Despite the fact that Federal and
We do want to improve
state agencies are supposed to
enforcement of U.S. trucking
enforce U.S. trucking regulations,
regulation everywhere, but this is
they are so understaffed that they
not a NAFTA problem. Trade
will not be able to adequately
with Mexico is less than 2 percent
enforce the increased traffic
of total U.S. truck trade, and
truchey hey
volumes associated with NAFTA."
increased truck-access will not
begin until December 1995. That
is ample time to assure effective
enforcement, as is our right under
NAFTA.
6,7
"Under NAFTA, smuggling drugs
Drug-smuggling is a problem now.
into the United States will become
Rejecting NAFTA won't help us
much easier."
sole that problem in any way. In
fact, the opposite is true. Closer
economic relations will help us
work with Mexico to solve
problems like illegal drugs.
Nothing in NAFTA limits our
ability to stop illegal drugs.
9
"Clearly, the Mexican negotiators
Virtually the entire U.S. services
out traded the U.S. negotiating
industry disagrees with the Perot
Serveit
team in the areas of land
book's conclusion about services.
ownership, communications,
Why? Because under NAFTA we,
shipping and banking. But it didn't
for the first time, open Mexico's
stop there. The U.S. negotiators
market for our larger, more
stuck to their strategy and gave
efficient services companies from
away more U.S. jobs."
banking to insurance companies to
telecommunications. NAFTA is
the solution, not the problem.
Mexico currently has many more
restrictions in services than we do.
NAFTA phases out most of those
restrictions. Rejecting NAFTA
will only enable Mexico to keep
those restrictions.
Page
Book says
Reply
10
"(T)he U.S. team had agreed to let
NAFTA does not create this
Canada continue to require U.S.
problem; NAFTA helps solve the
automakers who sell in Canada to
problem. Since 1965, Canada has
manufacture most of their vehicles
offered manufacturers the benefit
there."
of duty-free treatment if they made
enough cars in Canada.
Under NAFTA (as with the
CFTA), all duties between the
United States and Canada will be
gone in four years, eliminating the
need for U.S. companies to meet
performance requirements in
Canada in order receive duty-free
treatment on products imported
from the United States.
Page
Book says
Reply
10-11
When the Perot book states that
This characterization totally
"U.S. negotiators stuck to their
misrepresents the agreement and its
strategy and gave away more U.S.
effect (as described in entries
jobs," its reference is to the auto
further on). It is inconsistent with a
sector. The book goes on to state
large body of economic analytical
that "NAFTA will allow U.S.
literature suggesting that U.S. Auto
automakers to replace american
workers will benefit, not be
workers with Mexican workers. At
harmed, by NAFTA. Another
the same time, European and
quotation from the Congressional
Japanese manufacturers will gain
Budget Office's study of NAFTA is
easy access to the U.S. markets.
both balanced and broadly
Northern Mexico will replace
representative of what sector
Detroit as the car production center
analysis has shown concerning
auto
of North America."
NAFTA and the U.S. auto sector.
"in the short and medium term,
U.S. firms and autoworkers should
helped
both benefit. The current Mexican
USR-
trade surpluses in motor vehicles
MR
and motor vehicle parts are largely
a result of export incentives and the
required minimum trade balance
imposed by the Mexican
government, which NAFTA would
phase out. The low U.S. tariff on
automotive imports mean that
eliminating these tariffs would not
significantly increase the
competitiveness of Mexican
products in the U.S. market,
whereas eliminating the much more
substantial Mexican barriers would
markedly improve the
competitiveness of U.S. products in
Mexico. Further, most Mexican
assembly plants are not very
efficient
"U.S. firms should benefit in the
longer term. Although the longer-
term outlook for U.S. autoworkers
is less certain, they would more
likely be helped than hurt. Mexico
is a long-term growth market."
