REVIEW OF THE PRESIDENT'S SUPPLEMENTAL AGREEMENTS TO
THE NORTH AMERICAN FREE-TRADE AGREEMENT AND AN
UPDATE ON THE URUGUAY ROUND OF THE GAH NEGOTIA-
TIONS
(Ambassador Mickey Kantor)
Y 4. AG 8/1 : 103-10 ^^^^^^^^^^
Revieu of the Tresi Kent's Supplenen. . .
HEARING
BEFORE THE
-COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
MARCH 17, 1993
Serial No. 103-10
' #».
f:'^:^
Printed for the use of the Committee on Agriculture
U.S. GOVERNMENT PRINTING OFFICE
68-673 WASHINGTON : 1993
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-041522-5
REVIEW OF THE PRESIDENT'S SUPPLEMENTAL AGREEMENTS TO
THE NORTH AMERICAN FREE-TRADE AGREEMENT AND AN
UPDATE ON THE URUGUAY ROUND OF THE GAH NEGOTIA-
TIONS
(Ambassador Mickey Kantor)
Y 4. AG 8/1: 103-10 ,
Revieu of the i^resi^eat's Supplenen. . . ;
HEARING
BEFORE THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
MARCH 17, 1993
Serial No. 103-10
/
hr^
%
T}......
/
Printed for the use of the Committee on Agriculture
U.S. GOVERNMENT PRINTING OFFICE
6&-673 WASHINGTON : 1993
For sale by the U.S. Government Printing Oftlce
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-041522-5
COMMITTEE ON AGRICULTURE
E (KIKA) DE
GEORGE E. BROWN, Jr., California,
Vice Chairman
CHARLIE ROSE, North Carolina
GLENN ENGLISH, Oklahoma
DAN GLICKMAN, Kansas
CHARLES W. STENHOLM, Texas
HAROLD L. VOLKMER, Missouri
TIMOTHY J. PENNY, Minnesota
TIM JOHNSON, South Dakota
BILL SARPALIUS, Texas
JILL L. LONG, Indiana
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
DAVID MINGE, Minnesota
EARL F. HILLIARD, Alabama
JAY INSLEE, Washington
THOMAS J. BARLOW III, Kentucky
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
CYNTHIA A. McKINNEY, Georgia
SCOTTY BAESLER, Kentucky
KAREN L. THURMAN, Florida
SANFORD D. BISHOP, Jr., Georgia
PAT WILLUMS, Montana
BLANCHE M. LAMBERT, Arkansas
LA GARZA, Texas, Chairman
PAT ROBERTS, Kansas,
Ranking Minority Member
BILL EMERSON, Missouri
STEVE GUNDERSON, Wisconsin
TOM LEWIS, Florida
ROBERT F. (BOB) SMITH, Oregon
LARRY COMBEST, Texas
WAYNE ALLARD, Colorado
BILL BARRETT, Nebraska
JIM NUSSLE, Iowa
JOHN A. BOEHNER, Ohio
THOMAS W. EWING, Illinois
JOHN T. DOOLITTLE, California
JACK KINGSTON, Georgia
BOB GOODLATTE, Virginia
JAY DICKEY, Arkansas
RICHARD W. POMBO, California
CHARLES T. CANADY, Florida
Professional Staff
DiANNE Powell, Staff Director
Vernie Hubert, Chief Counsel and Legislative Director
Gary R. Mitchell, Minority Staff Director
James A. Davis, Press Secretary
(II)
CONTENTS
Page
Barrett, Hon. Bill, a Representative in Congress from the State of Nebraska,
written questions and responses 12
Canady, Hon. Charles T., a Representative in Congress from the State of
Florida, prepared statement 21
Response to written questions 22
Clayton, Hon. Eva M., a Representative in Congress from the State of North
Carohna, prepared statement 10
Condit, Hon. Gary A., a Representative in Congress from the State of Califor-
nia, prepared statement 7
Crapo, Hon. Michael D., a Representative in Congress from the State of
Idaho, prepared statement 24
de la Garza, Hon. E (Kika), a Representative in Congress from the State
of Texas, opening statement 1
Prepared statement 3
Response to written questions 4
Lewis, Hon. Tom, a Representative in Congress from the State of Florida,
prepared statement 11
Letter of March 11, 1993 78
Nussle, Hon. Jim, a Representative in Congress from the State of Iowa,
prepared statement 20
Sarpalius, Hon. Bill, a Representative in Congress from the State of Texas,
prepared statement 6
Witness
Kantor, Mickey, United States Trade Representative, Office of the United
States Trade Representative 25
Prepared statement 85
Submitted Material
Barrow, Robert E., master. National Grange, statement 89
(III)
REVIEW OF THE PRESIDENT'S SUPPLE-
MENTAL AGREEMENTS TO THE NORTH
AMERICAN FREE-TRADE AGREEMENT AND
AN UPDATE ON THE URUGUAY ROUND OF
THE GATT NEGOTIATIONS
WEDNESDAY, MARCH 17, 1993
House of Representatives,
Committee on Agriculture,
Washington, DC.
The committee met, pursuant to notice, at 10:05 a.m., in room
1300, Longworth House Office Building, Hon. E (Kika) de la Garza
(chairman of the committee) presiding.
Present: Representatives Brown, Rose, English, Glickman, Sten-
holm, Volkmer, Penny, Johnson, Sarpalius, Long, Condit, Peterson,
Dooley, Cla5^on, Minge, Hilliard, Inslee, Barlow, Pomeroy, Holden,
Baesler, Thurman, Bishop, Lambert, Roberts, Gunderson, Lewis,
Smith, Combest, Allard, Barrett, Nussle, Boehner, Doolittle,
Goodlatte, Dickey, and Canady.
Also present: Representative Crapo.
Staff present: Vernie Hubert, chief counsel and legislative direc-
tor; Joseph Muldoon, associate counsel; William E. O'Conner, Jr.,
minority policy coordinator; John E. Hogan, minority counsel; Glen-
da L. Temple, clerk; Anita R. Brown, Joe Dugan, Xavier Equihua,
and Lynn Gallagher.
OPENING STATEMENT OF HON. E (KIKA) de la GARZA, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
The Chairman. The committee will be in order.
We will abide by the usual practice. Unfortunately we had a cau-
cus earlier and the names may not have been noted. So if the clerk
will at this time note the members who are here in order that we
may accommodate them accordingly in the question period.
This morning we meet in order to be briefed by Ambassador
Kantor on the progress, or lack of progress, both with the Uruguay
Round of GATT and with the North American Free-Trade Agree-
ment.
Mr. Ambassador, we welcome you. We appreciate your coopera-
tion and, most of all, your availability to me and to the members
of this committee. What you do is of great importance to America
and to American agriculture, and certainly to all the members of
this committee and the Members of the House.
We know the most difficult task that you face. We want to be
fully knowledgeable not only in the process but in your endeavors
(1)
as you work for us as our spokesperson and representative. If we
fully acquaint you with our concerns and needs and if we are ac-
quainted with your endeavors, I think that it will be a very produc-
tive participation from your end, and certainly it will be very help-
ful to us.
So again, we welcome you to this committee. We hope that your
availability will continue, as you have privately stated to us, which
we very much appreciate. Anjrthing that we can do as a committee
or individually or collectively to work with you and assist you, we
are here at your call.
Also, any prepared statements from the members will be placed
at this point in the record.
Thank you.
[The prepared statements of Mr. de la Garza, Mr. Sarpalius, Mr.
Condit, Mrs. Clayton, Mr. Lewis, Mr. Barrett, Mr. Nussle, Mr.
Canady, and Mr. Crapo follow:]
Statanant by Rap. Kika da la Oarsa, D-TZ
Chairman, Housa Agrloultura Committaa
Haaring on Propoaad Supplamantal Agraamanta to NAFTA
and Updata on Uruguay Round of OATT Negotiations
Wadnasday, March 17, 1993
Today's hearing focuses on the Administration's effort to negotiate
supplemental agreements to the proposed North American Free Trade Agreement
on environment, worker rights, and import surge safeguards. Those
negotiations begin today, and we are pleased that the U.S. Trade
Representative is able to be with us to discuss the Administration's
priorities and objectives in this process.
As Ambassador Kantor and all of us realize, a lot is riding on the
outcome of these negotiations. For many in this Congress, support for the
yet-to-be-drafted implementing legislation to the main text for NAFTA is
dependent on what is included in these supplemental agreements. The
President himself has made clear that his own support for NAFTA hinges on
these supplemental agreements.
The negotiations that begin today offers more than just a chance to
strengthen the political support for NAFTA. The supplemental agreements
give us the opportunity to link the benefits of free trade with other
societal objectives — better protection of the environment, funding for
basic border infrastructure needs, enhanced worker rights, and improved
safeguards for import-sensitive industries in all three countries. I think
these are worthy objectives.
This Committee has an interest in all three areas of negotiation, with
the environment and import surge agreements of particular importance to
certain segments of American agriculture. You can expect to hear a lot
from us collectively and individually about the concerns of our
constituents who feel that NAFTA will have a negative effect on their
industries. We want to ensure that you are sensitive to their concerns —
and ours — and that perhaps you can try to address their concerns in the
negotiations for the supplemental agreements.
Because of the South Texas district I represent, I am personally very
interested in the supplemental agreement for the environment. It is my
hope that the environmental agreement can serve to improve the quality of
life for the millions of people who live along our 2,000-mile land border
with Mexico and to promote better stewardship and protection of the
region's natural environment — its air, soil and water resources. I would
also hope the environmental agreement would seek to better protect the
quality of our other "border" with Mexico, that is the Gulf of Mexico.
In addition, we have asked Ambassador Kantor to give us a sense of
what the Administration's intentions are with respect to reviving the
Uruguay Round of negotiations under GATT.
This Committee has followed the ups and downs of the Uruguay Round for
more than six years now and many of us have become quite frustrated and
disillusioned by the lack of progress. It is my hope that you. Ambassador
Kantor, and this Administration can somehow bring about a successful
conclusion to the Uruguay Round that will open export markets for the
entire U.S. economy and our agricultural sector in particular.
I welcome Ambassador Kantor to his first public hearing before the
Committee and look forward to working with you in the coming months on
these and other trade issues important to American agriculture.
QUESTIONS FROM CHAIRMAN DE LA GARZA AND USTR'S ANSWERS
Treatment of Peanuts in the NAFTA
Q. Learning from their experience whereby the Canadian Free
Trade Agreement has resulted in a flood of peanut products made
from Argentina and Chinese peanuts coming into this country, do
you agree that the proposed Mexican Free Trade Agreement would
limit any imports of peanuts or peanut products to those of
Mexican origin? It is my understanding from earlier hearing
before this committee that the then Administration was willing to
agree to this provision.
A. To be eligible for the preferential duty, paragraph 10 of
Annex 703.2 of the NAFTA reguires that all peanuts imported into
the United States from Mexico be harvested in Mexico. Likewise,
peanut products imported into the United States from Mexico must
be made from peanuts harvested in Mexico to be eligible for the
lower duty. Peanuts and peanut products imported into the United
States from Mexico which do not qualify for the NAFTA preference
will continue to be subject to existing tariffs and other
restrictions that presently apply.
Q. It is my understanding that under current law and the
proposed NAFTA treaty, that the re-imports of exported U.S.
additional peanuts is prohibited. To insure this understanding
with the NAFTA, would you object to our adding this prohibition
to the implementing legislation? It is my understanding from
earlier hearing before this committee that the last
administration had no objection.
A. The NAFTA does not prohibit re-imports of exported U.S.
additional peanuts from Mexico. Legislation which would
establish such an import prohibition would be unnecessary and
inconsistent with the NAFTA. As stated above, the Agreement
requires that peanuts imported into the United States from Mexico
be harvested in Mexico to receive the NAFTA tariff preference.
Peanuts imported into the United States from Mexico which were
not harvested in Mexico, including the re-import of additional
peanuts or products made from such peanuts, will continue to be
subject to existing restrictions. In that connection, the United
States retains its authority to assess substantial penalties on
handlers for importing peanut products made from U.S. additional
peanuts.
Q. Under U.S. law, U. S. -produced peanuts must meet strict
quality and grade standards. Would you object to our adding to
the implementing legislation requirements that imported peanuts
meet the same standards? It is my understanding from earlier
hearing before this committee that the last administration had no
objection.
A. Nothing in the NAFTA will prevent the U.S. Food and Drug
Administration, or other U.S. regulatory agencies, from
inspecting at the border to ensure compliance with human, animal,
and plant health standards. The NAFTA requires that sanitary/
phytosanitary measures have a scientific basis and be no more
rigorous for imported product than for domestically produced
items. In that regard, a provision calling for inspection for
aflatoxin in peanuts imported from Mexico to be just as rigorous
as that for domestically produced peanuts would not be
inconsistent with the Agreement.
Q. I understand that you are working on surge protection to help
the sugar industry adjust to the proposed NAFTA. Would peanuts,
and other commodities such as livestock and wool, be covered by
these provisions if you are successful in working them out?
A. The import surge side agreement is not expected to be
commodity specific. It would apply to all products covered by the
NAFTA, including sugar, livestock and wool. Our objective in
this regard is not to change the mechanisms in the NAFTA, but
rather to ensure that these provisions can be effectively and
fairly used by all sectors. In crafting this agreement, we will
be cognizant of the fact that our exports are a much larger share
of the Mexican and Canadian markets than are their exports to our
much larger economy. Accordingly, we must be attentive that we
do not inadvertently create unwarranted obstacles to the growth
of our own exports. We envision that a Safeguards Committee
would be established under this side agreement to examine trade
and employment trends at the request of any party to assess the
likelihood of safeguard actions. The Committee would be composed
of government officials of each NAFTA party and would report to
the NAFTA Trade Commission (the trade ministers of the respective
countries) .
OPENING STATEMENT
THE HONORABLE BILL SARPALIUS
HOUSE AGRICULTURE COMMITTEE
HEARING ON NAFTA AND GATT
MARCH 17, 1993
Thank you Mr. Chairman, and welcome to our distinguished
witness, Trade Ambassador Mickey Kantor. It is truly a
pleasure to have you here today to discuss two topics of great
importance to the American economy, the North American Free
Trade Agreement and the Uruguay Round of the General Agreement
on Tariffs and Trade.
While GATT has its own distinct set of problems, especially
concerning the opposition of American policies by French farmers
in the European Community, NAFTA offers us, both in the Congress
and the Administration, the opportunity to formulate and shape
policy that will directly affect the American economy for many
years to come. I am both excited and cautious about this
particular policy, and I hope that we will be able to work
together to critically and thoroughly analyze the impacts of
NAFTA.
While NAFTA is projected to be a benefit for a great deal of
agriculture in my district, I have several concerns that I feel
need to be addressed. Wheat trade has suffered since the U.S. -
Canada Free Trade Agreement and there is no indication that
these issues will be dealt with in NAFTA. The issues of end use
certificates and Canadian rail subsidies are of central concern
to American wheat producers, and I feel that is our obligation
and our duty to investigate these concerns, along with those of
sugar, fresh fruits, vegetables, and other adversely impacted
commodities.
The three side agreements proposed by President Clinton will be
an excellent means of addressing these concerns, and I look
forward to hearing your thoughts on these matters, and working
with you to ensure that the agreement will be of benefit to all
of the American economy. This must be our purpose in this
matter.
I thank you, Ambassador Kantor, for coming before this Committee
to address these concerns, and I look forward to hearing your
testimony.
OPENING STATEMENT
BY
CONGRESSMAN GARY A. CONDIT
HOUSE COMMITTEE ON AGRICULTURE
HEARING ON PROPOSED
U.S. - MEXICO FREE TRADE AGREEMENT
MARCH 17, 1993
Mr. Chairman, I would like to take this opportunity to thank
you for holding this hearing on the important subject of the North
American Free Trade Agreement. As you know, I have concerns about
the impact of such an agreement on the economy of my state and my
congressional district. To this end, I look forward in hearing
Ambassador Kantor's views on this historic trade accord.
The U.S. agriculture industries I believe most at risk are the
fruit and vegetable industries. The implications for California
agriculture are obvious. Agricultural trade between the U.S. and
Mexico is almost perfectly balanced. In 1991, the U.S. reported
nearly $3 billion worth of agricultural exports to Mexico. Mexico,
in turn, exported $2.5 billion in agricultural products to the
United States. The picture dims however when the products shipped
between the t,wo countries are more closely examined. The majority
of U.S. exports to Mexico include bulk feed grain and livestock
products. The primary agricultural exports from Mexico to the U.S.
are horticultural products. It is safe to say the horticultural
products which are grown in the U.S. will experience the greatest
competition from Mexican producers. But even in this instance, the
8
impacts would be uneven. California producers of avocadoes, and
winter vegetables would face stiffer competition in both domestic
and Canadian markets. On the other hand, California processors of
deciduous fruit and producers of high-value and value-added
specialty products might gain from economic growth and an expanded
market in Mexico estimated to be 360 million consumers.
In the 1992 presidential campaign. President Clinton promised to
negotiate two side agreements to the NAFTA: one each on
environmental and labor issues. Since the election, President
Clinton has also indicated he wants a side agreement on import
surges. Agriculture, especially the fruit and vegetable sectors,
have expressed the need for some type of protection from Mexico for
sensitive crops — in essence, import surge protection. It is my
hope that Ambassador Kantor will address these issues today.
I also have concerns for the sugar provision as written. This
agreement was negotiated by the previous administration, many of
whom are still in their positions. I think, Mr. Ambassador, that
we should take a long, careful look at this agreement and correct
those things which are unfair to sugar farmers. Much has been said
about "side agreements." I endorse that concept and trust you will
strongly consider using that tool to "fix" the proposed agreement.
I am very concerned about the impact of the North American Free
Trade Agreement (NAFTA) on the economy of the Central Valley. I
have yet to be convinced that this agreement will serve the needs
of the agriculture conununity and nation as a whole. As you know,
the Central Valley economy is enormously dependent on agriculture.
Without agricultural production, all sectors of our economy will
suffer. I would hope that the Agriculture Committee will continue
to look at this agreement closer during the upcoming months to see
what it really means to the nation's agriculture community.
10
PREPARED STATEMENT OF HON. EVA 11. CLAYTON
Opening Statement for Full Committee Hearing on NAFTA
Wednesday, March 17, 1993
Thank you Mr. Chairman. I would like to extend a warm
welcome to Ambassador Kantor for coming to the Agriculture
Committee. We appreciate the resolve of Mr. Kantor in securing
fair and productive trade agreements which enhance the prosperity
of U.S. export industries. This is especially true in regards to
American agriculture. Further, I would like to thank Mr. Kantor
for his commitment in attaining fair and equitable trade between
the United States and other countries.
Recently, I had an opportunity to meet with several
agricultural commodity groups that have voiced their concerns
about the North American Free Trade Agreement and how it may
affect their footing in the U.S. domestic market. Today, I hope
that Amb. Kantor can shed some light on the direction that the
Administration is taking in regard to the supplemental agreements
which will soon be negotiated.
It is my sincere desire to see a fair settlement in regards
to the labor and the environment as well as putting safeguards on
the problem of import surges. These points create real concern
for not only the people of my congressional district, but for all
Americans who might be adversely affected by NAFTA as it exists
in its current form. I hope that you can speak to this problem.
Finally, I want to address the problem of the point of
origin regulations inherent in NAFTA. The fear that specific
industries have regarding the point of origin of certain
agricultural commodities is very real. I know that you will
address this concern in a thorough fashion.
Thank you.
11
STATEMENT OF
THE HONORABLE TOM LEWIS
MARCH 17, 1993
Ambassador Kantor, I appreciate your being with us here this
morning to discuss two very important issues to the Committee.
I am pleased that President Clinton has recognized the need to take
significant additional steps through side agreements to enhance the
current North American Free Trade Agreement.
As you are well aware, I and most of my colleagues from the Florida
Congressional delegation are deeply concerned about the impact of
the North American Free Trade Agreement on Florida's $6.2 billion
agriculture industry, the second largest in the State.
The Administration's consideration of environmental, labor and
import surge side agreements to NAFTA presents a window of
opportunity to address our concerns. We are hopeful that we will
have the opportunity to work to obtain the necessary changes to
make NAFTA work for Florida.
Make no mistake, I believe NAFTA has potential long-term benefit to
the United States. A 360 million consumer trading bloc and $6
trillion market cannot be ignored. However, just as apparent is
the short-term expense of NAFTA borne in large part by Florida
agriculture.
These losses are clearly documented beginning with the 1991
International Trade Commission Report. ITC found that Mexican
producers are able to supply the U.S. market with many of the same
horticultural products grown and processed in the United States at
a much lower cost. The report also found that U.S. citrus and
winter vegetable growers can expect to experience losses in
production.
Florida is responsible for providing more than one half of our
nation's fruit, vegetable, citrus and cane sugar during winter
months. In my view it is not unreasonable to insist that NAFTA
contain proper safeguards to guarantee fair competition between
Mexico and the United States.
I am hopeful we can address some of these concerns this morning.
Again, Ambassador Kantor, welcome to the Committee.
12
QUESTIONS FOR THE RECORD
FROM HONORABLE BILL BARRETT
TO AMBASSADOR KANTOR
Ambassador Kantor, under the current sugar provisions, both
Mexico and the United States would adopt TRQ's (Tariff Rate
Quotas) so that all restrictions on sugar trade would be
eliminated by the end of a 15 year transition period. In the
first six years of the agreement, Mexico's sugar exports would be
limited to its current quota allocation of 7,258 metric tons. If
Mexico attains net exporter status during this six year period,
it would be allowed to export its net surplus up to a total of
25,000 tons. From year seven to fifteen, Mexico would be allowed
to export up to 150,000 metric tons of it net export surplus to
the US.
1. Q. Mr. Kantor, under this provision, would Mexico need only
be projected to be a "surplus producer" of sugar for two
consecutive years to be able to send the U.S. its entire surplus
of sugar after the sixth year of the agreement?
A. The projection would only apply to the upcoming crop year.
As in the case of most USDA program crops, we are interested in
production and trade of the upcoming crop. The administration of
the U.S. sugar program is based on projections of the U.S. and
world sugar situation. Under NAFTA, we will simply include
projections for the sugar supply and use situation in Mexico.
Any errors in U.S. or Mexican sugar projections will be
corrected. As provided for in the agreement, each year the net
surplus producer estimate will be adjusted for the previous
year's under- or over-estimate.
2. Q. Mr. Ambassador, if Mexico is a net importer of sugar and
its producers are higher cost and more subsidized than U.S.
producers why are we providing Mexico virtually unlimited access
to the U.S. market after 6 years?
A. Both Mexico and the United States are net importers of sugar
and are expected to maintain that status for the foreseeable
future. Mexico is a higher cost producer, but Mexican producers
are not more heavily subsidized than their U.S. counterparts.
In the NAFTA, the U.S. and Mexico have committed to a complete
elimination of all agricultural trade barriers — tariff as well
as non-tariff — for all commodities. There are no exceptions.
The sugar provisions of the NAFTA are unique within the Agreement
and unusually tough because access for sugar is tied to the
ability of each nation to become a net surplus producer of sugar.
Mexico can only reach net surplus producer status with
substantial investment and time. Given its growing population
13
and relative large per capita consumption of sugar, it is
unlikely that Mexico will reach that status in the foreseeable
future.
3. Q. Mr. Kantor, do you anticipate Mexican substitution of
High Fructose Corn Syrup (HFCS) for sugar in its large soft drink
industry as a result of the encouragement to achieve surplus
producer status provided in the NAFTA?