Page
Book says
Reply
10, 31-33
"The United States agreed to
This statement is misleading and
immediately drop its tariffs on
completely fails to explain why
automobiles imported from Mexico
NAFTA will increase U.S. auto
while allowing Mexico to keep
production. They fail to state that
half its tariffs on vehicles produced
the current U.S. tariff on
in the United States. The
automobiles is only 2.5 percent; In
remaining Mexican tariffs would be
contrast, Mexico's tariff is 20
phased out over a ten-year period."
percent, or eight times larger than
the U.S. duty. Under the NAFTA,
this tariff is cut in half immediately
to ten percent and then eliminated
over the next nine years. The
NAFTA also phases out Mexico's
current laws that require U.S. auto
companies to manufacture in
Mexico in order to sell there.
Without NAFTA, Mexico could
maintain its high duties and non-
tariff barriers.
The fact is that the United States is
autos
already open to Mexican-produced
US abrody
automobiles, whereas a variety of
factors leave the Mexican market
ofen
closed to U.S. autos. NAFTA will
the
open the Mexican market. That is
grotecally
why the Big Three auto producers
estimate that NAFTA will increase
ofen
Fles
U.S. autos exports from their
current level of only 1,000 vehicles
to over 60,000 vehicles when fully
implemented.
Page
Book says
Reply
10
The Perot book says that "[t]he
U.S. agriculture and the American
NAFTA deal on agricultural trade
farmer are big winners under the
is just as bad."
NAFTA. Conservative estimates
show an expected increase of $2.0
billion to $2.5 billion in U.S.
agricultural exports annually by the
end of the transition period because
of the NAFTA. These exports
alone will create over 50,000 new
jobs in the United States and boost
farm incomes.
Importantly, NAFTA eliminates
Mexico's arbitrary import licensing
system which has been a major
barrier to U.S. agricultural exports
to Mexico. Tariffs will also be
eliminated, giving the United States
preferential access to the rapidly
growing Mexican market.
10
"
only Mexicans can own land
Right now, Mexico restricts foreign
that is used for agricultural
ownership of Mexican farmland
production in Mexico."
(though not to the degree suggested
by the book). NAFTA does not
change those restrictions, just as
our states can maintain their
restrictions. But the book misses
the point. Our major objective is
to boost sales of American farm
products to Mexico, not American
ownership of Mexican farmers.
Page
Book says
Reply
10
"
NAFTA allows Canadian
The book tells a very misleading
wheat producers to keep the price
story on wheat. We would like
and marketing advantages over
Canada to cease its wheat
U.S. producers that were negotiated
subsidies. NAFTA does not
in the 1988 Canadian Free Trade
change that situation, nor would
Agreement. "
rejecting NAFTA help. The
agreement does not provide for
this. Accordingly, we maintain our
right to subsidize our wheat exports
to enable us to compete with
subsidized Canadian sales.
More significantly, what the
NAFTA does do is open
opportunities to U.S. wheat
farmers to sell in Mexico. U.S.
wheat exports to Mexico will not
be subject to Mexico's arbitrary
import licensing requirements,
which are by far the greatest
obstacle to trade in Mexico.
Instead, the import license will be
replaced by a tariff, which will be
reduced to zero over a ten year
period. As a result, U.S. wheat
exports to Mexico are expected to
rise about 20% because of the
NAFTA.
Page
Book says
Reply
10
"The U.S. citrus industry will also
U.S. negotiators recognized the
suffer under NAFTA. The United
sensitivity of the citrus sector, and
States must immediately cut its
the NAFTA contains unique
tariffs on the import of frozen
transitional arrangements for frozen
concentrated citrus from Mexico in
concentrated orange juice (FCOJ)
half. In contrast, Mexico only has
to provide the maximum transition
to phase out its 20 percent duty on
period for U.S. producers.
imports of U.S. citrus over an
extended period of time."
Currently, Mexico's duty on frozen
concentrated citrus is 20 percent ad
valorem while the U.S. duty is
9.25 cents per liter (equal to about
30% on an ad valorem basis.)
Both the U.S. and Mexican duties
are reduced over a fifteen year
period. A portion of Mexico's
FCOJ exports are given immediate
access at 50 percent of the existing
tariff rate. However, the quantity
which benefits from this duty
reduction is capped for 13 years.
In recent years (1990-91), the
cetnees mel
United States imported one-quarter
of its FCOJ consumption, from
esorg" of
Brazil. It is, therefore, likely that
increased Mexican imports will
drylary Mexico mother
displace sales of Brazilian orange
juice, not sales of U.S. orange
juice. Although U.S. citrus
somein
producers will face increased
competition, this fifteen year
transition period will help the
citrus industry to adjust.
Page
Book says
Reply
10
"NAFTA also exempts Mexico
This statement completely
from the U.S. Meat Import Act,
misrepresents the benefits of
which limits the amount of
NAFTA for U.S. beef producers.
imported beef that can enter U.S.
The American beef industry is one
markets. At the same time, the
of the biggest winners of all under
agreement will give Mexico
the NAFTA. Mexican tariffs of 15
unrestricted access to U.S. and
percent on live cattle, 20 percent
Canadian feed grains, which it
on fresh beef, and 25 percent on
needs to develop a large scale
frozen beef will immediately be
cattle-feeding and beef-processing
eliminated under the NAFTA. As
industry. The result will be a
a result, U.S. beef exports to
massive shift of the U.S. beef
Mexico are expected to double
industry from the United States to
under the NAFTA. That is why
Mexico as investors rush to take
U.S. cattlemen are among the
advantage of cheap wages, low
strongest supporters of this
safety standards, and lax sanitation
Agreement.
practices."
The scenario imagined by Mr.
wemes
Perot is simply not realistic.
Mexico imports millions of tons of
aprealture
grain and oilseeds for feed
purposes, not to mention beef,
pork, and poultry, from the U.S.
servas
Neither its policies nor its
resources are appropriate for a
rational, efficient large-scale,
livestock feeding sector. While the
U.S. Meat Import Act does permit
us to restrict beef imports from
Mexico and other supplying
countries, Mexico has not been
subject to any limitations for more
than a decade because Mexico has
posed no threat. NAFTA is no
danger to U.S. beef producers.
Page 10
The fact is, the U.S. cattle and
Continued
beef industry is too large, too
competitive and too efficient to be
threatened by growth in Mexico
which is likely to be limited.
Page
Book says
Reply
"The eventual elimination of
The Perot books dismissal of
Mexican tariffs on U.S. goods
Mexico as an important market
going to Mexico, which average
shows a lack of understanding of
only about ten percent, will mean
international trade. While Mexico
little to most U.S. companies and
is currently a small economy, it is
workers. The reason is simple:
a big market for U.S. exports. It
Mexico's market is small -less
is our third largest --and fastest
that five percent of the size of the
growing--major export market,
U.S. market- and Mexican
after Canada and Japan. Mexican
consumers are poor."
per capita imports from the U.S.
total $450 per year, more than that
of Japan or Europe, even though
Mexico's per capita income is far
lower.
Cerhain jobs, etc well
Moreover, Mexico is growing, and
in the future will represent an even
of
to real guest-
bigger opportunity. Those who
dismiss Mexico as a market
do we get manyful
represent the same mentality that
30 years ago said, "Japan isn't an
opts or return
important market." We should
learn from history and secure an
open market in Mexico.
The book is also wrong in
minimizing the importance of
Mexico's current trade barriers.
The fact is that Mexican tariffs are
2.5 times as high as U.S. tariffs,
and Mexico also relies on non-tariff
barriers to restrict U.S. access to
their markets. NAFTA will level
the playing field.
14
"Mexico reduced the wages of its
This statement is false and
workers to attract foreign-owned
misleading. In the mid 1980s
factories."