A. We do not anticipate significant Mexican substitution of HFCS
for sugar in the Mexican soft drink industry in the foreseeable
future. At present, neither the economic nor dietary incentives
for switching from sugar to other sweeteners are present in the
Mexican market. Also, NAFTA is unlikely to provide sufficient
economic incentives to bring about large-scale substitution of
HFCS for sugar.
The U.S. and Mexican sugar price at the producer level is roughly
the same. Therefore, there is no large price advantage for
Mexican producers to gain by shipping sugar to the United States,
especially considering transportation charges and infrastructure
constraints. Additionally, HFCS is not manufactured, nor widely
used, in Mexico. Currently, 5 companies in Mexico operate 7 corn
wet mills producing traditional products such as corn starch,
glucose syrup, dextrose, and corn oil. These facilities are not
equipped to produce HFCS. Major investment would be required to
update these mills or construct new facilities.
Soft drink manufacturers, the primary user of sugar in Mexico,
would have to make major investments to switch their production
facilities from using sugar to HFCS. In addition to their
investment, any conversion to HFCS in Mexico would involve major
policy changes in Mexican corn imports (limited in the first 15
years of the transition period to a level that would restrain
Mexican production of HFCS) and significant investment in Mexican
HFCS facilities or new infrastructure to import large quantities
of HFCS from the United States.
4. Q. Won't Mexico have a 1-2 million-ton sugar surplus to ship
to the US just by converting their domestic beverage industry
from sugar to corn sweetener, as the NAFTA would provide enormous
incentive to do so?
A. We expect that shifts in the industry will continue to be
driven by economic factors. For the reasons stated above, it is
unlikely that there will be a major shift from sugar to HFCS in
Mexico in the foreseeable future.
5. Q. Would these conversions have an impact on the US corn
market or US corn production?
A. In the near term, any additional use of HFCS in the Mexican
market would probably come from product imported from the United
States, since Mexico currently has no facilities for producing
14
HFCS. In the longer term, if Mexico were to develop HFCS
production capacity, it would inevitably have to depend on U.S.
corn as its raw material source.
6. Q. How can you verify future claims by Mexico that it has
achieved net exporter status? How can you verify that it is not
"substituting" — importing foreign sugar for domestic use and
shipping Mexican sugar to the US? How can you verify Mexico is
not "transhipping" — importing foreign sugar and shipping to the
US as if it were Mexican sugar? What's to stop Mexico from
exporting all their domestically grown sugar to the US and
importing sugar for their own use?
A. We will be meeting with Mexico to compare production,
consumption, and stock data. Over the last 20 years, USDA has
developed a robust data series on the Mexican sugar market which
we will use to compare with the Mexican data. The United States
will also have the right "to observe and comment on the
methodology" Mexico uses to prepare its data. The United States
will be completely assured that Mexico is indeed a net surplus
producer before we accept that claim.
The NAFTA sugar component contains measures expressly designed to
prevent substitution and transhipment. NAFTA rules of origin for
sugar have been constructed to prevent Mexico from becoming an
export platform for either raw or refined world sugar. World
sugar refined in Mexico is not eligible for the NAFTA preference.
Also, by the end of the sixth year of the transition, Mexico is
required to adopt the same tariff level on sugar from non-NAFTA
countries as the United States maintains. From that point on
through the transition, a common U.S. -Mexico tariff on sugar,
together with the provision which links access to net surplus
producer status, will eliminate any incentive for transhipment or
substitution,
7. Q. In regards to the import surge side agreement, would this
include sugar provisions? Would the US sugar industry gain
further protection through this side agreement?
A. The side agreements are still being negotiated. Therefore,
it may be premature to indicate what will or will not be in these
agreements. However, we have made no product-specific proposals
at this time. Our current proposal is largely procedural in
nature. We want to make sure that the safeguard provisions
already contained in the NAFTA are well understood. In addition,
we are looj<ing at procedures which could provide an early warning
of the need for safeguard actions. In this regard, a Safeguards
Committee would examine trade and employment trends at the
request of a party to assess the likelihood of safeguard actions.
In addition to the safeguards that are already incorporated in
the sugar provisions of the NAFTA, the agreement has a general
safeguard which is available to the sugar industry or any other
import-sensitive industry. Depending on its final content, the
side agreement on import surges could facilitate access to the
15
general safeguard for sugar and other import sensitive
commodities.
8. Q. What is the time table of this side agreement?
A. We hope to conclude successfully the side agreements by early
summer.
Under the dry edible bean proposed agreement, the U.S. would
eliminate the 1.1-1.3 cent per kilogram tariff on dry beans
imported from Mexico. In return, Mexico would implement a
transitional (TRQ) for dry beans for 15 years, and assure US
duty-free access to the Mexican market for 50,000 metric tons
annually.
Enclosed is a letter from a constituent of mine regarding the US
dry beans provisions. I would appreciate your comments regarding
his concerns.
A. Mr. Kelly sent a similar letter to us. In the NAFTA
negotiations, we placed our most trade sensitive items in the 15-
year phase out category and Mexico did too. Dried beans was one
of the commodities for which Mexico insisted on a 15-year phase-
out of import restrictions. Mexico does not apply tariffs to
U.S. dry bean exports but maintains a restrictive licensing
system. Under the NAFTA, Mexican import licenses will be
eliminated immediately, substituted by a tariff rate quota.
Initially, no tariffs will be applied to the first 50,000 metric
tons of U.S. bean exports to Mexico. This duty-free quantity
will increase by 3 percent each year while the over-quota duty
will be reduced to zero during the 15 year-transition period.
The tariff rate quotas developed in the NAFTA negotiations were
based on both U.S. and Mexican official trade data. In 1990, the
United States exported 153,000 tons of dry beans to Mexico. In
1991, we exported 38,000 tons, and, in 1992, we exported 27,548
tons.
Neither the NAFTA nor the U.S. -Canada Free Trade Agreement (CFTA)
address domestic subsidies. This topic has been reserved for
discussion in the Uruguay Round multilateral trade negotiations
of the General Agreement on Tariffs and Trade.
Under the CFTA, Canada excludes agricultural products shipped
through western Canadian ports for consumption in the United
States from transport rates established under the Western Grain
Transportation Act. With regard to subsidized exports of
Canadian dried beans into the Mexican market, the NAFTA does not
preclude the United States from countering Canadian subsidies in
the Mexican market.
9. Q. Mr. Ambassador, Canada currently controls about 75
percent of the Mexican wheat market. This is largely due to
Canadian rail subsidies and the tricks that are played by the
16
Canadian Wheat Board.
Does the NAFTA address any of these problems?
If not, does the Administration plan to address any of these
problems through the side agreements?
A. The agricultural chapter of the NAFTA essentially represents
two bilateral agreements — one between the United States and
Mexico and the other between Canada and Mexico. There were no
discussions between the United States and Canada on any
agricultural market access issues. This is primarily because of
Canadian reluctance to address these issues in a comprehensive
fashion. The NAFTA, therefore, does not address problems in
wheat trade across our northern border. Trade in agricultural
goods between the United States and Canada will continue to be
governed by the rules of the U.S.- Canada Free Trade Agreement.
Canadian Wheat Board sales of durum wheat into the U.S. market
have recently been the subject of high level discussions between
U.S. and Canadian officials. We recognize the seriousness of
this situation and are committed to dealing with it in a
bilateral context. With regard to subsidized exports of Canadian
wheat into the Mexican market, the NAFTA does not preclude the
United States from countering Canadian subsidies in the Mexican
market.
10. Q. Mr. Ambassador, you've indicated your desire to extend
FAST-TRACK and revive the GATT talks. Can you give me some
indication as to what direction the Administration plans to take
with the GATT talks?
A. Enclosed are press releases issued by the White House and
USTR announcing the President's decision to request an extension
of "fast track" authority. Also, we are enclosing the formal
proposal which was sent to the Congress on April 27.
11. Q. Does the Administration plan to push for export subsidy
cuts in the EC?
A. The Uruguay Round agreement on agriculture will include a
provision requiring multilateral export subsidy reductions.
Assuming the Blair House agreement are formally accepted by
Uruguay Round participants, the outcome would be export subsidy
reductions of 21 percent in volume and 3 6 percent in expenditure
levels over six years. Since the agreed upon base period for
export subsidy reductions is 1986-1990 and the current level of
EC export subsidies is substantially above the base, the real
reduction for the Community from present levels will be
substantially more than suggested by the Blair House agreement.
12. Does the Administration plan to push for further cuts in
the EC's internal supports?
17
A. The current Uruguay Round text on agriculture, as modified by
the Blair House agreement reached between the United States and
the EC, calls for a 20 percent reduction on an aggregate basis
over six years, using 1986-88 as the base. Direct payments that
are appropriately linked to production-limiting programs will not
be subject to the reduction commitment if certain conditions are
met (for crops: fixed acreage base/fixed yields or payments made
on less than 85 percent of base level production; for livestock:
fixed number of livestock head) . All Uruguay Round participants,
including the EC, must comply with these commitments.
13. Q. It seems to me that past GATT talks have focused to
merge the US and EC farm programs and payments with hopes to find
level ground. In the US we have supply management, in the EC we
have production, production, production. Many of the grain
companies would like to see the US move toward production,
production, production. Some farmers and others are satisfied
with supply management programs and would like to see the EC
pattern their programs after ours. How do you see the
Administration approaching this?
A. We view the Uruguay Round not as an exercise to harmonize
U.S. and EC agricultural policies, but as effort to reform
agricultural trade on a global basis. Considerable progress has
been made in developing multilateral rules and disciplines for
domestic support programs and agricultural export subsidies, but
more work is needed in the area of agricultural market access.
18
Kelley Bean Co<
BEANS & PEAS
ALL VARIETIES IN BULK AND PACKAGES
MarHIl, Nebraska
693SI
March ie, 1003
CongrMSfflan Bill B«rr«tt
1213 Longworth HOB
Washington O.C. 20516
D«ar Congreesman 6arr«tt:
X want to porsonally thank you for taking your valuable tloM and attending th«
Congressional Recaption that the National Dry Bean Council had at our recant
Washington Meeting. Your support of the dry edible bean Induatry of Nsbraska Is
always appreciated. I
Z understand that U.S. tra^-^relentatlve Hlokey Kantor will be appearing
before the House Agricultural Coonlttee this afternoon discusaing NAFTA. Aa I
have expressed to you personally several tiMa over the paat year. If the MAFTA
agreeiient Is not side barred for agr1oi(.^re with specific protection for dry
edible beans we will Im in dea^'trw^le Jiat^ the sugar beet Industry but for
different reasons.
At the aeeting In Washington, the Jfat1«^i pry Bean Council (representing all
growers and processors In the iJ.S^.) .went dhr record with a unanlmn resolution
opposing the NAFTA agreoawit as written bui^ln support of free trade. Why is
the NAFTA Agraeaant wrona for drv edible beans?
' ' 'I-'" ■ ' 1 ' '
1. The U8DA did not seek 'input of the industry.
2. The negotiators failed to address the Canadian rail subsidy which
I will be used to cross the U.S. into Mexico.
I 3. And this is the big one. They used only the sales to the Mexican
govemmartt (Cortafiupo) for export nunbere but they failed to
address the day to day bean sales that go acroes the border. Up
to two Mi 11 ion cwt of Pintos each year (25x of what Is considered
to be U.S. doa^tic 9pnsMBp^4on).
4. They did not address the: unilateral subsidy to the Mexican grower
(#31.00 U.S. per <Mt on J>1nto beana - coa^red to |27.50 for U.S.
Pintos cleaned and bafloed delivered to the Mexican border). Jbft
V,$, flfOwqr 99%9 P9 ^Wt«1<^ on <trY beans,
6. They Mde the phase.out^on the TRQ (Tariff Rote Quota) too long -
fifteen yeera. ..::. : .:^ ie
We, the dry edible bean industry would. recoawend that the side bar agreenent
contain the following and this is backed up the resolution of the National Dry
Bean Council representing all growers and processors in the entire United
States:
1. Fast track the phase.out; 2-5: years and not fifteen.
2. Raise the quote allowed without a tariff from 60,000 Mtric tons
to 160,000 net ric tons per year. If nothing else, this will
allow our day tojday business to cross the border without
tariffa.
Post-It'* Ixaiyl lax transmittal imamo 7671 'W
Telex 43a
Oe,
sac
Atx^
■*
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"^mL^ ^
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V;<^^7-^G
19
PAO£ 2 KEllEY KAN CO., WK.. MORffiLL, NEBRASKA
3. Cut or do away with tho Mexican subsidy to thair growar.
4. Do not allow tha Canadlana to uaa their freight subaldlas acroaa
the United Stataa Into Mexico.
8. And last but not least the aost important: Open the border
liMMdiately for day to day.butlneas to cro&s without the tarlffa
that exist today.
Hr. Barrett, we appreciate your support. If you have any questions or rvMd data
to support ny 1ett«r, please contact:
Hr. Phil KliriMll, Executive Director
National Dry Bean Council I
1101 ConMctjq^^Ave. NM, Su1t« 700
Washington b.CT^ 20036
Thank you for your support of tha^Jtebri«j|Mbb^n producara.
Very truly yours,
KELLEY BEAN CO.
Gary L. Kelley ,s • h '.h* Vatfin
President -.'.^^dcM :• u~
': > ■ . :i. ;;..u-. . .
cc: Bill Bolster, President, National Pry B^an Council
Phil Kimball, Executive 01 recipr^. ((at Ipnal Dry Bean Council
Nebraska Dry Bean Contltsloh
Elizabeth Berry
j:
20
STATEMENT OF THE HONORABLE JIM NUSSLE
HEARING ON THE NORTH AMERICAN FREE TRADE AGREEMENT
MARCH 17, 1993
Thank you Mr. Chairman for calling this hearing today. And
thank you Ambassador Kantor for coming here to share the
Administration's views on the North American Free Trade
Agreement .
There has been a good deal of public speculation recently
about the success of a NAFTA and whether Congress will support
the current agreement. I support the NAFTA as it currently
stands because I believe the long-term benefits of the current
proposal are extremely positive for the United States.
As we move toward a global economy, promoting free and fair
trade among the United States, Canada and Mexico must be a
critical component of our economic plan. I might also add that
coming from the State of Iowa, where sales to Mexico and Canada
account for more than one-third of Iowa's total exports, the
NAFTA is especially important. Moreover, NAFTA also opens the
door for increased exports of value-added products, which will
help many states like Iowa increase its value-added exports which
are so important to our nation's domestic economy.
Finally, I look forward to hearing more details this morning
on the supplemental agreements for labor, environment and import
surges that the Administration plans to begin negotiating. I
would caution the Administration, however, not to push for any
supplemental agreements that would seriously undermine the NAFTA
proposal currently on the table.
Thank you again Mr. Chairman for holding this hearing today.
21
CHARLES T. CANADY
'2tm Distbict Florida
COMMITTEE ON AGRICULTURE
DtPARTMENT OPtR*TIONS AND NUTRITION
FOREIGN AGRICULTURE AND HUNGER
COMMITTEE ON THE JUDICIARY
CIVIL AND CONSTITUTIONAL RIGHTS
ECONOMIC AND COMMERCIAL LAW
INTERNATIONAL LAW IMMIGRATION,
AND REFUGEES
Congregg of tfte ®nitcb States
J^ousr of Ecprcsentatibes
8aa8l)ington, 1B€ 20515-0912
STATEMENT OF CONGRESSMAN CHARLES CANADY
of Florida
before the House Agriculture Conunittee
March 17, 1993
1 107 LONCWORTH BUILOtNC
Washinoton. DC 20SI5-O9I2
1202) 226-1252
Federal BuiLOmo
124 South Tennessee avenue
lakeland fl 33801
18101 688-2651
Mr. Chairman, As the Conunittee moves to review the provisions of
the proposed North American Free Trade Agreement, we must
carefully scrutinize the trade pact to ensure that America's
agriculture producers are not put at an unfair disadvantage in
the global market place. Florida's $6.2 billion agriculture
industry will be subject to a major trade agreement that, while
helping other sectors of agriculture across the country, could
devastate Florida agriculture as we know it.
High-tech, labor intensive production is at the heart of Florida
agriculture. Because of this, our growers are greatly burdened
by the cost of government regulations. Our producers must comply
with labors laws, environmental laws, transportation laws and
numerous other government regulations that place an added cost on
producers that many estimate to be 3 0-percent of the production
costs. Government has added that 30-percent to the cost of
agriculture production, in order to guarantee the American
consumer that U.S. products are safe and nutritious. Mexican
producers face a far different government and regulatory
environment.
Mr. Chairman, this is not a question of whether Florida fruit and
vegetable producers can compete with imports from Mexico, Canada
or any other country. This is a question of whether they will be
allowed to compete. Our producers have spent millions of dollars
to transform their operations into the most efficient,
streamlined operations in the world. Let us not lose sight of
this success in our efforts to reach a trade agreement.
I look forward to hearing the testimony of Ambassador Kantor
today and hope that as the Administration moves through the
construction of the implementing language and the negotiation of
the side-agreements, they will take into consideration that
Florida's producers, as well as America's producers, currently
produce the safest, most abundant food supply in the world. I
will not support an agreement that does not address the built in
competitive disadvantages our producers currently face. Without
properly addressing those disadvantages, the 30-percent of
production costs I spoke of earlier will be turned into a 30-
degree tilt in the international playing field and that tilt will
not be in our favor.
Thank you Mr. Chairman.
PRINTED ON RECVCLEO PAPER
22
QUESTIONS FROM CONGRESSMAN CHARLES CANADY
Q. Ambassador Kantor, I am concerned about the regulations that
the U.S. government has placed on the American agriculture
producer in order to guarantee that the commodity produced is
safe and nutritious. We have heard that Mexico has Sanitary and
Phytosanitary standards that are comparable to America's. Also
the pesticide regulations and environmental standards are
similar. However, the enforcement structure is not in place to
ensure that production tools that are banned in the United States
because of health and safety concerns, are not being used in
Mexican agricultural production. How will the NAFTA agreement
provide guarantees that imported citrus products, tomatoes etc.
are being produced in a manner that meats American standards?
A. All food products imported from Mexico — or from any other
country — must comply with Environmental Protection Agency (EPA)
tolerance regulations for residues in food and with all other
U.S. regulatory agency requirements. The NAFTA will not change
any of these requirements.
The U.S. Food and Drug Administration (FDA) and the U.S.
Department of Agriculture (USDA) (for meat, poultry and eggs)
have primary responsibility for monitoring imports for
compliance, and for taking enforcement action. These inspection
and enforcement functions will in no way be weakened by NAFTA.
Q. What process will be established to monitor pesticide use?
In the case of EBDC's it was proven that residue levels at the
farm gate were much higher than in the market basket study which
showed basically undetectable levels. There are many pesticides
that are banned in the U.S. that can be used by Mexican
producers. Given the make-up of the product, no residues will
be discovered by the time the product reaches the inspection
sight at the border. Are we going to set up a new inspection and
monitoring process through this agreement to address this
problem?
A. Because of the large volume of imported foods coming from
Mexico, FDA devotes a substantial portion of its monitoring
efforts to Mexican products. For example, more than a quarter of
the imported food samples collected by FDA annually for pesticide
residup surveillance are from Mexico. While FDA monitoring
reports indicate that Mexican compliance has tended to improve
over the years, the violation rate for Mexican produce is
generally higher than the violation rate for domestic produce
tested by FDA.
23
Because of the increased amount of Mexican produce entering the
U.S. and related concerns about the violation rate for that
produce, U.S. and Mexican officials are working together to (1)
analyze and resolve, to the extent possible, differences in
pesticide residue standards between our two countries and (2)
discuss ways to educate Mexican growers on U.S. import
regulations. This unprecedented joint initiative by U.S. and
Mexican regulatory authorities is expected to significantly
narrow the differences that exist and reduce the violation rate
for Mexican produce. The project is indicative of an overall
improvement in cooperation and communication between North
American environmental protection/pesticide enforcement agencies.
Sparked by the prospect of NAFTA, closer coordination between
North American regulatory authorities on pesticide issues will
strengthen enforcement and enhance consumer and environmental
protection throughout the region.
USTR/LC 9-10-93
24
statement Submitted by Congressman Michael D. Crapo
MR. CHAIRMAN:
MR. KANTOR:
I WANTED TO THANK YOU FOR APPEARING BEFORE THIS COMMITTEE ON THE
ISSUE OF THE NORTH AMERICAN FREE TRADE AGREEMENT. IT IS AN
IMPORTANT ISSUE WITH MANY RAMIFICATIONS FOR MY CONSTITUENTS.
WHILE I BELIEVE THAT MOST AMERICAN COMPANIES AND BUSINESS HAVE MUCH
TO GAIN FROM THIS AGREEMENT, I HAVE SERIOUS CONCERNS REGARDING THE
SUGAR PROVISIONS OF THE AGREEMENT. IF PASSED IN ITS PRESENT FORM,
THE AGREEMENT COULD CAUSE SERIOUS DAMAGE TO THE U.S. SUGAR
INDUSTRY.
IDAHO, AS YOU MAY KNOW, IS AN IMPORTANT SUGAR PRODUCING STATE. THE
SUGARBEET INDUSTRY, FROM PRODUCTION THROUGH PROCESSING, PROVIDES A
SOLID ECONOMIC BASE FOR MY DISTRICT AND HELPS SUPPORT THE RURAL
AREAS OF IDAHO THROUGH PROVIDING JOBS AND INCOME. I DO NOT WANT TO
SEE THIS ECONOMIC BASE DAMAGED THROUGH IMPLEMENTATION OF AN
AGREEMENT WHICH DOES NOT PROVIDE ADEQUATE SAFEGUARDS TO THE SUGAR
INDUSTRY.
I BELIEVE THAT THE FOLLOWING MODIFICATIONS TO THE AGREEMENT ARE IN
ORDER.
1. THE SURPLUS PRODUCER CALCULATION DEFINITION MUST BE EXPANDED
TO INCLUDE THE CONSUMPTION OF CORN SWEETNERS . IT APPEARS THAT
MEXICO COULD GENERATE A 1 TO 2 MILLION TONS SUGAR SURPLUS
MERELY BY CONVERTING THEIR LARGE BEVERAGE INDUSTRY FROM SUGAR
TO CORN SWEETENERS, AS OCCURRED IN THE UNITED STATES.
2. THE PROVISION GIVING MEXICO VIRTUALLY UNLIMITED ACCESS TO
THE U.S. MARKET AFTER 6 YEARS IF IT IS PROJECTED TO ACHIEVE
SURPLUS PRODUCER STATUS TWO CONSECUTIVE YEARS IS TROUBLESOME
AND MUST BE DELETED.
3. THE PHASE-OUT OF SECTION 22 IMPORT PROTECTION ON REFINED
SUGAR AND SUGAR-CONTAINING PRODUCTS FROM MEXICO OVER 10 YEARS
MUST BE LENGTHENED TO 15 YEARS IN ORDER TO BE CONSISTENT WITH
THE TRANSITION PERIOD FOR RAW SUGAR.
THESE BASIC AND FAIR MODIFICATIONS WILL DO MUCH TO DIMINISH THE
LEGITIMATE CONCERNS OF THE IDAHO SUGARBEET GROWERS, THE SUGAR
INDUSTRY IN IDAHO AND IN THE UNITED STATES.
25
STATEMENT OF MICKEY KANTOR, UNITED STATES TRADE
REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE
REPRESENTATIVE
Ambassador Kantor. Thank you very much, Mr. Chairman. I ap-
preciate your courtesies. I have enjoyed our private meetings and
I enjoyed our executive session this morning.