Mexico froze wages to fight the
high levels of inflation and
recession the country was
experiencing. Moreover, Mexico
cut wages of workers in an effort
to balance the federal deficit and
correct its trade imbalance. Since
Since 1989
1989, Mexican wages have been
Mex ways Two
rising. Indeed, Mexico made many
of the tough decisions to reduce its
federal deficit as Ross Perot calls
on the U.S. to do.
Page
Book says
Reply
14
"President Salinas asked President
This statement is 180 degrees from
Bush for a Free Trade Agreement
the reality. A major benefit of the
to open investment in the same
NAFTA for the United States is
manner as the Maquiladora
that it reverses the Maquiladora
program."
program.
That program gave products
assembles in Mexico preferential
access to our market while
maintaining all of Mexico's trade
and investment barriers. in effect,
it established an export platform in
Mexico and encouraged U.S.
companies to move there. NAFTA
produces the exact opposite effect
by opening entirely Mexico's
market and eliminating the
distortions created under the
Maquiladora program.
Page
Book says
Reply
14-16
"The most bitter Congressional
Their mischaractarizations are an
fight of 1991 was over an obscure
attempt to discredit the major
piece little piece of legislation
mechanism by which Congress and
called the "fast track." It gave
the President share the authority
President George Bush the authority
for concluding and implementing
to negotiate the North American
trade agreements. Fast Track has
Free Trade Agreement in complete
existed since 1974.
secrecy and without the
participation of either Congress or
Fast track procedures were used to
the U.S. public
implement the results
of the Tokyo Round in 1979 when
The term "fast track" refers to a
Jimmy Carter was President
process whereby Congress turns
and the Free Trade Agreements
over to the President its authority to
with Israel in 1985 and
regulate foreign commerce..."
Canada in 1988, with Republican
president's in the White House.
All of those agreements were
approved by overwhelming
margins in Congress, in part
because the fast track
preserves Congress' role during the
negotiation, approval
and implementation of trade
agreements, through extensive
notification and consultation
requirements. Throughout
the negotiating process, there is
extensive consultation
with members and committees of
Congress. After the agreement
is reached, Congress and the
Administration work in
close consultation to formulate
Pages 14-16
implementing legislation, with all
Continued
committees of jurisdiction involved.
They are hardly "secretive" as they
clearly do not exclude Congress or
the public.
The 1991 extension was debated
for seven weeks and passed by both
Houses of Congress in an open,
democratic process. This authority
merely gives the President the same
powers all of his counterparts
around the world have. Without it,
the United States could not open
markets around the world through
multilateral and bilateral
agreements.
Page
Book says
Reply
14-16
"Congress gave President Bush
This passage of the book is pure
"fast track" authority for
fiction. In fact, because of the
NAFTA in late May of 1991. But
1991 legislation, fast track
there was a catch--these
procedures were available for trade
extraordinary powers would expire
agreements entered into by the
at the end of 24 months. Contrary
President prior to May
to expectations, the pact was not
31, 1993. President Bush signed
sent to Congress within that time
NAFTA on December 17, 1992;
period. Thus, the "fast track"
consequently, the fast track
powers expired on June 1, 1993
procedures were available for
NAFTA; no new legislation was
This was a problem to which there
needed.
was only one answer---Congress
had to pass another "fast track"
President Clinton sought additional
bill. Rather than replay the bitter
fast track authority only for his
legislative fight of 1991,
effort to complete the Uruguay
congressional allies of the Clinton
Round of multilateral trade
Administration quietly slipped
negotiations. This fast track
legislation into the one
legislation was not a part of the
thousand page budget reconciliation
reconciliation debate; it did not
package that was rushed to a House
sneak through in the dead of night;
vote late in the evening on May 27,
it was a separate piece of
1993. Not a word was said about
legislation dealing only with the
"fast track" during abbreviated
fast track. It was debated by the
debate on the budget bill. Days
House on June 22, and passed by
late, House members learned that
an overwhelming vote of 295-126.
while they were passing the
It was debated by the Senate on
budget bill they were also
June 30 and passed, as the authors
reauthorizing "fast track"
note, by the vote of 76-16.
status for NAFTA."
After it passed both Houses
separately, it was later included in
the Omnibus Reconciliation bill.
Page
Book says
Reply
14-16
"Congress also agreed to make
There is a requirement to vote
the agreement a top priority and
within 90 legislative
vote on it within 90 days after
days after the implementing
receiving it from the President.
legislation is submitted
Congress agreed, moreover, to
to Congress. "Legislative days"
limit any debate to 20 hours in the
refers to days that
House and 20 hours in the
one or the other House of Congress
Senate [without] filibuster."
is in session, and
90 legislative days is far longer
than calendar days; it
could be a period of many months.
Syncel Dee 1992
This is for longer than the period
of floor debate provided for most
Noneed for fast truch
major legislation. Moreover,
while debate in the full House and
90 days from
Senate is limited, there is extensive
debate and hearing in committees
peer bateer of
on the implementing bill, which
painstakingly fashioned, over a
anythments legisater
period of months, by all the
committees who have jurisdiction
over parts of the
legislation and the trade agreement.
The overwhelming votes on past
fast track trade agreements
confirms the degree to which
Congress and the President have
used the implementation process to
develop wide-ranging consensus.
Page
Book says
Reply
17
"Some of the bureaucrats on the
Misleading. These statements are
U.S. negotiating team were
based on a paper that was
experienced, but many were not.
repudiated shortly after it was
One participant reports that when
produced by both the author and by
the trade talks began not a single
the U.S. Department of
person in the U.S. Department of
Commerce, Chief Counsel for
Commerce's Office of Mexico
International Commerce. The
spoke Spanish. He says that during
retraction stated that the paper
one inter-agency session, only two
quoted in Perot's book "should not
of the 14 members of the U.S.
be relied on as a source of
negotiating team knew that key
information on the NAFTA because
sectors of the Mexican economy,
it is replete with factual and legal
such as petroleum, had once been
errors." This memo was published
American owned before they were
in Inside U.S. Trade on February
nationalized by the Mexican
26, 1993 (p. 16).
government. He also reports that
only five percent of the Mexican
At the time the NAFTA
documents, such as copies of
negotiations commenced, virtually
proposed regulations and
every member of the Department
administrative procedures, received
of Commerce's Office of Mexico
by the U.S. negotiating team were
had some knowledge of Spanish,
ever translated for review."
and several members were fluent
speakers of Spanish whose
language expertise was often relied
upon by their respective negotiating
groups. All necessary documents
were translated for the benefit of
negotiators. The author of the
statement, however, was not one of
the negotiators.
18
"Under the 1974 Trade Act,
Totally untrue. The U.S. Trade
Congress directed the Office of the
Representative consulted with its 39
U.S. Trade Representative to seek
advisory committees and other
advice and counsel from private
members of the private sector to
advisory panels during any treaty
the fullest extent. During the
negotiations, including NAFTA.
NAFTA negotiating process,
For the most part, it never
NAFTA negotiators held over 350
happened."
meetings with private sector
advisory committees, and an
additional 350 briefings for trade
associations and private sector
organizations throughout the
country. Each of the advisory
committees later wrote reports on
the final agreement reflecting their
extensive knowledge of the
agreement.
Page
Book says
Reply
18
"The Bush White
This statement is misleading.
House
announced the completion
Throughout the entire negotiating
of the agreement on August 12,
process, the Labor Advisory
1992, but refused to give its own
Committee (LAC), as well as all
Labor Advisory Committee the text
other advisory committees, were
to review until September 8."
allowed to view all portions of the
NAFTA text as they were
negotiated. Upon completion of
the agreement, all advisory
committees, including those
representing labor, industry,
agriculture, environmental groups
and other private sector interests,
were given all completed portions
of the final version of the text. In
fact, the first available sections of
the text were given to the advisory
committees on August 20, and by
August 27, all sections of the text
had been distributed. September 8,
1992 was the date the entire
combined text was distributed to
the committees in its final form.