I learn as I go from this committee, as well as other of your col-
leagues in both bodies, and I look forward to this relationship as
I try to be your lawyer, as well as the President's lawyer, as we
pursue these trade matters.
The Chairman. On this great day for the world, we welcome
you — on St. Patrick's Day. We have the wearing of the green.
I had an Irish great-grandmother, so there's a wee bit of Ireland
in me.
About this much.
Thank you very much, Mr. Ambassador. Do you have a state-
ment? You may proceed as you see fit.
Ambassador Kantor. Thank you very much, Mr. Chairman. I
will submit my entire statement for the record and then pick out
selected portions, if you don't mind.
The Chairman. Your entire statement will appear in the record
as if delivered, and then you may proceed as you feel most com-
fortable.
Ambassador Kantor. Mr. Chairman, I want to thank you in par-
ticular for your suggestions for a North American Commission on
the Environment and subcommissions to address specific transport
environmental problems. I appreciate your work on the complex
problems facing the United States-Mexico border area and the Gulf
of Mexico, which has sometimes been forgotten, as you know, Mr.
Chairman, in this.
I know that we will have many opportunities to work together
on these issues in the months ahead to find creative solutions, in-
cluding dealing with the Good Neighbor Environmental Board, of
which I know you were the author.
This morning I would like to place the NAFTA and the Uruguay
Round in the broader context of the President's vision of economic
growth, and also be available for any other questions about bilat-
eral or other treaties or obligations or concerns that you or your
members might have.
Our prosperity and that of our children depend on our ability to
compete and win in a global market. Where trade policy is con-
cerned, the United States will continue to champion open markets
and expanded trade, but we will insist that the markets of other
nations be open to our products and services, especially U.S. farm
exports.
I would just note at this point, as all of you know, that fully 10
percent of our exports, $42 billion in 1992, 30 percent of our agri-
cultural production, was exported. It is a net winner for this coun-
try and therefore critical as we try to balance our exports and im-
ports which, as you know, have not been in balance over the last
12 to 13 years.
We see our prosperity bound up with the prosperity of our trad-
ing partners, especially Canada, Europe, Japan, and Mexico. We
will work with them to promote global growth, aid the development
26
of other less prosperous nations, and address the emerging issue of
environmental protection, as the President noted in his American
University speech.
The President has consistently affirmed his support for the
NAFTA, provided it is accompanied by effective U.S. domestic poli-
cies and supplemented by domestic actions and supplemental
agreements to address concerns regarding labor, the environment,
and safeguards against import surges. Addressing these concerns
does not mean renegotiating the NAFTA itself; our goal is, rather,
to negotiate the necessary supplemental agreements and to work
with the Congress to develop implementing legislation so that the
NAFTA, the supplemental agreements, and domestic measures can
be in place by January 1, 1994.
These supplemental agreements must break new ground in find-
ing ways to raise workers' standards and environmental protection.
In these areas we are committed to agreements that harmonize up-
ward, not downward.
President Clinton is committed to the creation of a trinational,
or three-party, Commission on the Environment, and I look for-
ward to hearing further views from the committee on how such a
Commission might work.
I am also aware of this committee's concerns about adequate pro-
visions to address surges of agricultural imports. We will not sac-
rifice substance for speed. We will not ask you to vote on NAFTA
until the supplemental agreements are completed and you can
judge how they strengthen the NAFTA. This administration will
not come to the Congress for approval of the NAFTA without sup-
plemental agreements that have real teeth, meaningfully advance
their objectives, are concrete, and contain serious commitments, as
an enhanced NAFTA package can contribute to the ability of our
farmers to compete at home and abroad and can help improve
working conditions, living standards, and environmental quality
throughout North America.
After Japan, Canada and Mexico are our second and third largest
markets for United States agricultural exports. Since 1986 United
States agricultural exports to Mexico have nearly quadrupled,
climbing to almost $4 billion in 1992, and establishing Mexico as
our fastest growing export market for farm-produced goods. In fact,
our two neighbors accounted for more than 20 percent, $8 billion,
of U.S. agricultural exports in 1992.
The United States-Mexico agreement on market access rep-
resents a significant change in the status quo. Upon implementa-
tion of the NAFTA, tariffs and tariff-rate quotas will replace cur-
rent nontariff barriers in United States-Mexico agricultural trade.
Roughly half of United States-Mexico trade will be duty-free at the
moment the agreement goes into effect; 9 years later, all agricul-
tural tariffs between the United States and Mexico will be elimi-
nated except duties on certain highly sensitive products. Barriers
on U.S. imports of sugar, peanuts, orange juice, and a few fruits
and vegetables will not be eliminated until the 14th year after the
agreement takes effect.
At the same time, Mexico will eliminate its barriers on corn, dry
beans, powdered milk, sugar, and orange juice.
27
The bottom line is that NAFTA should give U.S. agricultural pro-
ducers significant opportunity in our fastest growing export mar-
ket. We expect particular benefits for our exports of beef, pork,
poultry, eggs, dairy products, grains, and oilseeds.
The NAFTA also contains strong provisions in chapter 7 safe-
guarding the ability of Federal and State governments to set the
standards they deem appropriate to limit exposure to pesticide resi-
dues and other additives and contaminants.
President Clinton is committed to the successful completion of
the Uruguay Round of multilateral trade negotiations, which has
been ongoing since 1986. Several complex issues remain to be re-
solved. The Clinton administration, in consultation with the private
sector and Congress, is focusing on the remaining obstacles to be
overcome before the Uruguay Round is completed.
I think we can complete the Uruguay Round in a way that will
benefit the United States and the world economy, but based on our
discussions to date I do not believe that we were as close to comple-
tion as some reported in early January. When the EC Trade Min-
ister, Sir Leon Brittan, was here in February, I told him that our
goal was a good agreement, and not just a quick one.
By the way, I talked to Sir Leon just this morning, Mr. Chair-
man, and reiterated that concern. I will be in Brussels on the 29th
of this month to begin those discussions.
Let me also indicate that about 45 minutes ago we began our dis-
cussions at the Deputy level with our Mexican and Canadian trad-
ing partners on the supplemental agreements.
The administration is carefully reviewing the agreement on in-
ternal support and export subsidies reached between the United
States and the European Community at Blair House last Novem-
ber, and we must resolve with the EC a number of questions re-
garding the implementation by the EC of that agreement and the
draft Uruguay Round text on agriculture.
The question of whether we can conclude an agreement depends
very much on market access commitments for goods and services
that are still being negotiated. If we obtain good results on market
access — cutting tariffs, breaking down nontariff barriers — the Uru-
guay Round will offer significant potential benefits for the Amer-
ican farm community. The Department of Agriculture has esti-
mated that a successful Uruguay Round agreement would expand
United States agricultural exports by $6 billion to $8 billion annu-
ally after 5 years, and add $1 billion to $2 billion to farm income.
We chose to announce the administration's decision to seek the
renewal of fast-track procedures when Sir Leon Brittan was here
because the Uruguay Round depends, in the first instance, on U.S.
and EC leadership in setting out the ambitious objectives to be
achieved in areas such as market access. The 3-year deadlock be-
tween the rest of the world and the EC over agriculture stalemated
the Uruguay Round and gave other nations, most notably Japan,
the ability to avoid contributing meaningfully to the successful
completion of the talks.
In this, Mr. Chairman, the EC and the United States are united
in insisting that the Japanese take a more active part in these dis-
cussions.
28
While we work to conclude the NAFTA supplemental agreements
and the Uruguay Round, we will continue to use our trade laws
and the dispute settlement provisions of our trade agreements to
open foreign markets and break down barriers to specific United
States agricultural products. We have our share of current difficul-
ties with the EC, which I will discuss with Sir Leon Brittan when
we meet again later this month. We will continue to press the EC
to implement fully the commitments it made to us on oilseeds, com
gluten feed, and malt sprout pellets. I will also meet on April 2
with Sir Michael Wilson, the Trade Minister of Canada, to discuss
among other issues wheat, which I know some of the members of
this committee are concerned about.
As this committee knows, we currently export over $40 billion in
farm products, as I noted before. That represents about 30 percent,
as I said, of the total value of U.S. farm production. We are not
a perfectly open market, of course, but because of history, practice,
and our concern for maximizing consumer choice, the U.S. market
will always be basically open. Consequently, we plan to use every
tool at our disposal — multilaterally where possible, bilaterally
where necessary — to make sure that other markets are comparably
open to ours.
I want to make that clear because the President said it very
clearly at American University, "comparably open to ours."
Mr. Chairman, I welcome the opportunity to answer questions
from you and the members of your committee, and I appreciate the
opportunity to be here.
[The prepared statement of Ambassador Kantor appears at the
conclusion of the hearing.]
The Chairman. Thank you very much, Mr. Ambassador. Again,
we appreciate you being here.
Let me say that in the context of the overall NAFTA, I appre-
ciate the comments you made about some of my proposals. I felt
that being a member of a family that lives where we live now,
when it was a part of Mexico, when it was a part of Texas, then
coming into the United States, I felt that I might have a bit more
personal sensitivity to the issues that we are dealing with. So I
very humbly made suggestions, some of which were accepted and
others of which were not.
One area that I felt very strongly about was that we must have
a private sector dispute settlement mechanism for a variety of rea-
sons, particuraly since we have different commercial codes between
the United States and Mexico — a different legal system.
We are still very concerned about sugar, as you will hear from
the members. There are also concerns with peanuts, with wheat,
corn, some of the horticultural produce, tropical fruits, and vegeta-
bles. There is still great concern on those issues and we hope that
you might be able to address those, to the extent possible, in par-
allel agreements.
We also hope that you will very closely monitor Mexico's recent
dumping investigation or concerns with exports of live hogs and
fresh, chilled, and frozen pork and offals.
This committee helped initiate the agreement on the trans-
parency and the 45-day notice. We don't want to revert to the old
system. The Mexican Government informed our Embassy on Tues-
29
day that on the next Friday, the export of hve hogs to Mexico
would be stopped. So this is where the 45-day transparency and no-
tice came in.
We do hope that you will monitor this issue closely. As you know,
Mexico is a signatory to the GATT dumping code, and I do hope
that you monitor that they follow the rules strictly.
I know this hearing is on agriculture, but I am also concerned
about the environment and how it impacts the thrust of the
NAFTA. In the North American Environmental Commission, I do
hope we realize that the border with Mexico does not end at the
water's edge. It continues through the Gulf of Mexico, and we hope
you also address issues of the Gulf of Mexico on environmental
matters. The gulf is basically a closed body of water and we need
to protect it.
I might also mention that, as you know, in the Good Neighbor
Environmental Act of 1992, sponsored by this Member, we estab-
lished a Good Neighbor Environmental Board for the United
States-Mexico border for which members are yet to be named. So
I think President Clinton has a tremendous opportunity to use this
board to begin to deal with environmental issues along the border.
Along with that, you have my recommendation — I don't think
well understood — about changing the thrust of the border merchan-
dise fee which is in existence. This fee currently goes to the general
Treasury, but we could divert it. You don't have to open the agree-
ment to do that because that is a domestic law here. It is outside
of the agreement.
I might also mention that in regard to a recent proposal to estab-
lish a trilateral development bank, we have enough money prob-
lems in our country. I feel we could have the TDB have a fund for
border environment rather than us having to put more money in
another area.
I certainly agree with you about commissions and adding more
bureaucracy. To the extent that we can keep that down, we concur
with you.
Now we will go to the members. If there is no objection, I am
going to go to 3 minutes to see if we can get all of the members.
Then for those that have more interest, after we have finished with
the existing membership, we can come back for a second round.
Ambassador Kantor. Just to respond to one thing that you men-
tioned, the situation on the allegation by the Mexican Government
that there could possibly be dumping in the area of hogs. We are
watching that very closely to make sure, one, that they adhere to
the dictates of GATT; and two, we are working with the domestic
industry and USDA to follow it. So let me assure this committee
that we are paying close attention to it.
The Chairman. Thank you very much. That's our concern. They
have a perfect right to do so. All we say is adhere to the GATT
rules, and then you monitor it closely, because they are members
of GATT.
You mentioned working with USDA. I want to commend you and
Secretary Espy for the excellent effort you are making toward co-
operation between the Department of Agriculture and your office in
the naming of a representative agreeable to both sides. So I want
to commend you very sincerely for your part of it, and certainly
68-673 - 93
30
Secretary Espy for being a part of that. It's nice we don't have to
go to two agencies; when we speak to you or when we speak to Sec-
retary Espy, we know that you are coordinating. This is very help-
ful and a little bit unusual.
So I commend you for doing the innovative and trying to do a
good job. I really am very pleased that you and Secretary Espy will
have that working relationship.
Ambassador Kantor. I have learned that it is very smart to fol-
low closely your former colleagues and do what they say, so I will
continue that policy.
The Chairman. We will go with the members that are here now.
We have a vote — I think it is the approval of the Journal. At my
stage of tenure here, I think I can miss a vote now and then,
[Laughter.]
Mr. Roberts.
Mr. Roberts. Mr. Chairman, I am not going to miss a vote, but
I will try to make it very quick here, and maybe on the second
round we can come back.
Mr. Ambassador, you can have the full benefit of the Roberts
trade speech and we can get to the details.
Mr. Ambassador, Monday afternoon the USTR and EPA staff
came up and briefed our staff on the proposed three-nation envi-
ronmental commission and NAFTA in general. Staff was informed
that the U.S. Government did not favor the creation of the commis-
sion because it would have control over the U.S. Government's
standards in regard to the environment.
We have an article in the Post that now seems to indicate the
administration is now supporting a three-nation commission. That's
my first question. If that is the case, I must tell you I am con-
cerned about this approach because of the early issue raised in re-
gard to the United States dictating environmental standards to
other governments, and then on the reverse side of it — which is the
other side of the sword — aren't we in effect then turning over our
industrial environmental standards to a three-nation commission?
Would you care to respond, sir?
Ambassador Kantor. Yes. I'd be pleased.
First of all, either someone misspoke or it was misheard, and let
me not — I think we can clarify this.
Administrator Browner and I are very much on the same wave-
length, as the President made it clear on October 4, 1992, in North
Carolina, that we would have a three-nation environmental com-
mission. That commission will not be charged with supernational
powers or to invade the sovereignty of any nation, including ours.
Frankly, Mr. Roberts, we would not want that to happen. I don't
think anyone on this committee would want that, and certainly not
this administration.
It will, though, have the power and opportunity to investigate
and follow up on petitions, to do its own reviews, to issue reports,
to look at the enforcement of national laws in any one of the three
countries.
One thing that I might point out is that, for instance, in Mexico
the laws on the books regarding the environment are very good.
They track our laws nearly on all fours, in most cases. The ques-
tion is enforcement, whether through the court system or in other
31
ways, and that's really the question of how we set up this commis-
sion and how it relates to the NAFTA itself.
But let me make it clear, this administration is for a three-nation
panel on the environment. That's what we're negotiating, starting
today. It will have real teeth in it. It will be concrete and meaning-
ful, and we are committed to it. So if there was any doubt in any-
one's mind — and I apologize for any misperceptions or
misstatements which might have been made — then I think I've just
clarified those.
Mr. Roberts. I appreciate that response.
I have some further questions but in the interests of time and
the vote, Mr. Chairman, I shall return. I yield back. Thank you.
The Chairman. I thank the gentleman.
Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman.
Mr. Allard. Would the gentleman yield for just 1 second?
Mr. Brown. Certainly.
Mr. Allard. I'd like to make a unanimous-consent request that
all members be allowed to submit a written prepared statement,
Mr. Chairman. Would that be allowed?
The Chairman. Yes; without objection. Any member may submit
a prepared statement for the record. Those statements will be
placed at the beginning of the hearing.
Mr. Allard. Thank you, Mr. Chairman.
I thank the gentleman for yielding.
The Chairman. Mr. Brown.
Mr. Brown. It is a pleasure to see you here, Mr. Ambassador.
Knowing you and your past background, I have great confidence in
your ability to do an outstanding job of negotiating with the Mexi-
cans and Canadians and other nations.
I just want to express the view that you have already heard from
many, that a successful supplemental agreement on environment,
labor, and import surges I think is essential to the passage of this.
I hope that you will give that every possible attention. Many of us,
including me, have introduced legislation that would suggest mech-
anisms for doing this. I don't know that any of them are perfect,
but it was done to indicate our interest and concern over this issue.
The reasons are very simple: If we don't take care of these issues,
many of us won't get reelected. That's a powerful motivator for us.
In that connection, refresh my memory. Is there a provision to
establish a network of research institutes with Canada and Mexico
that would deal with some of these issues that we're talking about
here? I seem to recall seeing a reference to that someplace.
Ambassador Kantor. Not in the NAFTA itself, Mr. Brown, there
is not.
Mr. Brown. In the supplementals, possibly?
Ambassador Kantor. In the supplementals what we hope to
have, in addition to the commissions, of course, is access to — if not
full-time — secretariats with expert staffs, whether it be labor
standards and safety, or in the environmental area, which can do
the kind of work which I think you and I would agree needs to be
done in order that we have a serious and concrete agreement.
We raise these standards throughout North America, not har-
monized down, which I think is a great worry.
32
You mentioned something which I think is of incredible impor-
tance. I think you really hit at the heart of this problem. We have
to come back to this Congress with a NAFTA and supplemental
agreements that make the situation substantially better, I think,
in order to be able to advocate an agreement that you and others
here would want to see this country go forward with. This is not
only in the interests of the United States. It is in the interests of
North America and global growth. If we don't make the situation
better than it is today, then we have not done our job.
So that is the criteria under which I am operating, on instruc-
tions from the President. From what I can gather from you and
your colleagues and the other body, I think it is probably what they
would like to see, a situation that is substantially better than it is
today. That doesn't mean there have to be winners and losers;
hopefully it is a win- win situation for all three countries, and I
think we can accomplish that. It's not easy; it's going to be difficult.
There will be very tough negotiations, which we started today, but
with the help of the Congress and some ideas that you and the
chairman and others have had and with the support of this Presi-
dent, which we have, I think we can get it done.
Mr. Brown. Well, the chairman has made some suggestions
based on his own long experience with the region that he rep-
resents, the border regions between Mexico and the United States.
As you know, we have problems in the border regions in Califor-
nia, mainly, very serious transport environmental problems, mani-
fested in a number of different ways. We have had these problems
for a long time. We have had mechanisms since World War II to
coordinate the health approach to the border regions, all the way
from the Gulf of Mexico to the Pacific. It's not been particularly
successful. We have had science and technology agreements for at
least the last 20 years. They have not been particularly good.
I am suggesting to you — my question raised the point that maybe
this is an opportunity to really put some teeth into this coopera-
tion, which I call research and development but you can call it a
lot of other things — this understanding of what the problems are
and what the best solutions are through a rational, systematic, re-
search-oriented kind of approach.
The President has a letter from the Florida delegation calling for
a kind of economic and social research activity; in other words,
compiling precise data that will be helpful in monitoring the effects
of the agreement. We need that emphasis on good information, sup-
port for research to get that good information, and a structure to
make sure that it works. I am suggesting that to you, in addition
to my deep concern over the standards themselves with regard to
the environment and labor.
Will you support that kind of approach?
Ambassador Kantor. In fact, yesterday, in front of the Environ-
ment Committee headed by Senator Baucus in the other body, we
talked about that. We do support it, both in terms of research and
reporting, in terms of exception conditions and reviewing, and mak-
ing public when a country is not enforcing its standards. I think
all of that is of tremendous help, using expertise on the staff and
being able to bring in expertise — ^we agree with all of that very
much.
33
As you know, I have had the experience, as you have, of talking
to everyone from Mayor Wilson to Mayor O'Conner to Mayor
Golding about the problems at the border between San Diego and
Tijuana, which are manifest, and you and I as Califomians both
know that. So we will continue. It is not just, as the chairman
knows, the Texas or New Mexico border. It is also the California
border, and we are paying strict attention to that.
Mr. Brown. As you know, I have been interested in environ-
mental research for many years. We do not have adequate environ-
mental research in our own country. If we attempt to apply envi-
ronmental standards to Mexico, we are going to be in even worse
trouble. I think our first step is going to have to be to strengthen
our expertise to understand first what the problems are, then what
the solutions are.
Ambassador Kantor. Exactly.
Mr. Brown. The research has to be aimed at the regulatory func-
tion here, as our own EPA's research is to a large extent, but then
it must go beyond that. Here's where we can help to contribute to
the economic development of Mexico, by assisting them with long-
range applied research which we have supported for agriculture,
for example, in our country, and for health.
Mexico is on the verge of developing a first-rate capability to do
that. We have set up, through legislation about a year ago, a bina-
tional research foundation to continue to support that. It is ex-
tremely weak and inadequately funded.
I want to suggest to you that we might tie together these efforts,
which go back a long way. We still have a research and develop-
ment cooperative agreement with Mexico that goes back to the
Nixon administration that has never been used. We have this pro-
posal that is in the law now for a foundation to support binational
research. We have a need to provide research in connection with
NAFTA. All of these ought to be brought together to assist not only
in enforcing the agreement, but to stimulating the economic devel-
opment of Mexico.
Isn't that so, Mr. Ambassador?
Ambassador Kantor. It certainly is. As you know better than I,
as chairman of the Committee on Science, Space, and Technology —
you have worked on this for years — we need to tie these various ap-
proaches together in a meaningful way.
We have to start with border cleanup, as the chairman referred
to. That's going to be a daunting task, especially the funding part.
Not the identification; the problems are obvious. Border cleanup,
establishment of commissions, better enforcement of law, and ac-
cess to the courts in Mexico, and then tjdng in these various ap-
proaches, whether it be applied research or using experts to deter-
mine whether or not we are really harmonizing up. That is so im-
portant— I know you would support this, harmonizing standards
up, not only in the environment but in worker standards and safe-
ty, as well.
The Chairman. I thank the gentleman.
The gentleman is very correct, Mr. Ambassador. As I mentioned,
we need to use existing facilities. To begin with, there is this Good
Neighbor Environmental Board that will include representatives
from Tijuana to Brownsville but for which the members are yet to
34
be named. Under the law they should be from every State on the
border, Governors and local officials, lay people, academic people.
Certainly this is an opportunity to begin the process.
Also as my friend, the distinguished chairman of the Science
Committee, remembers, we provided legislation in the Initiative for
the Americas which is on the books to create a Center for North
American Studies which we hope would be related to all of the as-
pects of North America, but geared more to agriculture. It provides
for a possible consortium of universities and colleges. That's also
available.
Unfortunately, all of this entails funding. Hopefully with your
help and that of Mr. Panetta and all of the members here, we
might fund it. There's also a little bit of money to be gotten from
the merchandise transfer fee — which we probably need to visit
some more. We don't have to reopen NAFTA; it's there but; no one
has noticed it. Every organization on the border supports retaining
it. Mexico has a similar one. Ours goes to the general Treasury,
Mexico's goes to their customs, and the Secretary for environmental
concerns in Mexico is agreeable that on the Mexican side those
moneys should be devoted in part to environmental and infrastruc-
ture needs on the Mexican side.
We do hope that you avail yourself of existing law with the Good
Neighbor Environmental Board. It is an excellent opportunity for
the President to put in people of his choosing from along the bor-
der. This is true also for the Center for North American Studies,
so that we may coordinate some of the existing law in relation to
research and development, because the best is yet to come in re-
search as far as agriculture is concerned, Mr. Ambassador.
We will now pick up some of the members that have come back,
if you have questions.
Mr. Dooley.
Mr. Dooley. Thank you.
Mr. Ambassador, I just thank you for coming by. I also want to
state that a lot of us who are representing the agricultural commu-
nity are concerned with some of the budgetary cuts that are pro-
posed in the Agriculture Committee which basically will result in
going from $21 billion down to $10 billion. It's certainly going to
challenge the industry, but I think it's a challenge which we accept.
But what I think is absolutely necessary when we move down
this path is that our farmers can compete with farmers in any
other country in the world, but we have to have fair access to mar-
kets. While a lot of us who are representing the industry are going
to support the reductions and the change in some of the farm pro-
grams, if we don't get the solid support from this administration
on breaking down unfair trade barriers and opening markets to us,
it's inevitably going to lead to widespread bankruptcy in the farm
sector.
I applaud the administration's stand in some of your recent com-
ments on NAFTA, because that's the future for the agricultural in-
dustry, the international marketplace. We are dealing in the inter-
national marketplace, and hopefully you will be very diligent in
pursuing some of the obvious inequities and unfair barriers, be
they Japan, be they the EC, or perhaps when we look at some of
the side agreements that are going to be considered with NAFTA,
35
that we really do try to create an equitable opportunity, because
that's all my folks are asking for.
Ambassador Kantor. I appreciate that. The President said in his
speech that we're going to "compete, not retreat." He has great con-
fidence, as you do, not only in American workers but American
farmers.
Let me talk for a moment if I could, Mr. Chairman, to respond
to that, because I think it's really a critical question that Mr.
Dooley has raised here.
Let's take the EC, for example. As you know, for years they have
had variable levies which in fact raised the price of goods coming
into Europe above the world market price and make it almost im-
possible to compete, although it's amazing that our farmers con-
tinue to do fairly well even in face of that. Their internal supports
are about $48 billion. Their export subsidies are about $13 billion,
whereas ours are about $1 billion, I think, in 1991. They have enor-
mous advantages, not only in operating here in this market be-
cause of those factors in keeping our farmers out of their markets,
but also in terms of third markets where we compete with them.
It should not go unnoticed that in 1975 the Europeans were the
greatest net importer of agricultural products in the world, and by
1985, because of what I just mentioned, Mr. Chairman, they were
the greatest net exporter of agricultural goods due to these sub-
sidies and internal supports and variable levies and other matters
that they have used.
Now, what we need to do in the Uruguay Round, Mr. Dooley, is
have a good, effective market access package. Now, there has been
some positive movement. In the Dunkle text itself, over 6 years we
lower by 20 percent internal subsidies on the 1986-1988 base. That
will help. In the Blair House agreement we lowered export sub-
sidies by 21 percent over 6 years, which will help, of course.
I have to say quickly that it does not close the gap, but at least
it puts us in a better competitive position than we are today. But
it is market access that really makes the difference. We have to in-
sist on disaggregation. We have to insist that we don't start at a
lower base than we are at today.
It was interesting that on January 2, when my predecessor met
with Sir Leon Brittan, he suggested that in market access we start
at a lower base for agricultural products than we are at today.
That was somewhat stunning, and to her credit, of course. Ambas-
sador Hills rejected that, as any good USTR would, and she was
a good one.
So we have opportunities; we have concerns. I think the NAFTA
is a big net winner if we can get these supplemental agreements,
Mr. Dooley. But you can rest assured that this USTR under this
President will be advocating for U.S. agriculture every chance I get.
Mr. Dooley. Just to follow up, we really believe strongly that the
EEP and the MPP are real tools which we can use to address some
of these unfair barriers and we hope the administration will be
willing to use those aggressively when conditions merit them.
Ambassador Kantor. Every time we have a chance to open mar-
kets and expand trade, we're going to do so, and we're going to use
every tool at our disposal.
36
The Chairman. Mr. Ambassador, one of the questions that has
come up is the question of customs and the rule of origin part of
the NAFTA. I know you have a customs working group estabhshed,
or to be estabhshed, among the three countries.
My question is, under this agreement, will U.S. Customs be able
to monitor within the other countries for compliance with rules of
origin or other areas related to customs?
Ambassador Kantor. Our rule of origin law that we have
reached in the NAFTA itself is very strict. We will be able to mon-
itor them. We don't want Mexico to become a platform for goods
that are from non-NAFTA countries.
Let me just say, to give some credit where credit is due, this was
well negotiated in this agreement by not only the staff but my
predecessor, and I think we are well protected in that area.
The Chairman. You will be able to monitor in-country, if nec-
essary?
Ambassador Kantor. Yes. We have in-country audits as well, of
course, as the normal procedures.
The Chairman. That will allay some fears, some of the concerns
expressed by members.
Mr. Lewis, we are still on the beginning round, the 3-minute
question period.
The gentleman from Florida.
Mr. Lewis. Thank you, Mr. Chairman.
Mr. Chairman, I have a written statement for which I would like
to ask unanimous consent to place in the record.
The Chairman. That consent has already been granted. Any
member may submit for the record any statement that they have.
Mr. Lewis. I may have a series of written questions that I would
like the Ambassador to respond to my office in writing.
Mr. Lewis. From where I sit, Mr. Ambassador, momentum for
the NAFTA is not at full throttle. I am aware that the situation
has yet to fully unfold in terms of total negotiations and side agree-
ments and so forth.
But we have a problem, some big problems, that we're concerned
about. You received a letter from the Florida delegation; I hope you
would respond to those concerns. We are looking at major labor
problems. We notice that only one environmental group, the Flor-
ida Wildlife Federation, has signed off on NAFTA. More groups are
jumping off ship than are jumping on board. From our observation
we see that the "Donahue Show" is one show that is educating
about NAFTA.
We have a serious concern with commodity markets, with sugar,
citrus fruits, and vegetables. They are too volatile and react with
too much speed to be adequately addressed with a volume-based
safeguard mechanism. We are concerned about transshipments as
well. We need to address these issues in a side agreement.
How do you feel we are going to be able to meet these respon-
sibilities with the tariff quota situation? Or better, I should say,
how will it be quicker to track based on volume rather than price?
Ambassador Kantor. Let me take it three ways if I might, Mr.
Lewis. I appreciate your question.
One is on the transshipment issue. Hopefully, the tough rules of
origin, with the ability audit, as the chairman and I were just talk-
37
ing about, will address that issue in an effective manner. That's in
the NAFTA itself right now.
Two, in terms of addressing the problem of surges which we're
not aware of — I think you feel they could sneak up on us — part of
the safeguard against surges is that in the supplemental agree-
ment negotiations we will discuss an early warning system that we
could implement which I think would be extremely helpful.
Three, on sugar itself, as you know, the substitution problem is
left unaddressed in chapter 7 of the NAFTA itself. We believe that
we can look at that in a hopefully effective manner, and some other
areas as well, without getting into a negotiating strategy in public.
It is certainly on the front burner as far as we are concerned, but
I would be quick to add, as you know better than I, that in fact
Mexican sugar production has gone down. Its population has
grown. We have more and more imports into Mexico rather than
the opposite. In terms of substitution, it doesn't appear at this
point that they have the ability to do that. That doesn't mean that
7 or 8 years from now — as you know, for 6 years, we have a quota
of 7,258 metric tons on sugar, and then of course it goes up after
that, assuming that they have a net production increase.
In all of those ways, because of the current situation and because
of protections and because of what I think we can do with these
supplemental agreements, I believe we can address your issues ef-
fectively. We certainly mean to do so.
Mr. Lewis. Thank you, Mr. Ambassador.
I'd like to correct one thing. I said Florida Wildlife Federation,
but I meant that the National Wildlife Federation signed off on
NAFTA.
I think we have to point out very strongly, Mr. Ambassador, that
we are very much concerned in Florida about the short-term dif-
ferences for the long-term gains. We don't feel that we can afford
those short-term losses in a $6.5 billion agricultural industry in
Florida.
Ambassador Kantor. As one who is still a member of the Florida
bar and used to practice in Immokalee, Florida, Mr. Lewis, I under-
stand some of that.
Mr. Lewis. Thank you, Mr. Ambassador.
The Chairman. I thank the gentleman.
Mr. Rose.
Mr. Rose. Thank you, Mr. Chairman.
Mr. Ambassador, in consideration of the Canadian Free-Trade
Agreement, we were repeatedly told that Canada did not produce
peanuts and should not be a concern to supporters of the peanut
program. But from the period 1988 to 1989 imports of peanut paste
from Canada were 1.404 million pounds, and in 1991 to 1992
11.396 million pounds.
Mr. Ambassador, that is a heck of a lot of peanuts from a country
that doesn't grow many peanuts. We wish you would take a look
at that. We think a reasonable interpretation of section 22 pro-
hibits the importation only of peanut butter and we can't under-
stand why peanut paste is coming into this country in violation of
section 22. Most of these peanuts are coming from China and Ar-
gentina.
38
In todays Washington Post, there is a lead editorial that says,
"How to Help Russia." Russia has no low-priced exports and no
market for our products, but China does. Why are we having one
set of rules — because this has pretty well been the administration's
policy toward Russia and the former countries of the Soviet
Union — a single condition ought to be democratic self-government.
We don't require that of China. We don't even come close to requir-
ing that of China.
I think that is the height of hypocrisy and I hope that the admin-
istration will know very soon how much we're concerned about
them getting MFN treatment. I am chairman of the Subcommittee
on Specialty Crops and National Resources. The subcommittee with
jurisdiction over the honey program. My honey producers say that
we are being flooded with Chinese honey and the import duty on
our honey going into China is 60 percent.
Maybe the American psyche is more business-oriented than I
thought. If they got a low-priced export and a market for our prod-
ucts, we don't really care about whether they have democratic self-
government. But on poor places like Russia that don't, by God, we
are real patriots. I hope you will do what you can to check into
these things.
Ambassador Kantor. Let me address that on the honey first.
That is a serious problem. In 1990 I guess about 25 million pounds
of honey came in and then it went way up over the last 2 years
up to about 60 million. But you raise a much larger and critical
issue about the Chinese. The Chinese want GATT accession, MFN
status, yet we are concerned about transshipments, mislabeling,
nuclear proliferation, use of prison labor, other human rights viola-
tions, shipments to the Middle East, and that is just the beginning.
Mr. Rose. That's right.
Ambassador Kantor. This administration is working on a coordi-
nated policy toward the Chinese which we hope is going to be effec-
tive, and not just in trade. As you know, we suffer a $19 billion
trade deficit with the Chinese today, which is unacceptable, frank-
ly, given the fact that they have not given us the market access
they agreed to give us, yet we have opened our markets quite wide
to Chinese products.
So we need to look at it as a seamless web and not just one
area — whether it is trade or nuclear proliferation. This administra-
tion is going to try to look at it as a total picture, as I think you
are suggesting. I agree with you.
Mr. Rose. I am also suggesting that there is a hypocrisy here
when we insist on democratic institutions and self-government as
a condition to our help for Russia and don't require anything close
to that for doing business-as-usual with China. I think the hypoc-
risy is just screaming at us. And that is what the hard liners in
the Russian Parliament have said to me at NATO parliamentary
meetings.
They say, "Why is America pressing us so hard to set up demo-
cratic self-government and you don't do a thing about pressuring
the Chinese in the same way?"
Thank you, Mr. Ambassador.
39
Ambassador Kantor. Thank you, Mr. Rose. I appreciate that. As
I said, we are working on our pohcy. This is our seventh week and
we're going to address these problems. You can be sure of that.
Mr. Rose. Thank you.
The Chairman. I thank the gentleman.
Mr. Ambassador, our colleague mentioned with regard to peanuts
transshipment and that the People's Republic of China doesn't
have to worry about transshipment of honey. We only charge them
1-cent-a-pound duty. So this is something that I know we visited
and you will be addressing that issue.
Within the overall, there needs to be some consistency. This is
driving a whole segment of agriculture out of business. Some critics
are taking shots at our producers because it is considered cute by
some editorial writers, yet we afford foreign producers a give-away
tariff. It is inconceivable that we would do that while the rest of
the world has duties, with the exception of Canada, which I think
is 1.5 cents. But beyond that, it is anywhere from 20 to 100 percent
tariff. I do hope there is a GATT solution — but since the/re not
members of GATT, I think we must address that on a bilateral
level, and make it GATT consistent.
Ambassador Kantor. The Chinese, of course, are imploring us to
help them with the GATT accession. I had sent a team from the
USTR to China. They were just there 10 days ago. We made it
quite clear that until in fact their markets opened up and there
was reasonable market access, we weren't going to be as favorable
toward GATT accession as they may have wanted us to be.
I think, Mr. Chairman, that the President's speech at the Amer-
ican University made it quite clear. We are going to insist that our
trading partners in this new world — this post cold war world — be
comparably open to our products as ours are to theirs. We welcome
their products, but we expect them to welcome ours.
The Chairman. That is exactly true. The old saying is "Business
is business." You have to do business in a business-like manner
and not give away the store.
Ambassador Kantor. And these are not just theories. All of your
members know that there are real businesses and real American
workers that have a stake in this. Trade is $1.6 trillion of this
economy. That is $1 out every $4. We can no longer afford to open
our markets and not insist our trading partners do the same.
The Chairman. Good for you. We will work with you.
Mr. Gunderson.
Mr. Gunderson. Mr. Ambassador, welcome.
I couldn't help but reflect as I have been following your activities
in the paper and listening to you this morning that I bet the cam-
paign was easier than this.
ii^bassador Kantor. No, Mr. Gunderson, it wasn't.
Mr. Gunderson. That may be encouraging.
Ambassador Kantor. Let m.e say that this is a delight given the
political campaign. No. 1, I can be bipartisan, nonpartisan and
work with both sides of the aisle. No. 2, I can work with a Presi-
dent who truly understands not only what I am doing, but frankly
what everybody else is doing and has set a real consistent policy
for us. No. 3, I can come up here without having to advocate politi-
cally and advocate for the American people.
40
I find it enjoyable. It is a tough task and it is challenging. The
President has never given me an easy task yet, but I am happy not
to be in a political campaign, frankly.
Mr. GUNDERSON. I appreciate the response. I am one of those
who believes that we have to find a way to make this happen. I
look forward to working with you to try to achieve that end — not
that we don't have problems. But we have to find a way, when you
look at the long-term implications of this, to make it happen.
I have a question on timing because I am confiised. Very frankly.
President Bush signed this — if I understand correctly — in Decem-
ber.
Ambassador Kantor. That's correct.
Mr. GuNDERSON. That started a clock ticking. I thought that we
had some obligations to complete by mid-year that we're now talk-
ing by the end of the year.
Can you share with us exactly what time constraints we have re-
garding the treaty, regarding side agreements?
Ambassador Kantor. We are in a situation now to fast-track the
NAFTA and the supplemental agreements and the implementing
legislation. We have now whatever time we need, want, or is rea-
sonable to bring it up here to the Congress once that has been
signed.
We were under some restrictions if we had not gotten to the
March 1 deadline and given Congress a notice on March 1. That
is the time constraint that we had.
Now let me make sure that
Mr. GuNDERSON. What happens by March 1?
Ambassador Kantor. On March 1 would have been the drop-off
date for the 90-day notice. Fast- track ran out on June 1. But Presi-
dent Bush signed on December 17, so therefore we are now in the
process of working with your staff. We will be working with both
bodies on implementation legislation.
As you know, this is prenegotiated under fast-track procedures,
not negotiated after we send it up. We will also be working with
you closely on these supplemental agreements.
Let me also indicate that we have indicated that we will seek
fast-track renewal for the Uruguay Round. The President has not
yet indicated how long he would like that to be for, but we will be
coming back with that as well.
Mr. GuNDERSON. Yesterday, I had constituents in my office who
were opposed to NAFTA. They said, "The reason we had the jack-
in-the-box disaster in the State of Washington was because the
North American Free-Trade Agreement allowed tainted meat to
come in uninspected through Canada from Australia."
You and I both know that that is not true. I share that with you
because it indicates the level of education that I think is necessary
if you're going to have any hope in succeeding at this.
But I would like to focus on the question of the environment.
What are you anticipating regarding increased enforcement at
the border? When you tell people that if it doesn't comply with our
food safety standards and it is not coming in, they say that they
don't inspect because they don't have enough inspectors.
What is the administration looking at in the area of increased
enforcement of American food safety law?
41
Ambassador Kantor. First of all, I will leave the particulars of
that to the Secretary of Agriculture who has that jurisdiction. On
the other hand, let me address two of your questions.
Environmental border cleanup is one of the highest priorities in
these negotiations that we began today on the NAFTA and supple-
mental agreements. That has to happen. The funding is a daunting
task. The chairman has given us some good and very creative ideas
in that regard, but that is going to be a very difficult task. Under
the situation we're in now, we all understand that we're trying to
do something about a structural budget deficit that is plaguing this
country. We would like to keep long-term interest low.
To the extent that we add more weight in terms of needs to that
budget, we are hurting in that regard. So we have to be fairly cre-
ative as we come back to you and work with you with regard to
border cleanup.
As far as protections, we have made it clear in the North Amer-
ican Free-Trade Agreement itself that we can enforce scientifically
based regulations to protect human health and consumption as
well as the use of various pesticides, herbicides, or whatever that
would violate U.S. law. So that is clear.
But in terms of the details and how we inspect at the border, let
me just say that the Secretary of Agriculture would be much more
competent to answer that question than would I.
Mr. GUNDERSON. Thank you.
Thank you, Mr. Chairman.
The Chairman. Mr. Ambassador — the members please forgive
me for adding little addenda to the conversation or the dialog
here — as you know, we have the La Paz Agreement, which is a bi-
lateral agreement with Mexico. Under that agreement, we have
five areas: Border sanitation, transboundary shipment of hazardous
waste, chemical emergencies, air pollution from copper smelters,
and international transport of urban air pollution. I feel that this
agreement could be used as a vehicle to address environmental is-
sues related to our two countries on the border in addition to the
Good Neighbor Environmental Board and in addition to a commis-
sion— the Gulf of Mexico.
So there are already in existence areas of which you can avail
yourself.
Ambassador Kantor. We are well aware of that. In fact, we are
pursuing how that fits into this North American Commission. We
are talking about the three-party commission on the environment
and how they would fit together.
The Chairman. Actually, we have done so many things by dif-
ferent hands that a major coordination by your office would make
your life easier, or maybe more difficult, to find all these little
pieces and put them all together.
But we want the best. I am sure that you are striving for that.
Ambassador Kantor. Mr. Chairman, when the Congress wrote
this law and in updating it over the years made it clear that that
is the job I am supposed to do on behalf of the President and on
behalf of the Congress, frankly. The Congress was really the driv-
ing force in creating this office and in trying to coordinate trade
policy and making it a cabinet position.
42
I feel very strongly that that is a major part of my responsibil-
ities.
The Chairman. We are very happy about that because we can't
negotiate, though we visit with representatives from almost every
nation in the world periodically — they come through here and we
go there. But for the technical negotiation, you are our man and
we are going to rely on you.
Mr. Glickman.
Mr. Glickman. Thank you.
Mr. Ambassador, it is a delight to see you here.
I would tell you that I did not support the fast-track authority
on NAFTA under the previous administration because I thought
there was kind of a purist love affair with free trade without un-
derstanding some of the nuances that you're dealing with now. I
have a great deal more confidence now in you and in this adminis-
tration.
Saying that, let me ask you, If you get satisfactory side agree-
ments in the environment and labor, is the President then going
to vigorously push the Congress for passage of this agreement say-
ing that this is a highly politically charged issue?
Left to its own accord this will not pass. The natural inclination
is to basically hear fi-om every group that has a problem, every
group that wants the status quo, every group that is afraid of the
future. I am not saying that there are not legitimate concerns
raised, particularly in the environmental area and in the low-wage
area.
My feeling is more a question as well as a thought. Without ac-
tive interventionist consistent and deliberate pressure from the
President of the United States, this agreement doesn't have a
chance of passing.
My question to you is: Assuming that you get stuff worked out
on the side, is that what you're going to do?
Ambassador Kantor. If we have agreements we reach which
have teeth, which are meaningful, which are concrete and serious,
this President intends to do what he said he was going to do on
October 4, and then reiterated December 17, ana then reiterated
at American University. He will come up here and advocate the
NAFTA with these supplemental agreements because under the
criteria we have talked about earlier today, does it make the situa-
tion better than it is today?
That is really the criteria — not whether or not it is perfect. There
is no such thing as a perfect world. I am glad you mentioned the
free-trade protectionism, fair trade, results-oriented management —
I have heard so many labels thrown out that I am dizzy. The fact
is that we need to make sure we have comparably open markets,
that we're pragmatic in our approach, that we really represent
American business and American workers. In this particular agree-
ment, we come back with something that really helps the situation
substantially as compared to what it is today.
I really appreciate your remarks, Mr. Glickman. You are right on
point. The President has said it time and again and he means it.
Assuming we come back with agreements, he is not going to come
up here with the North American Free-Trade Agreement without
43
them. So we have to assume that if it comes up here, that is the
circumstance that will persist at the time and he will advocate it.
Mr. Glickman. And the Mexican negotiators know that we have
to have some modifications on the environmental end and labor
issue for the President to be able to come back and sell this agree-
ment to the Congress.
Ambassador Kantor. I think that in the President's meeting
with President Salinas — as you know, when he was President-elect,
that was the first foreign leader he met with. In my meetings with
Dr. Cordoba and Minister Sara and Mr. Blanco and in our various
other meetings we have had in discussions and telephone calls we
have made it quite clear that that is the criteria.
Mr. Glickman. Is there any concern in the administration that
if we don't get an agreement that the Salinas government will fall?
Ambassador Kantor. The Salinas government falling I think is
a little bit too hysterical on the part of some folks. I think what
we want to do is understand that this is an important agreement
for increased growth in North America, for global growth, for help-
ing American business and workers as long as we have good,
tough, supplemental agreements.
That is what we have to understand. To the degree that it helps
stabilize not only this Mexican Government but helps to continue
to draw them toward a market economy and further democratiza-
tion, then we ought to welcome it as a country.
I think President Salinas has done a fine job in this regard. I
don't think we are looking at governments falling. I think we are
looking at a serious political situation, frankly, in all three coun-
tries.
I think you are right in your political assessment of what is
going on up here. I am a rookie, but even I have the picture.
Mr. Glickman. I just basically say that in a modem global world,
dealing with the Europeans and the people in the east Asian com-
munity, it does make sense. If we can get a fair agreement, the
Americas should be together in trying to compete with the rest of
the world.
Ambassador Kantor. As you all on this committee know better
than anyone, we will create the largest free-trade zone in the
world. Let me tell you, that will have a tremendous power in deal-
ing with the rest of the world in terms of opening markets further.
It will make a big difference.
That is assuming that we will be successful, of course.
The Chairman. Mr. Canady.
Mr. Canady. Thank you, Mr. Chairman.
Mr. Ambassador, we appreciate your being here today. I just
want to join in in bringing to your attention again the letter that
the Florida delegation sent to you expressing our serious concerns
about the impact that the proposed agreement will have on Florida
agriculture. Florida agriculture is a multibillion dollar business in
Florida. It is my personal concern that the agreement will have a
devastating effect on Florida agriculture.
At the risk of replowing some ground — I apologize. We were gone
for some votes and some of these questions may have already been
addressed.
44
I would like to address the issue of how we can be certain, as
part of the agreement and the supplemental agreements, that the
types of regulatory burdens that are faced by Ajnerican agriculture
are also going to be faced by the agricultural producers in Mexico.