18
"The 29 official U.S trade advisory
The Office of the United States
committees, involving more than
Trade Representative has 39
825 industry representatives, were
advisory committees, which are
created by Congress to ensure that
composed of over 1000
U.S. goals and bargaining positions
representatives of not only U.S.
in trade talks, such as the NAFTA,
industry, but also U.S. agriculture,
would be guided by advisers who
labor and environmental groups as
represent the broad interests of the
well as a committee of state and
United States. This balanced
local government officials.
review did not occur during the
Furthermore, the Labor Advisory
NAFTA negotiations."
Committee (LAC), which consists
of approximately 100
representatives of a broad range of
organized labor throughout the
United States, had more interaction
with NAFTA negotiators than most
other individual committees.
During the NAFTA negotiating
process, representatives of the LAC
met with negotiators 42 times to
discuss the details of the
agreement.
Page
Book says
Reply
18
"The most important of these
Here, Mr. Perot incorrectly claims
advisory committees was the
that Congress has no say in the
Advisory Committee on Trade
structure of the advisory
Policy and Negotiations(ACTPN).
committees. However, as Mr.
Its 45 members were appointed by
Perot, himself, states in the
the president. None were
paragraph preceding this, it was
confirmed by Congress Each
Congress that drafted the legislation
member was prohibited from
creating the advisory committee
sharing information outside the
system in its current form. In
group. The ACTPN meetings were
accordance with this legislation, the
exempt from the sunshine
President is required to select
provisions of the Federal Advisory
advisory committee members.
Committee Act, which require that
the public's business be conducted
Also, with regard to public
in public."
disclosure, the statutes governing
the ACTPN and other committees
state that information discussed in
meetings is to remain confidential
to "the extent to which public
disclosure of such information can
reasonably be expected to prejudice
the development of trade policy,
priorities, or the United States
negotiating objectives." Since the
information discussed in advisory
committee meetings during the
NAFTA negotiations revolved
around U.S. negotiating objectives,
public disclosure of this
information would have
undermined the U.S. negotiating
position.
Page 18
Mr. Perot, of all people, should
Continued
understand how important it is not
to give our trading partners access
to sensitive information about our
negotiating position. Congress
certainly does, and has insisted that
we maintain such confidentiality.
Page
Book says
Reply
20
"After the trade pact was
False. This is another quote from
completed, one of the U.S.
the same paper later repudiated by
negotiators explained to an audience
its author. As noted in the
of federal regulators that although
Department of Commerce's
changes in most domestic
retraction: "Contrary to the
regulations normally require notice
assertion in the [paper], the
and public comment, secret trade
NAFTA is not a treaty that is self-
negotiations (such as NAFTA)
executing and it will not
could alter these same regulations
automatically supersede any
without the need for notice and
Federal laws or regulations.
public comment. The negotiator
Rather, the NAFTA is an executive
said, 'I have seen specific instances
agreement that will supersede
where USTR staff denied copies of
existing laws only to the extent
U.S. negotiating positions which
provided by the Congress in
would require overturning Federal
implementing legislation."
regulations from the staff of the
agency issuing those regulations'."
Congress has the final say as to
whether to change our laws.
NAFTA doesn't change that.
Extensive consultations with every
regulatory agency ensured that they
were informed of NAFTA
developments, and regulators from
many agencies, including the
Department of Agriculture, the
Food and Drug Administration, the
Environmental Protection Agency,
the Federal Communications
Commission, and the Department
of Energy were integral members
of the NAFTA negotiating team.
Page
Book says
Reply
20-22
Perot makes a variety of claims
The U.S. broom industry was
regarding the treatment of the
accorded one of the longest
broom industry.
transition periods of any industry
under the NAFTA -- a longer
adjustment period than given any
Mexican manufacturing industry.
Contrary to the allegations of Mr.