I understand that in terms of the nitty-gritty of this and the spe-
cifics, the Department of Agriculture may actually have to make
the final determinations. I need to know what we will see in sup-
plemental agreements and what we will see in the NAFTA itself
that will ensure us that those mechanisms will be in place because
otherwise I think we have a legitimate concern that there is going
to be very much an un-level plajdng field.
Ambassador Kantor. Let me address that in two or three ways.
First of all, in the NAFTA itself right now it is given rules of ori-
gin and reductions of nontariff barriers and tariff barriers that will
help agriculture not only in the rest of the Nation but in Florida
as well.
I understand your concerns and certainly the letter I received
from the Florida delegation indicates a number of those, but let me
play off that, in a sense.
We agree that we must harmonize up environmental standards.
That has two points to it, as you well know. One is that it protects
American consumers, but more importantly than that, it also be-
gins to harmonize the cost of doing business in agriculture in Mex-
ico with the United States. Obviously, right now it is frankly
cheaper to do business in agriculture in Mexico than it is here.
So we agree with that approach. These supplemental agree-
ments, if done correctly, will do that. We also have to look at Mexi-
can occupational safety and other standards which will do the same
thing. That is the second point in your letter and it is something
that we agree with.
When we look at other points in your letter — a data base of
Mexican and United States agricultural trade protection and com-
merce— we are looking at that. These commissions will have the fa-
cilities to do that.
So many of the points you make in your letter we are addressing
in these supplemental agreements. And we will continue to do so.
Let me emphasize that we will not come back to the Congress
with something without teeth in it. We just won't do it. This Presi-
dent has insisted upon it. That is something of which you may be
sure.
The last protection that you have as a Member of Congress and
all your colleagues is that we are going to work with you as we go
along. We're not going to wait until June or July and come back
and say, "Here it is." We will keep you informed as we go along.
We will keep you informed in both executive session — which some-
times we need to do because we are negotiating, in effect, with two
other countries — and we will keep you involved at the staff level as
well, as we have tried to do.
I think that also gives you an ability to continue to advocate with
us ideas that might be helpfuL
Mr. Canady. I understand that and I appreciate that. I appre-
ciate the approach you're taking on that.
The critical thing for us is not simply a harmonization of stand-
ards, but having an effective enforcement mechanism in place be-
45
cause without that the harmonization of standards becomes mean-
ingless. Unless we can have some assurance on that ground, then
obviously our concerns will remain. Although the standards may
end up being identical, if we cannot ensure enforcement of those
standards effectively, then we really have not had redress.
The Chairman. The time of the gentleman has expired.
Mr. Volkmer.
Mr. Volkmer. Thank you, Mr. Chairman.
Mr. Ambassador, I know you have already addressed earlier with
the chairman the problem of the pork and poultry. I just want to
let you know that some of us on the committee view what Mexico
is doing as somewhat inconsistent with the idea of having free
trade and promoting free trade.
In the first place, for some time we have had a problem with
Mexico on mystery swine flu. Right now, because of that, our live
hogs going to Mexico are down about 59 percent from where they
were from 1991 to 1992. Now we find on this dumping — correct me
if I am wrong, but as I understand Mexican law, if one of those ex-
porters in El Paso actually sold into Mexico for less than what it
cost him for one hog or a series of hogs, then Mexico could put ad-
ditional levies on all hogs coming from all exporters into Mexico.
Is that correct?
Ambassador Kantor. Frankly, we don't know that to be true. I
have heard that. We are not sure of that.
As I said in answer to the Chair's questions, we are monitoring
this closely.
Mr. Volkmer. I know you're monitoring, but as I understand it,
Mexican law is different from ours in that if you dump in here,
then whoever dumps gets the levy against their product, but not
everybody. But I understand Mexican law is that if they make a
case on any one of these, they can increase the levy from the 20
percent up to equal the amount of the dumping, and that that ap-
plies to all pork going into Mexico.
Ambassador Kantor. In order to be careful, I would like to get
back to you, Mr. Volkmer, and give you a specific answer.
Mr. Volkmer. I would like to have that because if that is the
case, then how can we have free trade if they do one thing and we
do something different? I thought a free-trade agreement was sup-
posed to eliminate all that stuff.
Ambassador Kantor. Your point is well taken. We will get back
to you on that.
Mr. Volkmer. Thank you very much. I would appreciate it.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman.
Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman.
Mr. Ambassador, welcome to the House Agriculture Committee.
I want to ask you a philosophical question and preface it by a
very short statement.
I am one of those many who believe that the future of agriculture
is driven by the engine of foreign export, as I know you are. One
almost only has to look at the numbers to prove that 30 percent
of all our agricultural production is exported and the future for us
46
to profit in agriculture depends on future opportunities in open
markets.
Having said that, I have been following the GATT closely for the
last 6 years. It seems to have a life unto its own, without certainly
current solution.
Given the fact that the European Community subsidizes its agri-
cultural program $3 for every $1 of ours — that is internal sub-
sidies— externally $10 to $1 on their exports.
Given that enormity of difference, and recognizing that it is very
difficult to find an agreement without overthrowing the govern-
ments of France and Germany in the meantime, politically, how do
you ever get to a level playing field or some sort of equity in trade?
Having said that, the philosophical question is simply this: Rec-
ognizing Japan is a huge purchaser of our commodities, and rec-
ognizing that agriculture is only one part, why don't we begin to
open the question with the Japanese of a free-trade agreement? We
recognize that it would certainly send a chill into the negotiations
with the European Community, which might be productive. Second,
a bilateral agreement with the Japanese surely would enhance our
agricultural exports.
Would you comment on that?
Ambassador Kantor. I would be happy to, with great trepidation
and sometimes in speculation, but certainly I will try to comment
as I have before.
We have not done enough, frankly, Mr. Smith, in looking at the
Pacific Basin — not just Japan, but the Pacific Basin in general. It
is the fastest growing market in the world right now. For instance,
we have been talking about China. Southern China is growing at
40 percent a year. The ASEAN nations — the so-called Four Ti-
gers— are growing very quickly.
Frankly, the Japanese are having some economic problems right
now. In fact, their economy is not growing. In fact, it has been de-
clining in the last two quarters.
That doesn't mean what you're saying philosophically is not cor-
rect. It is only to say that we have enormous opportunities which
we have not addressed adequately. This is not by way of criticism,
but I think it is by way of explanation and pure fact. We have an
opportunity to do so.
Prime Minister Keating about 2 months ago made an interesting
speech in Australia where he felt we ought to put a framework
around something called the Asian Pacific Economic Cooperation
Forum, of which we are a member and the Asian nations are mem-
bers, including China. We are the chair of that forum this year, by
luck and by chance.
It may be an opportunity to open up just the kind of dialog you're
talking about, not just with the Japanese — with which we have
some bilateral problems right now — but in a wider sphere. I think
you are correct that we will certainly gain the attention of others
in the world who might have some concerns in that regard.
Mr. Smith. I have just one quick follow-up question.
When you meet with Mr. Wilson, Mr. Ambassador, we of the
West have a constant thorn in our side with the crow's nest rate,
as you may know. There is no subsidy going to Thunder Bay, but
there is going to the Pacific coast, which places the United States
47
exports particularly to the Asian areas in jeopardy. I would hope
that you could visit with Mr. Wilson regarding the crow's nest rate
and a continued subsidy to Canadian products going to the Pacific
coast.
Ambassador Kantor. We began those discussions. He was here
earlier. I have talked to him twice by phone. I am going there on
April 2. Those discussions — whether it be wheat or other prod-
ucts— are discussions that need to be held. He understands our
very grave concerns.
Mr. Smith. Thank you.
The Chairman. Mr. Ambassador, I apologize. I must leave. I will
leave you in good hands with our colleague, Mr. English, to preside.
I have to attend a very important meeting with two of my favorite
people, the Prime Minister of Ireland and the President of the
United States. We will be having a wee bit of Irish cheer.
Mr. English [assuming chair]. Mr. Sarpalius.
Mr. Sarpalius. Thank you, Mr. Chairman.
I, too, want to commend you on your new position and look for-
ward to working with you as a member of this committee.
Mr. Ambassador, could you elaborate a little more on the con-
cerns with the Canadian agreement regarding wheat where they
require and use certificates for all grains?
It has been a problem with wheat producers. Could you address
that a little further?
Ambassador Kantor. Let me just take that a little further.
That is a problem. There is also a problem with the rail sub-
sidies, which was not addressed by the FTA. There is also a prob-
lem, as you know better than I, with the Canadian Wheat Board
and how they purchase wheat from Canadian farmers. The problem
of transparency has resulted in a huge growth in the sale and de-
livery of Durum wheat, especially, into the United States. It is
something we are very well aware of and about which we are very
sensitive and concerned in the most serious way. It will also affect
barley and Spring wheat as well.
Unfortunately, in the FTA, those rail subsidies were left out of
the agreement, as you know. We had a chapter 19 panel under the
FTA which did not go forward with the action we had hoped they
would with regard to wheat, although they did allow us to go for-
ward with an audit to try to gain some transparency in what the
Canadian Wheat Board has been doing.
Frankly, I don't believe that is enough. We are having discus-
sions now in the administration and I will be seeing Michael Wil-
son on April 2. We will try to move forward and try to get some
movement in this area. It is a difficult situation. I understand that
and we are very concerned.
Mr. Sarpalius. Another concern I hear from a lot of my produc-
ers— I don't think this is just in my district. It is everywhere. One
of the biggest concerns with NAFTA is enforcement. What assur-
ances will we have that we won't see any back-door products com-
ing into Mexico and then in turn coming into this country?
"What types of enforcement will Mexico be willing to give us to
see to it that this agreement does indeed hold true, as well as along
the border of Texas?
48
There was just recently a story on "60 Minutes" regarding a
large number of immigrants coming into this country. If we become
more lax along our borders in Texas and in California, what type
of an increase in enforcement are we going to have on our borders
as well?
Ambassador Kantor. Without addressing what is a Customs
problem, the rules of origin in the NAFTA itself are very strict. We
don't want Mexico to become a platform, in fact, of products from
other countries, as you suggest. And we have a very good dispute
resolution mechanism in the NAFTA itself which involves every-
thing all the way to retaliation, if in fact there has been an offense
committed.
Therefore, we believe in the NAFTA itself what you have sug-
gested is covered as adequately as it can be. That doesn't mean it
is going to be perfect. That doesn't mean that in certain cases there
might not be transshipments that in fact violate these rules of ori-
gin, but we believe the Mexican Government is very serious about
this and negotiated this agreement seriously in this respect. We
are confident that we can enforce it.
Mr. Sarpalius. Well, saying it and putting it on a piece of paper
and doing it is something else.
Ambassador Kantor. It certainly is.
Mr. Sarpalius. That is one of the major concerns that I hear
about — what assurance do we have that there really will be some
enforcement of this. I assume you're convinced in your mind that
that problem is taken care of
Ambassador Kantor. I don't want to overstate the case. No one
should in my position. In my confirmation hearings in the other
body, I made it quite clear that I believe half of my job is enforce-
ment, not only agreements that are currently in effect but also U.S.
laws, whether it be 301, 201 in other areas.
We have to make sure that we enforce the laws on the books and
these agreements in order to make sure that they work and also
to gain the confidence of the American people, frankly. I believe
that is an important part of what I do.
Mr. Sarpalius. My time has expired. Thank you.
Ambassador Kantor. Thank you, sir.
Mr. English. Mr. Barrett.
Mr. Barrett. Thank you, Mr. Chairman.
I, too, Mr. Ambassador, want to congratulate you on your new
station in life. My apologies for not being present when you had the
dialog with members of this committee earlier. So in the interest
of time, I would also like to submit a series of questions to you and
hope that you could respond in writing, specifically with reference
to commodities, wheat, sugar, and drj' beans.
However, I have one quick question.
I continue to receive word that there has been a side agreement
with sugar. Sugar producers even are telling me that there perhaps
has been some agreement.
If we are revisiting this subject, I am sorry, but for my benefit
and perhaps for the record, Has there been any agreement up to
this point with sugar?
Ambassador Kantor. There is no agreement other than what is
in the NAFTA itself, which for the first 6 years we stay at 7,350
49
metric tons and it goes up after that, but the net production has
to increase.
I went through earUer that in the sugar area production in Mex-
ico has gone down in the last few years. But there is no agreement
other than what you have seen in the NAFTA as signed by Presi-
dent Bush on December 17. All that we have said in this adminis-
tration is that we understand the concern about substitutions of
fructose, which might lead to the assumption of more net produc-
tion therefore more exports into the United States.
We said that we will look at that problem seriously, and we are.
Mr. Barrett. Do you anticipate any kind of an agreement?
Ambassador Kantor. With all due respect, and I hope with some
sensitivity to my position as a negotiator, we are looking at it seri-
ously. It is not a subject that has been unstated to our trading
partners, and we will follow up on it. I don't think I should go any
further than that.
Mr. Barrett. I understand. Thank you.
Mr. English. Mr. Ambassador, I may have some written ques-
tions as well. Mr. Barrett was referring to some questions he want-
ed to submit, and I am sure other members of the committee will,
too. So we would appreciate it if you would consider those written
questions and get a timely response to our office.
Mr. Roberts.
Mr. Roberts. If the chairman would yield, I have a statement
and questions that are submitted by Congressman Crapo of Idaho.
I would like to ask permission to insert those, Mr. Chairman.
Mr. English. Without objection, his prepared statement will ap-
pear in the record.
Ms. Long.
Ms. Long. Thank you, Mr. Chairman.
Welcome, Mr. Ambassador. It is good to have you here.
I have a question regarding the NAFTA that I have not received
a satisfactory answer to date. What impact would the North Amer-
ican Free-Trade Agreement have on individual farm commodity
prices?
Ambassador Kantor. Frankly, because it lowers tariff barriers,
as you know, quite substantially it may not affect prices directly.
It will certainly affect the amount of our sales into Mexico, which
has become a very large importer and consumer of United States
agricultural products. So in that extent, it may affect prices be-
cause of a supply and demand situation.
I am certainly not an agricultural economist, so I cannot tell you,
but it will have a very profound effect on farm income. For exam-
ple, GATT will increase farm income from $1 to $2 billion, which
is substantial. We believe it will also have a profound effect on
farm income with agriculture, assuming that we get these supple-
mental agreements that make sense and all the criteria I have
mentioned before.
The fact is that I am not sure it will have a direct impact on
prices, but it certainly will have a direct impact on sales.
Ms. Long. I think it would be helpful if you were to conduct a
study and do some research to make some projections on individual
commodity prices. When you talk about increasing farm income by
$1 to $2 billion, you're looking at figures in the aggregate, v/hich
50
really isn't specific enough with regard to information that would
be important for individuals.
Ambassador Kantor. The staff just handed me, "A Preliminary
Analysis of the Effects of the North American Free-Trade Agree-
ment on U.S. Agricultural Commodities."
That was done in September of 1992. I will be glad to leave a
copy with you.
If that needs to be updated or if you have further questions, obvi-
ously we would be delighted to help you with that.
Ms. Long. Thank you.
I also have another question regarding the GATT. It is a
lengthier question, so I will submit it for the record and ask for a
response. It has to do with dispute settlements and the Multilat-
eral Trade Organization concept and what impact that would have
on our ability to effectively resolve a dispute.
It is a fairly lengthy question, so I will submit that one for the
record.
[The written questions follow:]
Questions for Ambassador Kantor From Hon. Long
Mr. Ambassador, for some time now a number of Members, including myself, have
been concerned with dispute settlement provisions as contained in the current Uru-
guay Round text. In particular, we are concerned about how the Multilateral Trade
Organization — the MTO — would function.
It appears to me that the MTO dispute settlement provisions bring into question
the ability of our nation to maintain laws that are challenged and lost in the MTO
dispute settlement process.
I will make available to you and your staff several documents, including a Con-
gressional Research Service memorandum which states that if the dispute settle-
ment provisions as outlined in the MTO are adopted, and I quote: "A party would
no longer have control over whether or not it must change that particular policy or
law to conform with the GATT."
I will make the entire CRS memorandum available to you and your staff for your
information. I want you to be aware that there are many Members who are con-
cerned about this. I will also make available to you a letter that over 50 Members
sent to President Bush on this issue.
Have you examined the MTO provisions with regard to dispute settlement in de-
tail?
[The answers were not submitted at time of printing.]
Ambassador Kantor. And we will try to answer that.
We have deep concerns about the MTO, both in terms of amend-
ments, waivers, decisionmaking — you name it and we have con-
cerns.
Ms. Long. As do I.
Ambassador Kantor. As a country, we have submitted about a
42-page protocol both in terms of the language — and of course the
creation of MTO itself has been questioned by this country. So we
share a number of your concerns and we would be delighted to an-
swer that question.
Ms. Long. Thank you.
Mr. English. Mr. Boehner.
Mr. Boehner. Thank you, Mr. Chairman.
Mr. Ambassador, welcome to the committee.
As you may be aware, Mexico has become the second largest
market for United States pork producers. Over the last year, ex-
ports to Mexico are down 59 percent because we have been in a dis-
pute over animal health issues.
51
In early March, the Mexican Government began initiating a
dumping investigation against United States pork producers and
the pork industry.
What actions are the CHnton administration taking to respond to
this dumping case that has recently been initiated?
Ambassador Kantor. We are looking at that closely. We have
talked about this before, but let me answer it again.
Under GATT rules, Mexico has the opportunity to initiate an in-
vestigation. We're going to monitor it closely to make sure that
they stick to GATT rules in this respect. They have alleged dump-
ing practices and have not proven any dumping practices. We are
working with the both the private sector of the industry as well as
USD A in carrying out this monitoring process. We are as deeply
concerned as you are about it.
Mr. BOEHNER. What, if any, signals are we getting, in your opin-
ion, as a result of the actions from the Mexican Government on
pork? Some of us believe that they are signaling that they are
going to continue to be tough, and selectively tough, in allowing
certain commodities into their country.
Ambassador Kantor. Frankly, some of these considerations
would be taken care of if we come back with the North American
Free-Trade Agreement with the proper supplemental agreements
that take care of these major problems we have been discussing,
I think the Mexican Government, like our Government some-
times, does not speak with one voice. I am not sure that there is
a conspiracy, as you might put it, to raise these issues in various
areas in order to create some concern. I think this is just one
area — I don't know the background of it. I don't know the genesis
of the concern, but it is something that continues to be a problem
that plagues us.
We are well aware of it. We are concerned. We know it is an im-
portant problem.
Mr. BoEHNER. The country of Mexico is a signatory to GATT.
Under GATT there are pretty strict rules for bringing allegations
of dumping. If in fact these allegations and this investigation are
unwarranted, are we prepared to go to GATT and ask for sanctions
against Mexico under the GATT rules?
Ambassador Kantor. We are prepared to take any action nec-
essary to protect this industry in this regard that is available to
us.
Mr. BoEHNER. Thank you, Mr. Ambassador.
Thank you, Mr. Chairman.
Mr. English. Thank you.
Mrs. Clayton.
Mrs. Clayton. Thank you, Mr. Chairman.
I want to submit my statement for the record.
Mr. English. Without objection, your prepared statement will
appear in the record.
Mrs. Clayton. But I would also like to express my appreciation
to Ambassador Kantor for his resolve to make NAFTA possibly a
productive instrument by which we can include not only agri-
culture products but all economy because we recognize the impor-
tance of having free trade. Our hope is not that we put some com-
modities at a disadvantage.
52
Some of my questions have been raised already by my colleagues,
particularly the origin as it relates to peanuts. I will just submit
those questions likewise.
But let me raise another question because you raised it for us.
In order to make this instrument accepted, you proposed a number
of side agreements that will speak to concerns that we have.
Beyond agriculture, I have a concern about the NAFTA from the
point of view of the environment. I have a concern from the point
of view of low wages.
You see, I come from rural America in eastern North Carolina
where a lot of the low entry level jobs are proposed to be replaced
if this comes through. I don't see on the horizon any effort to mini-
mize the conversion of that.
I speak particularly to the textile workers, but the same thing
would be with farmworkers and their wages. You just can produce
cheaper if you went to Mexico.
Not only the enforcement, which some of my colleagues raised
sufficiently, but I want to raise what you're doing proactively rec-
ognizing that that is going to be a significant problem in parts of
our county where we already have underemployment. This would
further erode that.
Ambassador Kantor. That is hitting the nail right on the head.
In fact, that is what the President on October 4 talked about in
your State when he talked about the supplemental agreements to
NAFTA.
Unless we begin to harmonize worker's standards — which in-
cludes wages, working conditions, safety, environmental stand-
ards— and begin to do two things: Better the situation as it is right
now in Mexico and throughout North America and harmonize
them; and begin to harmonize the cost of doing business. We don't
have a situation that is in fact substantially bettering what we
have today.
What we have today is the flight of capital and production. You
can't stop that from happening. It has already happened to some
degree. If in fact we can come back with successful, meaningful
supplemental agreements, as I have said, we can then harmonize
standards and begin to address exactly the problem you have ar-
ticulated so well.
That is what we are about in these supplemental agreement ne-
gotiations. That is what the President called for on October 4 and
then reiterated on December 17 and at American University.
Mrs. Clayton. Thank you.
Mr. English. Mr. Hilliard.
Mr. Milliard. Thank you, Mr. Chairman.
I believe that the supplemental agreements are going to really
overshadow the agreement from the information you continuously
give.
During the negotiation of the North American Free-Trade Agree-
ment, was an agreement made to settle side issues that were not
purely trade to be negotiated later, or are we in effect reopening
the negotiations?
Ambassador Kantor. First of all, I wasn't there. I was out cam-
paigning.
53
Mr. HiLLlARD. But do you or someone on your staff who was in-
volved in the negotiations have information?
Ambassador Kantor. Let me
Mr. HiLLlARD. There is a follow-up question I want to ask.
Ambassador Kantor. You have asked a very serious and impor-
tant question. Whether or not it was raised in the negotiations
themselves over the North American Free-Trade Agreement as was
signed by President Bush, these are issues that need to be nego-
tiated now. We believe they can be negotiated and implemented
without reopening the body of the NAFTA because they go beyond,
and are apart from, and are complimentary to, what has already
been done.
So we believe that can be done both legally and is in the best
interest of the North American Free-Trade Agreement and in the
best interest of creating a better situation in North America for
workers and business, especially in our country.
I think that goes to your question. We are very careful, though,
not to renegotiate NAFTA itself, the four comers of the document
that has already been signed.
Mr. HiLLlARD. I asked that question because it seems to me that
we don't have an agreement.
Ambassador Kantor. Without the supplemental agreements, the
President of the United States has said that he would not send the
present NAFTA to the Congress.
Mr. HiLLlARD. I understand from that standpoint that we don't
have an agreement. I am talking about that — even those that nego-
tiated that left the table shaking hands felt as if they had some-
thing.
Ambassador KANTOR. They did.
So there is a full and complete disclosure here and a
Mr. HiLLLUlD. Let me cut it short.
The benefits in the agreement — are they worth it to this country
to the extent that we will forego if we are unable to get all we want
in further negotiations on the side agreements?
Ambassador Kantor. No, but the benefits to the this country are
substantial. And those are not contradictory answers. No, we need
the supplemental agreements. Yes, there are substantial benefits.
We lower tariff barriers substantially, which will increase U.S.
business and create jobs in this country. Of the 24 studies that
have been done, 23 have shown that employment increases under
NAFTA.
Two, we eliminate nontariff barriers which have been harmful.
We protect intellectual property. We have a dispute resolution
mechanism in this that I think makes sense. We protect invest-
ments and financial services and the rules of origin are very tough.
So in all those ways which I have just articulated for you, this
agreement makes sense, but only if we can have these supple-
mental agreements to go along with it.
Mr. HiLLlARD. Thank you.
Mr. English. Thank you very much, Mr. Hilliard.
Mr. Pomeroy.
Mr. Pomeroy. Thank you, Mr. Chairman.
Mr. Ambassador, I have listened closely this morning as well and
I commend you. I think that the breadth of detailed knowledge you
54
have indicated, particularly relative to agricultural issues, show
you to be an extremely quick study. I believe as our lawyer you will
represent us well in the trade talks.
I have had a concern, representing North Dakota, that agri-
culture is about the furthest thing from the minds of our trade ne-
gotiators; that agriculture was an area papered over in an effort to
get an agreement.
This has caused some serious problems and I would just point to
the Canadian Free-Trade Agreement loopholes that have already
been mentioned. It's very harmful to our Durum growers and other
grain growers.
There is linkage to NAFTA to the extent that that loophole is in-
corporated within the NAFTA framework and Canada is allowed to
continue that practice. It also politically has really left a sour taste
in the voters in my region for free-trade talks. They don't believe
that free trade is fair trade, given what we have seen with the Ca-
nadian Free-Trade Agreement.
In your upcoming meetings with the representatives of the Cana-
dian Government, do you have hopes of addressing this issue?
Ambassador Kantor. Not only hopes, but we are.
Let me say that I have had numerous meetings with your two
Senators, who are old friends of mine, as you know. We have dis-
cussed not only in general but specifically what could be raised and
what might be effective. I have raised them already with Minister
Wilson. We're meeting on April 2 — and this is No. 1 on my agenda
and on the President's agenda — and we will try to get something
done effectively.
We understand the impact this has had in your State and in
other States as well. It is not just North Dakota. But the fact is
that the rail subsidies were not addressed in the free-trade agree-
ment. There is no transparency in the way that the Wheat Board
operates. We also have serious concerns as to how that Wheat
Board is subsidizing, if they are, the wheat farmers in Canada. We
at least gained the right to have an audit of how the Wheat Board
operates. We have end-use certificate problems, as you well know.
There are a number of things that we need to address and we're
going to do it. Whether we are successful or not is another question
in doing that. I don't want to sit here and promise more than I can
deliver. Obviously, we need consenting adults to agree.
We have some arrows, though, in our possession that we can use.
We will not hesitate to use them if it means we have to in order
to deal with this very serious issue. And this is not just Durum
wheat, it is also barley and Spring wheat, as you know better than
I.
But I will also assure you that this office and this USTR and this
President, who was Governor of Arkansas, is focused on agriculture
and will continue to do so.
Mr. POMEROY. The level of detail in your answers to my question
and the earlier questions reveal not just a sensitivity but a detailed
knowledge that I didn't necessarily believe was represented in our
earlier negotiating team.
We lost a recent appeal on the Durum issue and we can't hardly
beheve it, in Hght of the history. I think that perhaps the Canadian
Free-Trade Agreement, with its language which includes an actual
55
damage determination, places insurmountable burden to proving
the damage. The bilateral safeguard contained in the NAFTA
agreement talks about threat of injury as opposed to actual dam-
age. I think that might be an extremely important distinction if we
are to arbitrate these in a fair manner going forward.
My time has expired, Mr. Ambassador. Thank you very much.
Ambassador Kantor. Thank you for your kind remarks. I appre-
ciate that.
Mr. English. Mr. Goodlatte.
Mr. Goodlatte. Thank you, Mr. Chairman. I have no questions.
Mr. English. Mr. Bishop.
Mr. Bishop. Thank you very much, Mr. Chairman.
Mr. Ambassador, I am from the peanut-producing area of the
country, the State of Georgia, where 45 percent of the country's
peanuts are grown, 90 percent of which are in my district.
Under the NAFTA and based on continuation of the current sup-
port price policy, the domestic quota of peanuts in the United
States, the world price for peanuts, plus the proposed tariff would
be equal to less than the support price in the second or third year
of the North American Free-Trade Agreement. The economic im-
pact on the United States peanut industry could increase substan-
tially if Mexican farmers and even United States investors in Mexi-
can agriculture start producing peanuts for export to the United
States.
Lost revenue to the U.S. peanut farmers would easily reach $75
million to $100 million annually soon after NAFTA becomes oper-
ational. The economic impact on local rural communities in peanut-
growing areas would be substantial. It is estimated that it will
more than double the amount of lost revenue, which would mean
$150 million to $200 milhon.
I would like to know whether or not the side agreements will
contain any provisions to ameliorate or eliminate this drastic eco-
nomic impact on U.S. peanut farmers and on the rural commu-
nities in which they live. These communities are tied to the farm-
ers, the farm bankers, the crop insurance people, the feed and seed
people, the fertilizer people, and so forth and so on, with a domino
effect.
Ambassador Kantor. Let me address that in a couple of ways.
I appreciate your comments.
Even though it wasn't this administration, I think there was
some sensitivity to peanuts in the negotiations. Let me just indi-
cate that the volume in metric tons of peanuts shipped to Mexico
in 1989, 1990, and 1991 is quite substantial and the coming in is
quite limited, as you know.
Mr. Bishop. As of right now.
Ambassador Kantor. That's correct. I understand that. I also un-
derstand that you are raising an issue which concerns the future,
and I appreciate your concern.
The rules of origin are very strong and very strict in terms of
peanuts as well as other commodities. No. 2, there is a 15-year
phase-out on the tariffication of our quotas on peanuts, which gives
us a very long phase-out period, which is protective of the industry
itself.
56
I know you are referring to a study that has been done by the
industry. We have looked at that study and will get back to you
on it. We are not as convinced that that is correct. We hope it is
not. Obviously, the last thing we want to do — especially where it
appears to me that you represent about 38 percent in your district
of the peanuts in this country — is to do something that would have
a substantial impact upon you and your constituents.
But it is a serious problem. It is one that was intended to be ad-
dressed both in rules of origin and in the tariffication process. We
will continue to take a look at that and work with you on it.
Mr. Bishop. Although NAFTA purports to be a trilateral agree-
ment, it is my understanding that Canada declined to include large
segments of its supply managed commodities in order to protect
their own domestic commodities.
The U.S. peanut industry believes that the U.S. Government
should have insisted on the same provisions for all U.S. section 22
commodities. The rules of origin don't go far enough in protecting
the American peanut industry, and non-NAFTA peanuts will be
particularly difficult to catch at the border if they are processed
into such products as peanut paste, peanut butter, peanut oil, and
confectionery products. There is a lack of confidence that there are
sufficient safeguards to prohibit transshipment from other coun-
tries. At the present time, it seems that neither our Customs Serv-
ice nor the USDA have the resources to enforce the rules of origin
provisions to which you referred.
Is it possible in the rules of origin to make a technical amend-
ment to refer to the use of Mexican-grown peanuts rather than
NAFTA peanuts?
Also, to what degree will your agency be able to pursue third
party counties bringing peanuts through Mexico as a conduit?
Ambassador Kantor. We have taken care of your first concern.
That is in the agreement. No. 2, the rules of origin, which are very
good and very strict, should take care of your second concern.
The Canadians insisted on a separate agreement between Can-
ada and Mexico on agriculture. They did not join in a three-party
agreement. I think it is unfortunate, frankly. Let me say that I
know this is not your concern, but in dairy products and poultry
and those areas, they probably hurt themselves very badly because
they have left open an open field for the U.S. producers in that
area.
Mr. Bishop. It seems like we are so willing to give away the
store in terms of our own commodities where we are allowing other
countries who want to participate in NAFTA to protect their own
domestic products. But we're not doing the same thing for ours.
Ambassador Kantor. Let me say that we are not willing to give
away the store.
Mr. English. Mr. Peterson.
Mr. Peterson. Thank you, Mr. Chairman.
Mr. Ambassador, we appreciate your being with us today. I am
not even going to ask you about sugar. I am going to talk about
wheat and barley.
To follow up a Httle bit, one of the problems that you have with
this agreement, in my opinion, is because of the experience we
have had with Canada. Every week that goes by, the experience
57
gets worse and makes us more skeptical and nervous about what
might be happening in this situation where Canada and Mexico
want to have a separate agreement on agriculture. It really trou-
bles us because we used to have 75 percent of the wheat market
in Mexico and the Canadians had 25 percent. Now they have 75
percent and we have 25 percent. We are losing our milling wheat
and the Canadians are picking up the market in the Northeast.
We have had the dispute panel. The Americans voted against us
here a couple of weeks ago. So our folks are really nervous about
how this thing might play out with Mexico and are frankly upset
that we weren't able to get some of these Canadian issues on the
table to be resolved while we are trying to set up this North Amer-
ican Free-Trade Agreement.
I understand you weren't there when this was all going on, but
I would hope that somehow or another we can address some of
these issues. There is no way that we can include the Canadian is-
sues into these side agreements so there is no way we can bring
them into the talks at all?
Ambassador Kantor. We talked about this earlier and I appre-
ciated the conversation.
Because the Canadians refused to join in the NAFTA three-party
agricultural agreement, the FTA is still in effect. That doesn't
mean that we are without methods of going forward and dealing
with the problem you are raising, whether transparencies, sub-
sidies, or rail subsidies or other matters regarding wheat. We have
EEP; we have countervailing duties; we have the right to try to
reach a bilateral agreement; and we have the right to talk to Cana-
dians in open negotiations about restraints on imports into this
country or exports from Canada into the United States. So there
are a number of things we can address which we're beginning to
do with Minister Wilson.
Let me say that what is interesting — and I understand this par-
ticular problem and all of these are important. Under the FTA, our
trade deficit with Canada has substantially declined. We have done
quite well. Frankly, if you read Canadian newspapers, what is hap-
pening up there is that there is tremendous opposition to the FTA
because they have not done as well economically they believe as
our country has. So I guess it is which part of the elephant or the
donkey — to be bipartisan — you are touching as to the impression
that you get. [Laughter.]
The fact is that what you are raising is serious. We mean to go
forward. We will continue to work with you, as I have said before,
because we understand it is a real problem between Canada and
the United States and also in third countries like Mexico. I am try-
ing to separate that out from the NAFTA itself because really it
doesn't affect it in the way that you're referring.
Mr. Peterson. Are you folks familiar with my end-use certificate
bill I have introduced that would require the Canadian grain to
have end-use certificates when it comes into this country?
Ambassador Kantor. That is an interesting approach.
Mr. Peterson. Are you willing to support my bill?
Ambassador Kantor. I am certainly willing to take a close look
at it, Mr. Peterson.
58
Mr. Peterson. I hope you will because that is another area that
got botched.
Ambassador K^ANTOR. This is important. End-use certificates are
important. We really have not been as resolute with the Canadians
on this problem as we should have been. I am going to try to be
as effective as I can,
Mr. Peterson. We had a big rally in North Dakota, Congress-
man Pomeroy's State, where we had half Canadians and half
Americans protesting the free-trade agreement. Both sides of the
border think they have lost on this, which is an interesting point
of view.
Ambassador Kantor. It is really interesting when we look at
these. We ought to call these "hopefully expanded trade agree-
ments" and "opening market agreements". Free trade really is not
a term that applies to any of these because they are not totally
free. But expanded trade is in our interest in agriculture as well
as industrial products. As long as we understand frankly who we
are representing here, which is American business and American
workers — if we always keep that in mind, I think we will make
some progress.
It won't be perfect, but we will make some progress.
Mr. Peterson. And one last thing. It is very hard for those of
us up on the border that have had this problem to support this
agreement or what you're doing if we're taking agriculture out of
this agreement and we can't negotiate to solve these problems. It
is very hard for us to understand why we should support the North
American Free-Trade Agreement when the Mexicans and the Cana-
dians want to do the agricultural agreement separately.
What do we get out of that?
Ambassador Kantor. I understand the wheat problem. In certain
ways, because we're lowering tariff and nontariff barriers and be-
cause the rules of origin are tough, there are some real benefits for
agriculture in here, frankly. We're not in a position right now to
come back and say that we're going to advocate for the NAFTA be-
cause we don't have these supplemental agreements. Therefore, I
might sound to be tremendously negative about the NAFTA itself.
I am not. I believe it can have benefits. But we have to make the
situation substantially better with these supplemental agreements
than it is now to come back with those positive benefits of the
NAFTA itself.
Mr. Peterson. Thank you, Mr. Ambassador.
Thank you, Mr. Chairman.
Mr. English. Ms. Lambert.
Ms. Lambert. Thank you very much, Mr. Chairman.
Thank you, Mr. Ambassador, not only for being here today but
also for your hard work and diligence in taking on this issue. It is
a big one.
I think you have heard from the committee today and from oth-
ers that there are some very big concerns, and a great deal of
them. I come from a district where I represent 25 extremely rural
counties, all very heavily dependent on agriculture and it is an im-
portant issue for us.
59
I think we're all looking to see expanded markets, and we cer-
tainly want to open them. That is important, but it is also impor-
tant for us to see that it is done in a fair manner.
My understanding of the agreement as it stands is that it opens
our markets to their commodities twice as fast as it opens their
markets to our commodities. Certainly understanding that their
productivity levels in my commodities, specifically rice and cotton,
are limited because of their water resources, technology, and what
have you, but it is going to be very important for us to see the sup-
plemental agreement that you talk about.
I do understand my colleague, Mr. Hilliard, in his question con-
cerning at which point we move from a supplemental agreement to
reopening NAFTA. It is difficult because there are quite a lot of dif-
ficulties for us here to swallow. If we do see a supplemental as
strong as we want to, there is the question of, at which point we
are moving from a supplemental to reopening NAFTA?
One commodity that is very important to my area is cotton.
I am very interested to know if the administration would con-
sider on a snap-back for cotton as a means of preventing import
surges from driving up the cotton pricing stabilization programs. I
think that is going to be important for my area. I would certainly
like to hear what you might have to add on that.
Ambassador K^TOR. First of all, it is always a delight to hear
somebody from my adopted State. Your two Senators have niade
me an honorary citizen of Arkansas since my family and I lived
there for 6 or 7 months in the past year. We lived on Beechwood
Drive in Little Rock, which we miss. It is a wonderful place to live.
We are concerned about that, as I indicated before. Rice, of
course, goes beyond just disagreement. When we go into
tariffication discussions and market access discussions in the Uru-
guay Round, obviously the Japanese are going to have some con-
cerns. If we tariff nontariff barriers and other concerns in agricul-
tural products, the Japanese then have to come forward in terms
of whether they're going to open their rice market. I know that is
something about wMch I have discussed with your Senators.
I would be glad to have that discussion with you in terms of cot-
ton. We know the potential is not there now, but it could be later
in Mexico and needs to be something we look at very carefully. I
would be happy to work with you on that.
Ms. Lambert. Thank you. I would appreciate that. And I do
think the long-term effects are going to be very important to all of
us.
Thank you again for coming and for your hard work.
Mr. English. Mr. Barlow.
Mr. Barlow. I know you have heard many of these comments be-
fore, but I just want to reiterate them quickly. Even though they
are quick, they are very serious concerns for western and southern
Kentucky.
Rural economies are struggling. Industry in our rural economies
are struggling. We have autoparts; we have textiles; we have cloth-
ing manufacturers in western Kentucky. But it is a very competi-
tive world. We are very worried about losing jobs going south.
I would like particularly to dicuss with you, and I raise this not
just in regard to this treaty but in regard to other treaties going
60
forward through GATT and with other countries where the wages
are much lower than ours, the danger of companies going into tax-
free havens in these countries. We have companies that are paying
their fair share for social services through the tax structure up
here.
Could there be some type of tax equivalency assessed as goods
come from these other counties into the United States? This is an
area that we must begin looking at because you have companies
here that are paying through the tax structure for roads, sewers,
water systems, schools, et cetera. That type of tax structure doesn't
exist in many countries. Or the companies are being asked to es-
cape this type of a tax structure in the process of going into those
countries.
Ambassador Kantor. The question of direct subsidies in both
production and distribution or marketing is being addressed seri-
ously in the Uruguay Round. It is something where we were con-
cerned about the language and one reason why we have been un-
able to reach agreement.
The whole area of market access is critical. I believe — and I
think you believe — that American workers, given open markets and
expanded trade can compete with anyone on Earth. The productiv-
ity of our workers is first in the world right now.
One of the things that has hampered us is the lack of open mar-
kets, a lack of comparably open markets on the part of our trading
partners. That was the challenge that President Clinton laid in
front of the world in his American University speech, that we
would welcome products from other countries and we want them to
welcome ours as well. We believe that not only in western Ken-
tucky but all over the country that if we can open markets and pro-
vide market access tariffication in agriculture and other areas that
we will prosper, lead global growth, and our workers will benefit
from it.
In answer to your question, if you're going toward whether we
should throw up more barriers to entry
Mr. Barlow. This is not a barrier at all. I would like to dispute
that and will dispute that as we go forward in trade policies debate
as long as I am here in Congress. This is not a trade barrier.
This is a tax equivalency. Our companies are pajdng their fair
share of taxes in this country. Many companies are going abroad
to certain countries where they get either a negotiated tax-free sta-
tus or where the fact is that these countries simply do not have so-
cial structures that levy taxes on industry. So goods are coming
back into this country at an unfairly low rate. This is distinct from
the wage, which is another problem.
I am talking about some tax equivalency levy, paid as a good
comes from a country where there is a tax-free structure into a
country such as ours where companies are responsible taxpayers.
Ambassador Kantor. The inability of economic harmonization is
naturally what you're driving at. It is really something interesting
because it underlies a lot of what we're trying to do in these sup-
plemental agreements on the North American Free-Trade Agree-
ment. Frankly, if we're able to come back with tough, meaningful
agreements with teeth in these areas and harmonize standards and
61
begin to address the issue — really the issue you're addressing is a
much larger and a very profound one.
Then we will be able to look at future agreements in light of
what we have done in the largest expanded trade area in the world
in a very meaningful way. I think we will address your problem —
maybe not directly — but we're starting to address it indirectly in a
fairly meaningful way.
Mr. Barlow. Just in closing, I think we have to start addressing
it in this agreement.
Thank you, sir.
Ambassador Kantor. Thank you.
Mr. English. Mr. Inslee.
Mr. Inslee. Thank you, Mr. Chairman.
I would like to ask you a question about the relationship of our
foreign trade policy. ITie reason I do that is that for two or three
decades the American taxpayer has been funding the defense of the
free world, oftentimes, funding the defense of trading partners who
are dear friends but who don't recognize a comparable level of ex-
panded or free trade.
Isn't it about time that we start to at least consider using the
right to stand under the American taxpayer's military umbrella
and use that as a lever in an effort to achieve our expanded trade
aims for which you are so diligently going to fight?
Ambassador Kantor. The President in his speech addressed your
very good question in a very direct way. He said that our national
security depends on our economic security at home; that no longer
would our trade policy be driven by foreign policy and national se-
curity concerns; and that we need to engage in global growth and
expanded trade in order to grow not only our economy, but the
world's economy. But we expect our trading partners to take their
fair share and to come along with us.
That is really the key to what you're sajdng. We couldn't agree
more with you. The President has said it, and as USTR, I am going
to follow that policy. I agree with exactly what you just said.
Mr. Inslee. Thank you.
Mr. English. Mrs. Thurman.
Mrs. Thurman. Mr. Ambassador, I apologize for not being here
earlier. However, out of the nine counties I represent in Florida,
seven of them have been hit by the disastrous weather in Florida
so we have been trying to work on some of those issues. So not only
am I trying to deal with the North American Free-Trade Agree-
ment, but I am soon going to have to deal with damage by water
and freezes to the agricultural community in the State of Florida.
I hope you keep that in mind.
I guess the issue for us is — while you may know that the agricul-
tural community is about a $6 billion industry in the State of Flor-
ida, we grow or have about 240 different crops, and we provide at
peak times probably around 250,000 jobs.
I guess the question for some of us — I will tell you the Governor
aiid the Cabinet, the Senate and the House have all signed resolu-
tions and sent them here as well as a delegation in Florida that
has pulled together on this issue probably more than I have ever
seen before in an issue objecting to what is happening in NAFTA.
Quite honestly, as far back as in April, they asked us to partici-
68-673 - 93 - 3
62
pate. They asked us to give information and then we're ignored as
to what our needs and concerns are.
I personally have to tell you that it is going to be very difficult
for anything you say today or that was said at the briefing on Mon-
day that is going to make this an easy issue for myself or anybody
in the Florida delegation. I think we need some assurances from
you either today or later — and I will ask the chairman if I can sub-
mit what has been put out as a unified position by all agriculture
in Florida to show you what that statement is and what they're
looking at, but to answer some of their concerns or how they're
going to do this.
But we really need some assurances that we are not going to lose
agriculture in the State of Florida because it is real close to that,
as they see it.
[The information follows:]
63
1*1
Unified Position
on .the
North American
Free Trade Agreement
September 21. 1992
BOB CRAWFORD
COMMISSIONER OF AGRICULTURE
FLORIDA DEPARTMENT OF AGRICULTURE
AND
CONSUMER SERVICES
atid the
Floiida Caalemen'j Assodanon
Florida Qtrus Mutual
Florida Citrus Packers
Florida Citrus Processors Association
Florida Department of Citrus
Florida Fann Bureau Federation
Florida Foliage Assodatioo
Florida Fruit and Vegetable Assodaaon
Florida Intenatiaaal Agricultural Trade Council
Florida Tjnw and Avocado Administrative Committees
Florida Nurserynxn and Growers Association
Florida Ornamental Growers Association
Florida Tropical Fruit Growers Association
Florida Strawberry Growers Association
Florida Sugar Cane League Incorporated
Florida Tomato Committee
Gulf Citrus Growers Association
Indian River Citrus League
National Juice Products Association Incorporated
Sugar Cane Growers Cooperative of Florida
-44-
64
FLORIDA AGRICULTURE
and the
NORTH AMERICAN FREE TRADE AGREEMENT
Background
Florida agriculture is a S6 billion induiary that providei wfaoleaome, affordable food for consumers in
the United States and around the world. More than 240 different crops are produced on Florida's 40,000 farms,
ranches and groves. During the winter tnrmth*^ Florida growers provide more than half of the nation's fruit,
vegetables, dtnu and cane sugar. The industry provides jobs for more than 250,000 people during peak
production periods, and contributes strongly to the state's economy.
The negotiation of a North Amerioa Free Trade Agreement (NAFTA) has been of great concern to
Florida agriculture. The International Trade Commission in February, 1991, found that producers and
processors of wimer fruit, vegetables, and citrus were expeaed to experience losses in production and
employment as a result of the agreement.
In April, 1991, Florida agriculture requested an exemption of import-sensitive, winter-produced fruit,
vegetables, dtrus and their producu from the NAFTA until such time as several concerns of the industry were
meamngfoliy intjsfiff^, The induitiy also asked that ^"ft'"fl pattens of trade in raw and refined sugar needed
to be precerved.
Florida Agricaltiire^ Podtloo
The North Aaioicas Free Trade Afl^eemeat, m written, £kili to satisfy many of Florida agricolmre's
concerns. The iodomy believes the docnniattiDiitt be modified to EBeaaiag&iIlyaddreatheteimpanauiBDea.