Perot, it is not true that the U.S.
industry was promised an even
longer period; it is not true that
U.S. negotiators sought to
encourage the broom industry or
any other to move production to
Mexico; and it is not true that the
Mexican industry was allowed to
participate in the negotiations with
the United States and Mexico.
What is true is that broomcorn
brooms have been one of the most
highly protected products in the
United States (although the United
States, by Act of Congress, already
gives duty free treatment to imports
of Caribbean and Andean brooms.)
In extensive consultations with Mr.
Libman and other U.S. broom
producers during the course of
negotiations, the industry made
clear its major goal was to maintain
the U.S. tariff at half its current
rate for as long as possible. The
agreed-upon 12-year phase out
accomplishes this. Mexico is
permitted to ship 100,000 dozen
brooms without duties (which Mr.
Libman approved, on behalf of the
U.S. broom industry). For all
exports above this level, duties
reduced are by 30 percent in year
one, an additional 20 percent in
year seven, with no further
reductions until year 12. Thus, the
duty will remain at or above 50
percent of its current level for 12
years; the 15 year phase-out
provided to other sensitive
industrial products, the tariff would
have fallen below this mark in 7
years.
Page
Book says
Reply
23
"When the agreement was initialled
All these statements are false. The
on October 18, 1992 - two weeks
NAFTA was initialled October 7,
before the U.S. Presidential
1992, not October 18, 1992. The
election - the American public was
text of the tariff reduction
handed a short, marked up version
schedules had previously been
of the agreement."
released on August 27, and the full
text of the agreement had been
provided to the public on
September 18. In the period from
August 12 on, the text was
complete, but subject to technical
corrections in a process of legal
review. The texts were at all times
available to members of Congress,
and from September 18 were
available to the public as the text
went through technical verification.
23
"When the Agreement was
The agreement was signed on
officially signed on December 18,
December 17 (not 18), 1992, and
1992, no additional information was
the completed text was publicly
provided to the American people.
available at that time. No new text
The complete text of NAFTA was
was issued January 20, 1993,
finally released to the American
which was inauguration day in the
people on the afternoon of January
United States.
20, 1993)."
23
"Only a handful of people know
While it is clear that the authors
what it actually in the agreement. "
are not among those who know
what is in the agreement, there
have been a large number of
economic analyses and other public
even date I
material written on NAFTA.
signey was
In fact, most credible independent
economists conclude that NAFTA
wrong
will be positive for the U.S.
economy.
Page
Book says
Reply
28-29
"NAFTA will accelerate the loss of
False. U.S. exports of
manufacturing jobs in the United
manufactures to Mexico have
States."
grown rapidly since Mexico
lowered its trade barriers after
1986, and are projected to grow
more under NAFTA. This has
actually added 500,000 new jobs to
the American economy.
The Clinton Administration agrees
that "manufacturing matters" and is
concerned about the structural shift
away from manufacturing during
the last decade. However, NAFTA
is not part of the problem. It is,
instead, part of the solution.
NAFTA will create the largest
market in the world. By increasing
our export opportunities, NAFTA
will enable us to take advantage of
U.S. economic strengths, which
include high-wage, high-tech
manufacturing, and to increase
further the number of jobs
associated with exports to Mexico.
31
"Mexico provides automakers an
False. NAFTA immediately
easy escape hatch from the high
reduces and eliminates Mexican
cost of operating in the United
local content and local production
States, and they are taking
requirements that have encouraged
advantage of it."
U.S. automobile and parts
manufacturers to move production,
and jobs, to Mexico. With
NAFTA, the United States will be
able to export automobiles and
parts to Mexico, the fastest
growing market for these products
in North America. NAFTA
reduces and eliminates Mexican
trade balancing rules that require
the export of automotive products
produced in Mexico to the United
States in order to import parts
needed for assembly to serve the
Mexican market.
In other words, NAFTA phases out
current Mexican measures which
force investment in Mexico and
exports from Mexico in order for a
company to sell in Mexico.