Florida agricohara'a viahffiqr u t pradneer of ov natko'i Cood, at «a cmfkja ot hnadreds of thousandt of
pe(q>le,aiidaaattr(mgoaaribntortoFIozida'iecaaaByitatttaks. Should the agreement not be «ati«fa<tnrily
modified, Florida agricataire stnio^ nvmnmniirk dut the United Stttea Coafrea vole to disanvove the
The agrrxmcait mtot be modifiwi is the following veac
L Tffriff BtaWWt tiltBraritli''^'"^"!**'™* rtifi im grtiifkini. ninfrr fmifi. iT([rfaMri rirmi r"* -^- — —
recognoBd as being the most leacitive to tariff redBrtinna, However, only 4 percent of Florida's winter
freih frniii and vegBtabks are connimnd in die kngeat phase-out period. The agrwnwt most be
modlflfld to provide acBittlve cooaMdUka with a tranaitioa period that wU afford prodocari the
mailimnn time for adlBftmcaC
Z Safeguards; Florida agricaltBre had strpngtvieaaested a twice and volnme-based safeguard nech^to
to protect the iadnstry during the transition period from downward price pressure caused by import
surges. Thu Bgri-^m^tit fn«t«m« ■ vnh«ms.h»«><<, tariff rate qunn (TRO^ mprhaiiism that Will artificially
alTfr planting patterns during the quota periods. The end result wiD likely be depressed prices early
in each tariff window. Ihc agreemcat must be modified to Indnde a price-based special safeguard
mechaoiam for perishable commodlttcs. In addUioa, the tariff windows for the TRQ should be no
longer than 30 dsya. The general aaftgnard medianlaB In the agreesunt should also be strengthened
and have no restrictions on Its use.
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65
5. Standards: From a compcutive siandpomt. Florida agncullurc is grcallv concerned about the
diflcTCDccs in envuonmental. food safety, and labor regulations between the United Slates and Mexico.
The cost of compliance with these laws and regulations are a major factor in the cost of production for
Florida asriculture. The mdustry had requested harmonization of applicable laws and regulations m
order to balance the compcxitive playing Geld between the two nations. Although the agreement
encourages the adoption of imcmatimuii slandartls, it allows each party to csubli&h its own rules. The
agreemcDt mntt be modined to reqniK barmoointion of standards-related measures within 10 years
of the implefflcnutioo date. In addition, the agreement must be modified to require equitable
enforcement of each nation's laws and regulations regarding the production of goods and services.
4. Sanitary and Phvtosanltary Regoiatloiis: The NAFTA confirms the right of each nation to adopt and
nrninfum sanitary and pbytosanitary measures necessary to proiea htunan, animal or plant life. The
agreement most ensure that U.S. agricultare continues to be protected bttm the introduction of
harmful pests and diseases that could threaten human, plant or animal health.
5. Transshipment and SubstJtution: The induscry expressed concern that non-participating countries in
the NAFTA would ship prodticts throtigh Mexico or Canada into the United States and receive the
benefits of the agreement. The NAFTA contains rules of origia designed to prevent such abuses. It
is essential that the agreonent contain strong enforcement mechanisms. The agreement does not
prevent the substirulion of non-participant products from being used in a member's country so that the
member country's production can be shipped to another member. The agreemeit must ensutr the
practice of substitution is not utiUxed by a member coimtry to the detriment of another coembcr
country.
6. Data Collection: The indtistiy is concerned with the lack of adequate, reliable information on Mexican
agricultural production. The agrecMeat mntt be modified to indodc a requirentcat that Mexico
devetop completr startitiol Infbnnatloa oa Its agrtnittnral sector in areas such as acre^e, yield,
conanmptioD, trade, etc.
-46-
66
CITRUS
The Rorida Citrus industry reaffinncd its cuircnt position that fresh and processed citrus products
should be excluded from the North American Free Trade Agreement and went on record in non
suppon of this Agreement; and strongly recommends that our government enforce phytosanitary
production of citrus to prevent the possibility of the conduit of citrus products from other
countries entering the U.S. duty-free: and all labor and environmental issues should be
harmonized and enforced with U.S. standards to make certain those standards are met in order
to ensure thai wholesome citrus products arrive in the U.S. Without an exception, a two billion
dollar adverse economic impact will accrue to the Florida Citrus industry over 20 years.
In the final suges of congressional review of NAFTA, The Florida Citrus industry would not
support the agreement if it docs not meet its stated objectives. If there is no possibility of an
exclusion for citrus, then the Florida Citnis industry strongly supports at least a 20-year drop-
dead period with no reduction in the citrus tariff schedule during the 20-year period.
-47-
67
FRUIT AND VEGETABLES
The North Amcncan Free Trade Agreement must be modified to place Ronda-produccd
fruit and vegetables into the most sensitive tariff phase-out period. The following commodities
should be given the maximum phase-out period provided for in the agreement, plus have access
to a special safeguard mechanism, from the period October 1 to July 14, each year.
potatoes, fresh
tomatoes
cherry tomatoes
cauliflower
cabbage
head lettuce
other lettuce
carrots
radishes
cucumbers
beans, all
eggplant
celery
bell peppers
squash
sweet corn
parsley
other vegetables
cantaloupes
watermelons
stiawbenies
The following conunodities should be given the maximum phase-out period provided for
in the agreement, plus access to a special safeguard mechanism, throughout the yean
atamoya
avocados
carambola
guavas
leechee nut
mamcy
mangoes
papayas
other tropical fruit
-48-
68
NAFTA: Florida Sugar Industry Reconunendations
1. Sugar Recommendations. The following changes must be made:
a. Net Exporter Determination. Mexico will be given increased acces
to the U.S. market any year it is projected to achieve sugar
"surplus producer" status. This "surplus producer" determinatio
must be changed in two ways:
(1) It must be calculated not just on the basis of sugar, but
expanded to include corn sweeteners. Otherwise, Mexico will
have tremendous incentive to achieve sugar surplus status simpl
by replacing the 1.5 million tons of sugar consumed by its
beverage industry with corn sweeteners, and shipping its surplu
sugar to the United States.
If this change is not made, the pain of adjustment for the
Mexican sugar industry would be shifted to the U.S. sugar
industry. Our industry has already borne the pain of the
transition from sugar to corn sweeteners in beverages, at an
enormous cost — 53 closings of cane sugar mills, beet sugar
factories, and cane refineries, plus the loss of thousands of
U.S. jobs.
(2) It must be calculated on the basis of verifiable history and /^o
just on uncertain projections, as currently provided. In
addition, sound verification methods must be established and
enforced.
b. Access Limitation. Mexico's access to the U.S. market would be
expanded to 150,000 tons in year 7, and increased 10% per year
during years 8-lS of the agreement. By year IS, this would amoun
to imports of 322,000 ton*, 44 times Mexico's current accass.
But if Mexico achieves surplus producer status any two consecutiv
years, including years 1-6, it is permitted to send its entire
e)q;>ortable surplus to the United States. This provision must be
struck — Mexico should not have virtually unlimited access to the
U.S. market, particularly after a mere 6 years.
When U.S. domestic marketing allocations are in place, imports froi
Mexico, or any other country, above the 1.25-million-short-ton
minimum, must be subject to the common external tariff. To preven
substitution during or after the transition period, Mexico must
apply the common external tariff to all non-NAFTA sugar imports
after it achieves net exporter status.
2. Suaar-Containina Product Recommendation. U.S. Section-22 protections fo:
refined sugar and sugar-containing products will be phased out over 10
years. This transition period should be 15 years, not 10 years,
consistent with the transition period for raw sugar.
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69
Section 22 Commodities: Florida's Section 22 commodities should
not be tariffied. The U.S. has a Section 22 waiver, and Inasmuch as
Canada's dairy and poultry regimes will not t^ tariffied, in either a
trilateral or bilateral, tariffication of our Section 22 is not desirable.
Tarifflcation of Section 22 In the NAFTA could also set an undesirable
precedent for future bilaterai or piurilaterai free trade negotiations with
other Latin American and Caribbean countries under the proposed
Enterprise for the Americas Initiative.
Tarriflcatlon of Section 22 could also undermine and complicate our
position in the Uruguay Round of the General Agreement on Tariffs
and Trade since the proposed market access levels In the Uruguay
Round will most likely be more conservative than those in the
proposed NAFTA.
This Is not an issue of competitiveness. For example there is no
questton that our Sectton 22 crops are more competitive than
Mexico's, but the root of the matter Is that Section 22 Is subject to a
multilateral waiver that the U.S. was granted In 1955 for the GATT, and
therefore, it should only be dealt with in the multilateral context of the
Uruguay Round
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70
POSITION STATEMENT OF-
FLORIDA FARM BUREAU FEDERATION REGARDING THE
NORTH .AMERICAN FREE TRADE AGREEMENT (NAFTA)
Since the International Trade Conunission's rep>ort in 1991, it has been recognized
that Florida's winter fruit and vegetable industry would suffer economically from a
Mexican Free Trade Agreement. Other economic reports indicated that winter fruit
and vegetable producers would be the segment of the agricultural economy that
suffered while feed grains, soybeans, certain horticultural crops and the livestock
sector, as a whole, would benefit.
Floinda Farm Bureau and its members have participated through the public comment
process as well as serving on the private sector Agricultural Technical Committee
(ATAC). The public comments were focused on the U.S. International Trade
Commission, U.S. Trade Representative and her staff , Secretary of Agriculture and
his staff as well as the Florida Congressional Delegation .
Through Florida Farm Bureau's policy process, our members directed that our
organization was to become an active participant in the negotiations process . It was
the organizations goal to work with negotiators to develop the best agreement for
Florida agriculture. Now that the NAFTA has been initialled and made public, it is
up to our members to formulate Florida Farm Bureau's position. Our members must
now decide if the negotiated agreement provides Florida agriculture enough fairness
in competition with Mexican agriculture.
Specific Provisions:
1. PHASE OUT PERIODS - Florida's winter fruit and vegetable industry asked
for exclusion from the agreement, but did not receive it. The agreement
allows import sensitive crops a 10 to IS year phase out with Tariff Rate Quota's
( TRQs ) . While winter fruit and vegetables are the only commodities to receive
this benefit, our members feel that the phase out should be extended to 20
years for all import sensitive crops .
2. CONVERSION OF QUOTAS - Certain farm program crops utilize Section 22 to
limit imports quantitatively to tnnintnin the integrity and viability of those
programs . The quantitative import restrictions were converted to tariffs with
those tariffs being reduced emd eliminated under the NAFTA. Our producer
members are concerned that increased production in peanuts or other crops
as well as imports being processed and exported to the U.S. could damage and
destroy certain programs. Feeder cattle producers also have expressed
concern for the integrity of the Counter Cyclical Beef Import Law and the loss
of market for over half a million feeder calves shipped out of Florida on an
anniial basis. The signatories must develop a dependable and reliable data
gathering system to track both imports and exports.
3. RULES OF ORIGIN - Florida Farm Bureau continues to support a strong
country of origin rule and the necessary data to assure that it is implemented.
This issue is strategic in assuring the success of the NAFTA and providing
protection to the domestic industries of all members of the NAFTA.
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71
4. SANITARY AND PHYTOSANITARY RULES - Florida Farm Bureau continues
to call for strong sanitary and phyto-sanitary rules based on recognized
science. This area is key to all segments of Florida's agriculture. There is
concern among our members about livestock diseases and pests moving across
the border as well as the use of false sanitary requirements to restrict market
access of livestock products. The horticultural industry is concerned that a
reduction in phyto-sanitary requirements may adversely impact the U.S. plant
import laws and loose plant pests and diseases throughout the U.S. Finally,
our members are also concerned about the potential for human health
occurrences if sanitary and phyto-sanitary requirements are relaxed.
5. GRADES AND STANDARDS - While we do not believe that there should be a
harmonization of grades and standards , we feel that each country should have
the right to develop their own Federal grade standards. These standards
should be honored and recognized by the member countries. Product being
shipped into a country should meet those grade standards and marketing
order quality reqmrements.
6. GROWER DISPUTES IN TRADE OF AGRICULTURAL COMMODITIES - There
should be mechanisms in place to resolve grower disputes arising out of trade
of agricultural commodities . This could include the development of laws and
implementation of regulations such as Packers and Stockyard Act (PSA) and
the Perishable Agricultural Commodities Act (PACA) that resolve disputes and
guarantee promp ; pay for producers .
7. PERIODIC EVALUATION OF PROGRESS - Florida Farm Bureau supports the
periodic (possibly every four years) review of all signatory countries
environmental and labor laws and implementation at the grower level of those
laws . There is a tripeurtite panel designated that could be responsible for this
evaluation . In the event a signatory country is not making suitable progress
in implementing those laws, the NAFTA should temporarily freeze aU
agricultural provisions until satisfactory progress has been documented.
These ar-^as of concern must be addressed satisfactorily for Florida Farm Bureau to
support this agreement.
As we move through our poUcy process and as our members have more opportunity
to study the NAFTA other provisions may be added .
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72
FLORIDA FARM BUREAU FEDERATION
p. O. Box 147030, Gainesville, Florida 32614-7030 Telephone (904) 378-1321
March 16, 1993
QUESTIONS CONORBSSWOMAN THURMAN IMAY WANT TO ASK IN REGARD TO NAFTA;
1. In the NAFTA, why are the southern commodities with the least cost
programs (peanuts and cotton) or no pro-ams (fruits and vegetables)
most Impacted while the traditional program crops with direct payments
from the U.S. Treasury (com and wheat), the direct beneficiary?
Were the negotiators more concerned about protecting the traditional
program crops rather tlian the crops that have minimal impact on the
Treasury?
2 . In looking at the NAFTA , I find it interesting that orange juice and grape-
fruit juice are treated differently. The orange juice phase-in period is set
fifteen years with a tariff rate quota; yet grapefruit juice is not even
addressed.
Could you explain your rationale, in view of the fact that Mexico is a
grapefruit producer and their juice can be a direct competitor to Florida
producers?
3 . We have been told that the NAFTA negotiations wore conducted and final-
ized to reduce the tariff protection and to do away with non-tariff barriers.
1 find it interesting that the Canadian government continues to protect
segments of its agriculture Industry.
Why do we see protection of an adversely impacted industry as something
bad?
73
Ambassador Kantor. As I said before, as a member of the Flor-
ida bar, and as someone who has Hved and worked in southwest
Florida when I was very young, the fact is that I am aware of these
problems, we are sensitive to them at this office, and the President
is sensitive to them. We understand that there is a sense of a lose-
lose situation. I think with the proper supplemental agreements
and with the proper advocacy we can make this a win- win situa-
tion, even for Florida agriculture, about which we are deeply con-
cerned.
I have talked to a number of people in your delegation and your
Senators about this. But rest assured that we are acutely aware of
your concerns and will continue to address them as we go forward.
Mrs. Thurman. I am going to hold you to that.
Ambassador Kantor. I know you will.
Mr. English. Mr. Condit.
Mr. Condit. Mr. Ambassador, we are honored to have you here
with us today. As a fellow Californian we are particularly honored
and proud of the work you have done in the trade area as well as
other work you have done over the past year or so. We are ex-
tremely proud of you.
Coming from California, I know that you're aware of one of the
issues I am concerned with, which is the wine provision in the
NAFTA agreement. As you are aware, California produces 90 per-
cent of all the wine in the country and is responsible for about 95
percent of the wine exported from the United States.
The North American Free-Trade Agreement gives U.S. wine a
general tariff phase-out of 10 years with a tariff reduction of 2 per-
cent per year over the next 10-year period. The wine industry
should be a preferred trading partner with Mexico under the North
American Free-Trade Agreement. However, in the pact with Chile,
which was implemented in 1992, Mexico agreed to cut the tariff on
the Chilean wine immediately from 20 percent to 8 percent and
eliminate the remaining part of that over the next 4 years.
As you know, the wine industry and the people from California
feel that the Chilean wine is a major competitor for California. As
of January 1, 1993, the Mexican tariff on Chilean wine has been
reduced to 6 percent. By 1996, the Chilean wine will enter Mexico
duty-free and the United States wine will enter Mexico with a 14
percent tariff.
To get to the point, we don't believe that is a fair playing field
for the wine industry, which is extremely important to the economy
of California, particularly important to the economy where I live in
California, the Central Valley. In search for votes for the North
American Free-Trade Agreement, I just wanted to bring this up so
that if there is a way of dealing with this issue we would encourage
you to do that and try to find some fairness and level the playing
field.
Ambassador Kantor. As you know, Mr. Condit, I have had dis-
cussions with leaders of the wine industry in California. Many of
them are close friends.
There is an acceleration clause m the NAFTA itself, assuming it
goes through all the necessary requirements to be enacted and goes
into effect. We would have the right to begin immediate discussions
to accelerate the decrease in tariffs at that point. You can rest as-
74
sured that this is one item that is high on our Hst and on a front
burner, as are other items.
Certainly wine is. We are aware of the disparity between the
treatment of Chilean wine and California wine.
Mr. CONDIT. The supplemental agreement that you mentioned —
what holds that together? What really requires them to adhere to
it? Is it a
Ambassador Kantor. It becomes a bilateral negotiation. There
may have to be some give-and-take in that. They may want some
acceleration of tariff reductions. Although frankly, as you know,
tariffs are so low on goods coming from Mexico into this country
that we don't have a lot of give in that respect. But we believe that
we can both in discussions now where we do have some leverage
and in discussions later we can address this issue.
To go further than that I think might put me in a position as
a negotiator of negotiating with my friend, Mr. Condit, and not
with our trading partners, which I don't want you to do and which
you wouldn't want me to do.
Mr. Condit. Certainly.
I appreciate your response. I appreciate your consideration on
this matter. I do share some other concerns and will forward those
on to you in writing. I do appreciate you being here. I do mean that
we are very proud of you.
Ambassador Kantor. Thank you very much. I appreciate that.
That is very kind of you.
Mr. English. Thank you very much, Mr. Condit.
Mr. Ambassador, is there any movement with regard to the mar-
ket access question in the Uruguay Round at all?
Ambassador KANTOR. There better be or we will not have a suc-
cessful Round. We have had preliminary discussions in early
March. Those are mainly technical in nature and also in terms of
setting the agenda. I go to Brussels on the 29th of March. We will
then set some very specific meeting dates.
No. 1 on our list is market access in agriculture, industrial prod-
ucts, and services. We also have other concerns, whether the MTO
that Ms. Long talked about earlier or in subsidy discussions of in-
tellectual property rights, discussion of audiovisual — which is also
important to us in California, as Mr. Condit knows.
We have a number of items on the agenda. But we are moving
promptly as the President as directed me to do.
Mr. English. I recall last year we had some testimony from the
Environmental Protection Agency talking about the environmental
laws in Mexico. They told us that those laws were very similar to
the laws we have here in the United States. The difference comes
not in what the laws are on the books, but rather with regard to
enforcement.
So as we focus our attention with regard to what is contained in
any kind of agreement with Mexico, it appears to me that we may
be faced with the same kind of difficulty. It may be contained in
the agreement, but carrjdng out the enforcement is something else
entirely.
We have laws on the books in this country with regard to many
of our agricultural products and our trade governing other coun-
tries. Much of that has to do with imports. The issue comes down
75
not to what the agreement allows or calls for, but the question of
how the United States is going to enforce those agreements.
I know in testimony we have had and discussions we have had
with the Customs we have found that they have had little or no
part in the design of these agreements in a way that gives them
any kind of opportunity for enforcement. So the question comes
down to the agreement. In reality, are we in fact opening the
doors — because they are unenforceable — agreements that will not
allow — as is allowed under the agreement itself — protection for
transshipment of various agricultural products?
Has there been any kind of attention given to that area? What
kind of assurgince can we be given that there will be enforcement
with regard to our laws? Are we allowed into Mexico, for example,
to investigate transshipment questions? Will we be able to partici-
pate in that? Who will have the responsibility? Will there be addi-
tional personnel assigned to the Customs Service or other enforce-
ment agencies to make sure that this is carried out?
Certainly, when we look at the difficulties that we have faced
just in preventing all of the illegal drugs coming into this country,
and we know, for instance, any cocaine crossing our borders is ille-
gal, how are we going to be able to differentiate between a side of
beef or processed meat as to whether it came from Mexico as op-
posed to Argentina, Australia, or some other country in trans-
shipment?
Ambassador EIantor. Let me start from your very precise ques-
tion and maybe make one broader comment.
In article 505 records and article 506 origin verification we do
have the right to audit in Mexico and audit these procedures,
which should be fairly protective in terms of rules of origin. It is
very strong language.
Mr. English. The problem that troubles me about this is that,
sure we can audit books. There is no problem with doing that sort
of thing. But do we have the right under this agreement to send
investigators in to determine whether or not those books are being
created or whether they accurately reflect what has happened?
Let me tell the response when I asked this question earlier. The
response I got as to how we were going to determine whether or
not our meat import quotas are being violated — meat being shipped
into this country — was that we have a rough idea of how much
meat is produced in Mexico. Therefore, whenever the amount that
is crossing our borders exceeds that particular level, then we know
they are in violation.
If in fact what we are doing is saying that we will open up our
borders for any of our agricultural products from which we have
any kind of import quotas and simply say that they can ship in the
total amount that is produced in Mexico, then I think we have a
very serious problem indeed and one that will be very destructive
to American agriculture. I don't think there is any way in the
world you can say that that is going to be a positive influence for
American agriculture.
Ambassador Kantor. Let me just read in article 506 origin ver-
ification 1(b), which I think is very interesting.
"Verification can be done by means of visits to the premises of
an exporter or producer in the territory of another party" — in this
76
case, Mexico or Canada — "to review the records referred to in arti-
cle 505(a) and observe the facihties used in production of the
goods."
That is very strong language and goes a long way toward what
you are referring to. Obviously, you also talked earlier about en-
forcement of laws and dispute resolution. Chapter 20 is well draft-
ed. Also, in the side agreements we are going to look to the Mexi-
can port system and see what we can do in terms of assuring due
process, citizen access, appeal administrative decision into the
court system, and so on, which will make a difference.
So in all these ways, we are trying to address the question that
you raise. It is not only appropriate, it is a critical question.
Mr. English. Can you give us any kind of assurance that the ad-
ministration will in fact make sure that there are adequate re-
sources available through those agencies that have the responsibil-
ity for enforcement? I think we are talking primarily about the
Customs Service.
Ambassador Kantor. That's correct.
Mr. English. They are terribly overworked as it is. They have
huge responsibilities.
In this case, can you give us assurances that there will be special
attention focused on this in making sure that they have adequate
resources to prevent these kinds of violations of the agreement?
Ambassador Kantor. This comes under Secretary Bentsen and I
am not in the business of speaking for him, but I know he would
treat this as seriously as you, the committee, and I would treat it.
One of the staff members in this body will now head the Customs
Service, George Weiss, who is one of the most talented people to
come out of here or anywhere else. I think given his talents; and
given Secretary Bentsen's commitments; and given the language in
this document and the dispute resolution mechanism in the
NAFTA; and assuming we get the supplemental agreements — I
have said that many times but I don't think you can say it
enough — then I think we're addressing as effectively as possible the
question you are raising.
Mr. English. Thank you very much.
Mr. Goodlatte.
Mr. Goodlatte. Thank you very much, Mr. Chairman.
Mr. Ambassador, welcome. We're glad to have you here.
I represent the Shenandoah Valley of Virginia, which is a major
agricultural area of my State. I have generally regarded free trade
as something that was a big boon to American agriculture and to
a number of other industries in my district. I am concerned, how-
ever, to learn that the National Turkey Federation is concerned
about the fact that this agreement sets quotas for turkey exports
that are significantly below their existing exports and their pro-
jected export levels.
Do you have any observations on that? Is anything going to be
done to rectify that? That is probably one of the largest agricultural
commodities in my State.
Ambassador Kantor. This is one of which I was not aware.
I am told that the original base was set 1989 to 1991. Of course,
poultry has grown tremendously. Once they set the base during the
77
discussion, it grew beyond the base. It is jusi a pioDlem of locking
sonietiiing in too early.
I don't know if we can open this up unaer the acceleration provi-
sion or not. I will check into that, though. 1 think you raise a very
serious concern. It is part of what we talked about before in the
Uruguay Round. In the discussions m early January, which were
not productive — one reason was that in agiicuiture they wanted to
start at a lower base than we were right now in certain commod-
ities and they wanted to aggregate commodities, which will be
harmful as well.
You are raising a very serious issue. I really don't have a good
answer for you. We would like to get back to your office on that.
Mr. GOODLATI'E. I would appreciate that. It concerns me that
we're promoting free trade here, although it would seem to me that
Mexico is already allowing in more of this product than the agree-
ment.
Ambassador Kantor. I appreciate your comments and I will get
back to your office on that.
Mr. GOODLATTE. Thank you.
Mr. English. Mr. Lewis.
Mr. Lewis. Thank you, Mr. Chairman.
Mr. Chairman, I would like unanimous consent to enter into the
record the Florida delegation's letter to the President and Ambas-
sador Kantor.
Mr. English. Without objection, that letter will appear in the
record.
Mr. Lewis. Thank you.
[The material follows:]
68-673 - 93
78
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MEMORANDUM
FROM: TOM LEWIS
TO: HOD8E AGRICOLTORE COMMITTEE MEMBERS
DATE: MARCH 17, 1993
RE: FLORIDA DELEGATION LETTER REGARDING
THE NORTH AMERICAN FREE TRADE AGREEMENT
For you information, I have attached a copy of a Florida
delegation letter recently forwarded to President Clinton,
Secretary Espy and Ambassador Kantor.
The attached correspondence outlines Florida agricultural
concerns with the North American Free Trade Agreement and
discusses recommendations for inclusion into environment,
labor and import surge side agreements.
79
TOM LEWIS
ICTH CMSTFUCT. FUWtOA
ROOM 3351
RAVeLHW HOUSE OFFtCE BUILCNNO
WASHINGTON, OC 20S15
TELEPHONE: (203) 23S-S7V3
FAX (302) 325-iaM
COHMTTEEB
COMMITTEE ON AGRICULTURE
COMMrTTEE ON SCIENCE. SPACE,
AND •reCHNOLOGY
SELECT COMMITTEE ON
NARCOTICS ABUSE AND CONTROL
NORTH ATLANTIC ASSEMBLY (NATO)
(Eongreaa of tift l^nvteb ^ates
HouBE of SeprcBEntatiuEB
fflaaljingtnn, S.dl. 2D515
DISTRICT OFFICES:
PALM eeACH GARDENS
4440 PGA BOULEVAftO
SUITE 40«
PALM BEACH GARDENS, FL 13410
(407) e77-fi1»3
PORT ST LUCIE
7601 SOUTH U,S HIGHWAY ONE
SUITE 200
BARNETT BANK BLDC
PORT ST LUCIE, FL 34B53
(407) 283-7V89
(407) 465-3710
March 11, 1993
The Honorable Bill Clinton
President of The United States
The White House
1600 Pennsylvania Avenue
Washington, D.C. 20505
Dear President Clinton:
The North American Free Trade Agreement and its impact on Florida's
$6.2 billion agricultural industry is of great concern to the Florida
Congressional delegation.
We have attempted to monitor negotiations in an effort to make an
adequate assessment of NAFTA's effect on Florida. In May of 1992, the
delegation met with former U.S. Trade Ambassador Carla Hills. In
September of 1992, the delegation also discussed the impact of NAFTA
with Florida agriculture representatives to assess industry concerns.
On February 24, 1993, the delegation again met with individuals
representing all of Florida agriculture. Very valid and significant
concerns were brought to our attention outlining the economic damage
NAFTA, as proposed, will have on Florida agriculture.
While many of us believe the agreement has the potential for long-term
benefit to tlie United States, the short-term expense of NAFTA in its
current form is borne in large measure by Florida agriculture.
In an effort to make NAFTA the best possible trade agreement for our
country and for the State of Florida, we would like to take this
opportunity to outline recommendations brought to our attention by
Florida's agriculture industry.
1) Mexico's environmental protection practices must be
harmonized with U.S. standards. This objective must be achieved
before any tariffs or other trade provisions of NAFTA are
reduced.
2) Mexico's occupational, worker safety, and health standards
must also be harmonized with U.S. standards. This objective
must be achieved before any tariffs or other trade provisions of
NAFTA are reduced.
All retraining for displaced workers including agriculture
workers in the United States must be fully funded with
appropriations from the U.S. Treasury.
80
- Page Two -
3) To assure harmonization of the environmental and labor
regulations in Mexico, provisions must be made In a side
agreement to mandate the effective monitoring and enforcement of
compliance efforts in Mexico.
4) A database of Mexican and U.S. agriculture, trade, production
and commerce must be developed, maintained and funded in order to
assess NAFTA'a impact on the agriculture sector. The database
should have the capability to track commodity specific data for
import sensitive crops, information on the agricultural
workforce, trade levels and environmental conditions in major
export-producing regions.
5) A price-based and expedited special safeguard mechanism for
sensitive agricultural commodities must be included In the
agreement. Agricultural commodity markets are too volatile and
react with too much speed to be addressed adequately with the
volume-based safeguard mechanism found in the current agreement.
THIS price-based special safeguard mechanism should apply to all
import sensitive agricultural commodities. Language regarding
specific commodities has already been brought to the attention of
U.S. Trade Representative Mickey Kantor.
6) Mexico must not be allowed to ship to the United States any
commodity which Mexico is not at the time already verifiably
self-sufficient. This self-sufficiency can not be achieved by
substituting another commodity in order to reduce Mexican
domestic consumption of the commodity which Mexico desires to
ship to the United States.
We respectfully request the inclusion of these recommendations as side
agreements are formulated to the North American Free Trade Agreement.
We look forward to hearing from you on these issues as soon as
possible.
Sincerely,
/^ /
Rep. Tom Lewis
Rep. Charles Canady Cr
nady
iRep. Karen Thurmaa
Rei/.A Obrrlnc Brown
^^%ia^e>.
J
'-O--
R«p. Alcee Hastings
Rep. Ileana Ros-Lehtlnen
81
- Page Three -
Rep. Earl Hutto
Rep. Peter Deutsch
Rep. Mike Bilirakis
V7;2!^-^f>^ V^^^K. \o^^^b^^
Rep,,^te Peterson
Senator Connie Mack
cci
The Honorable Mickey Kantor
The Honorable Mike Espy
82
Mr. Lewis. Mr. Ambassador, as you know, with the NAFTA ledg-
er sheet we have winners and losers. We seem to feel that Florida
agriculture — including tomatoes, citrus, and sugar — is one of the
big losers in this deal, particularly in the short term.
I would like to point out that the Florida losses are not because
the growers or producers cannot compete, but because they are
forced to compete at a disadvantage in most cases.
You have in your office a signed letter from the Florida delega-
tion sent you identifying areas of concern and recommendations
that we would like to see included in the side agreements. You
have touched on many of these issues today.
But I would like for you to confirm that the six points we pointed
out in the letter are on the table for negotiation with Mexico.
Ambassador Kantor. Let me say that I have looked at this letter
before. In fact, each one of these six points has been addressed and
is being addressed in these discussions.
We have done so and we will continue to do so. As I said, they
started about 3V2 hours ago. We are taking these into very serious
account. The letter is well done and addresses some important is-
sues.
Mr. Lewis. Thank you. We appreciate your concern for Florida.
We certainly hope that you will further accept the invitation to
meet with the Florida delegation to further delve into these points
of interest.
Thank you, Mr. Ambassador.
Ambassador Kantor. We will be delighted at any time.
Mr. English. Mr. Roberts.
Mr. Roberts. Thank you, Mr. Chairman.
I had intended on asking a very detailed question on import
surges and pointing out that if you're going to protect on import
surges in one area you might actually erect a barrier in regard to
export gains. I think we have already pretty well touched on that,
so from that standpoint, I won't ask it.
Thank you for your patience and your perseverance. It has been
a long morning and you have been extremely helpful. I know Mr.
Glickman is worried about the fall of the Mexican Government. Mr.
Hilliard is concerned — and rightly so — over negotiations already
entered into aside from the supplemental negotiations you are en-
deavoring to put in place. Mr. Minge is worried about prices. I am
worried about prices. Mr. English is worried about prices. Every-
body here is worried about prices. All these people are worried
about, what if there is a NAFTA agreement?
I want to go back to what if there is not a NAFTA agreement
and we're $2 billion in exports — and I am not going to go over all
the benefits and all the counterproductive things. This reminds me
a little bit about that telephone ad that used to be on television
where the guy used to pick up the telephone. They would ask him
a question.
"I want worker protection."
You're indicating, "I can do that."
"I want environmental safeguards."
"I can do that. I can guarantee you that I can also do the busi-
ness on import surges and export gains."
83
'*What about the trilateral commissions on labor and environ-
ment? Won't this tread on sovereignty?"
"I can do that."
"But the citizens of Mexico ought to have the ability to raise all
sorts of court challenges" — or what I call the Mexican Trial Law-
yers Full Emplo3rment Act.
"I can do that."
Then at the last part of the ad, he would look in the television
and say, "How am I going to do this?"
I really don't know how you're going to do all of this. It seems
to me that you have a little more bushy-tailed questions on the
Democrat' side than our Republicans. Maybe we can whisper sweet
nothings to them as this gets down to its final conclusion. They are
always very amenable to that. I am not sure they are going to take
our advice, but we definitely need an agreement.
You have your work really cut out for you. I don't know how
you're going to do this. It seems to me that you have some para-
doxes of enormous irony here that we have to resolve. But the
farmer would never put the seed in the ground if he wasn't an opti-
mist and had a little faith, so I have faith in you, sir. We will
pledge to you on our side that we will work with you to the best
of our ability. I wish you luck and thank you so much for your ap-
pearance.
I don't think I have asked you a question, but if you would care
to make an observation, I would be delighted to hear you.
Ambassador Kantor. I appreciate your comments. I do feel a lit-
tle like the circus performer on a high wire act trying not to lose
my balgmce as we go forward. But the President has issued this
challenge to all of us to make this happen. I think in working to-
gether we can do it. It's not going to be easy.
Mr. Roberts. I have a small manufacturer in Osborne, Kansas.
He makes more equipment connected with the pork business than
you can ever imagine. We have hog warmers, hog pens, hog coolers,
everything you can imagine. He just doubled his plant. With
NAFTA, he says he will triple it. Value-added, small manufactur-
ing all up and down our rural areas that everybody here is really
worried about.
I think we have to have this agreement, Mr. Ambassador, so I
wish you luck.
Ambassador Kantor. Let me make just one comment. Our ex-
ports to Mexico have grown three-fold over the last few years in
just a very short period of time. We have had a trade deficit just
a couple of years ago and now we have a trade surplus of $6 billion
with Mexico. It is a growing market. That is the good news that
hasn't been articulated here.
And let me say that it is also the good news hopefully in the fu-
ture for everyone around here. That won't mean that there won't
be some temporary dislocation. I would be a fool to say that there
won't be. It does mean, I believe, a NAFTA with the proper supple-
mental agreements would be in the best interests of this country
and will make the situation substantially better than it is today.
Mr. English. Mr. Ambassador, I, too, want to thank you for com-
ing today. I don't believe there are any further questions.
84
You have been very kind to sit very patiently and listen to a lot
of concerns as well as questions. I don't share quite the optimism
of my friend from Kansas. I and most of my district — we have for
the most part unskilled labor. I don't think there is any question
that those people will be in jeopardy as far as their jobs are con-
cerned. Those plants that do stay in the United States with un-
skilled labor I think will be at a disadvantage to those that moved
to Mexico or to plants that may be in Mexico because of the cost
of labor.
As I have stated with regard to many of our agricultural prod-
ucts in which we do have import limits, I am concerned about the
enforcement. I have to say that you do give me some comfort with
regard to the language. I do want to talk to Secretary Bentsen to
see if we can get some comfort and some commitments with regard
to the enforcement, if that should go through, because I think that
is going to be critical as far as our aericultural industry is con-
cerned.
But I am particularly perturbed at many of those who are advo-
cating this package. They're talking about the real benefits coming
about 10 years down the road. In many of our areas — certainly in
my district — the economy is so precarious that if we have to wait
10 years for something good to happen, we are in deep trouble. We
need particular attention focused on that transition period. I am
very encouraged that the President of the United States has indi-
cated that he does want to move in that direction. And certainly
for those who are unskilled, he does want to try to address that
and deal with that problem. For that, I certainly want to commend
him.
I appreciate you working with us and I appreciate your attitude
and your efforts on our behalf I am hopeful that we will in fact
be able to call this a true free-trade agreement in the future. As
you pointed out, it is not really that as it stands today. But I think
all of us in agriculture understand that it is to our best interest
to have a true free-trade agreement.
Ambassador Kantor. Thank you.
Mr. English. With that, I want to thank you, Mr. Ambassador,
and we look forward to working with you in the future.
Ambassador Kantor. Thank you. I appreciate it.
Mr. English. With that, we will recess subject to the call of the
Chair.
[Whereupon, at 1 p.m., the committee was adjourned, to recon-
vene, subject to the call of the Chair.]
[Material submitted for inclusion in the record follows:]
85
TESTIMONY OF AMBASSADOR MICKEY KANTOR,
UNITED STATES TRADE REPRESENTATIVE
BEFORE THE COMMITTEE ON AGRICULTURE
U.S. HOUSE OF REPRESENTATIVES
March 17, 1993
Mr. Chairman, I appreciate the opportunity to appear
before the Coiranittee today to discuss a strengthened North
American Free Trade Agreement (NAFTA) and the on-going Uruguay
Round of multilateral trade negotiations. This is my first
appearance before this Committee, and I welcome the occasion to
become more familiar with your concerns and those of other
members of the Committee.
I want to thank you, in particular, Mr. Chairman, for
your suggestions for a North American Commission on the
Environment and subcommissions to address specific transborder
environmental problems. I appreciate your work on the complex
problems facing the U.S. -Mexico border area and the Gulf of
Mexico. I hope that we will have many opportunities to work
together on these issues in the months ahead to find creative
solutions.
This morning I would like to place the NAFTA and the
Uruguay Round in the broader context of the President's vision of
economic growth in America based on expanded trade and market
opening: competing in, not retreating from, the global economy.
Then I would like to address specifically some of the
agricultural trade issues currently facing us.
The trade policy of this Administration starts from the
same point as its economic policy does: our prosperity and that
of our children depend on our ability to compete and win in the
global market. Where trade policy is concerned, the United
States will continue to champion open markets and expanded trade,
but we will insist that the markets of other nations be open to
our products and services — especially U.S. farm exports.
Opening foreign markets is the impetus, from our
standpoint, for the NAFTA, and our main objective in the Uruguay
Round. Market access will also be a principal focus of our
bilateral efforts with respect to many nations around the world.
We see our prosperity bound up with the prosperity of our trading
partners — especially in Canada, Europe, Japan and Mexico. We
will work with them to promote global growth, aid the development
of other less prosperous nations, and address the emerging issue
of environmental protection.
NAFTA. President Clinton has consistently affirmed his
support for the NAFTA, provided it is accompanied by effective
U.S. domestic policies and supplemented by domestic actions and
supplemental agreements to address concerns regarding labor, the
86
environment, and safeguards against import surges. Addressing
these concerns does not mean re-opening the NAFTA text. Our goal
is rather to negotiate the necessary supplemental agreements and
to work with Congress to develop implementing legislation so that
the NAFTA, the supplemental agreements and domestic measures can
be in place by January 1, 1994.
Today our negotiators, led by Ambassador Rufus Yerxa,
begin the process of negotiating the supplemental agreements to
which the President is committed. These supplemental agreements
must break new ground in finding ways to help raise worker
standards and environmental protection; in these areas we are
committed to agreements that harmonize upward, not downward. In
these negotiations we will be dealing with issues, and fashioning
provisions, that have never been part of a trade agreement. For
example, President Clinton is committed to the creation of a
tri-national commission on the environment and I look forward to
hearing further views from the Committee on how such a commission
might work. I am also aware of this Committee's concerns about
adequate provisions to address surges of agricultural imports.
With regard to import surges, we are not looking to change the
mechanisms in NAFTA, but rather want to ensure that these
provisions can be effectively and fairly used.
We will not sacrifice substance for speed; we will not
ask you to vote on NAFTA until the supplemental agreements are
completed and you can judge how they strengthen the NAFTA. This
Administration will not come to the Congress for approval of the
NAFTA without supplemental agreements that have real teeth,
meaningfully advance their objectives, are concrete, and contain
serious commitments.
An enhanced NAFTA package can contribute to the ability
of our farmers to compete at home and abroad and can help improve
working conditions, living standards, and environmental quality
throughout North America. After Japan, Canada and Mexico are our
second and third largest markets for U.S. agricultural exports.
Since 1986, U.S. agricultural exports to Mexico have nearly
quadrupled, climbing to almost $4 billion in 1992 and
establishing Mexico as our fastest growing export market for
farm-produced goods. In fact, our two neighbors accounted for
more than 20 percent ($8 billion) of U.S. agricultural exports in
1992.
The NAFTA contains separate bilateral undertakings on
cross-border trade in agricultural products, one between Canada
and Mexico, and the other between Mexico and the United States.
As a general matter, the rules of the U.S. -Canada Free-Trade
Agreement (FTA) on tariff and non-tariff barriers will continue
to apply to agricultural trade between Canada and the United
States.
87
The U.S. -Mexico agreement on market access represents a
significant change in the status quo. Upon implementation of the
NAFTA, tariffs and tariff-rate quotas will replace current non-
tariff barriers in U.S. -Mexico agricultural trade. Roughly one-
half of U.S. -Mexico trade will be duty free at the moment the
agreement goes into effect. Nine years later, all agricultural
tariffs between the United States and Mexico will be eliminated,
except duties on certain highly sensitive products. Barriers on
U.S. imports of sugar, peanuts, orange juice and a few fruits and
vegetables will not be eliminated until the fourteenth year after
the Agreement takes effect. At the same time, Mexico will
eliminate its barriers on corn, dry beans, powdered milk, sugar
and orange juice. The bottom line is that the NAFTA should give
U.S. agricultural producers significant opportunity in our
fastest growing export market. We expect particular benefits for
our exports of beef, pork, poultry, eggs, dairy products, grains
and oilseeds.
The NAFTA also contains strong provisions, in Chapter 7,
safeguarding the ability of our federal and state governments to
set the standards they deem appropriate to limit exposure to
pesticide residues and other additives and contaminants.
The Urucruay Round. President Clinton is committed to
the successful completion of the Uruguay Round of multilateral
trade negotiations which has been on-going since 1986. My
predecessors expended enormous effort for six years to obtain
acceptable Uruguay Round agreements. However, several complex
issues remain to be resolved. The Clinton Administration, in
consultation with the private sector and Congress, is assessing
the accomplishments to date, and focusing on the remaining
obstacles to be overcome before the Round is completed. I think
we can complete the Round in a way that will benefit the United
States and the world economy, but based on our discussions to
date, I do not believe that we were as close to completion as
some reported in early January. When the EC Trade Minister, Sir
Leon Brittan, was here in February, I told him that our goal was
a good agreement, not just a quick one.
The Administration is carefully reviewing the agreement
on internal support and export subsidies reached between the
United States and the EC at Blair House last November, and we
must resolve with the EC a number of questions regarding the
implementation by the EC of that agreement and the draft Uruguay
Round text on agriculture.
The question of whether we can conclude an agreement
depends very much on the market access commitments for goods and
services that are still being negotiated. If we obtain good
results on market access -- cutting tariffs, breaking down non-
tariff barriers — the Round will offer significant potential
benefits for the American farm community. The Department of
88
Agriculture has estimated that a successful Uruguay Round
agreement would expand U.S. agricultural exports by $6 to $8
billion annually after 5 years, and add $1 to $2 billion to farm
income.
We chose to announce the Administration's decision to
seek the renewal of fast track procedures when Sir Leon Brittan
was here because the Round depends, in the first instance, on
U.S. and EC leadership in setting out the ambitious objectives to
be achieved in areas such as market access. The three-year
deadlock between the, rest of the world and the EC over
agriculture stalemated the Round and gave other nations, most
notably Japan, the ability to avoid contributing meaningfully to
the successful completion of the talks. We will not complete the
Round without some leadership by the United States and the EC.
Nor will we complete it if Japan continues to behave as if it has
little stake in the outcome. In the Round we will continue to
insist on meaningful access to Japan's rice market. We also need
to see signficant contributions from other trading partners —
the newly-industrializing countries in Asia and Latin America —
and the developing countries who owe their economic gains to a
strong, open multilateral system.
Bilateral initiatives. While we work to conclude the
NAFTA supplemental agreements and the Uruguay Round, we will
continue to use our trade laws and the dispute settlement
provisions of our trade agreements to open foreign markets and
break down barriers to specific U.S. agricultural products. We
have our share of current difficult issues with the EC, which I
will discuss with Sir Leon Brittan when we meet again later this
month. We will continue to press the EC to implement fully the
commitments it made to us on oilseeds, corn gluten feed, and malt
sprout pellets. I also will meet early next month with Canadian
Trade Minister Michael Wilson, to explore what further can be
done to ensure that Canadian wheat shipments to the United States
are in conformity with trading rules.
As this Committee knows, we currently export over $4 0
billion in farm products annually. That represents about 30
percent of the total value of U.S. farm production. We are not a
perfectly open market, of course, but because of history,
practice, and our concern for maximizing consumer choice, the
U.S. market will always be basically open. Consequently, we plan
to use every tool at our disposal — multilaterally where
possible, and bilaterally where necessary — to make sure that
other markets are comparably open to our own.
Mr. Chairman, I welcome the opportunity to answer
questions from members of the Committee.
89
THE NATIONAL GRANGE
STATEMENT OF
ROBERT E. BARROW
MASTER OF
NATIONAL GRANGE
SUBMITTED TO
HOUSE AGRICULTURE COMMITTEE
APRIL, 1993
RE: NORTH AMERICAN FREE TRADE AGREEMENT
9amily 7arm Organization Serving Kural A^ff^rii"^
THE NATIONAL GRANGE, 1616 H STREET, N.W. WASHINGTON, D.C. 20006
90
I am Robert E. Barrow, the duly-elected Master of the
National Grange, which has offices at 1616 "H" St., N.W,, Wash-
ington, D.C. The National Grange represents approximately 3 00,000
farmers and other residents of rural America in over 4,000 local
communities across the United States.
The central problem for every free market economy is to keep
supply and demand in balance. Agriculture has been struggling
with supply and demand, in spite of production control programs,
for over 60 years, and no end is in sight unless we have a
structural increase in demand.
Agriculture needs new customers and new markets in order to
grow and prosper. Where can we find them? For starters, we can
look south to Mexico; then beyond to Central and South America.
The National Grange has followed the development of the
North American Free Trade Agreement (NAFTA) since its inception
more than two years ago. As a member of the Agricultural Policy
Advisory Committee on Trade, I have personally been involved in
the events that led up to the three Heads of State initiating the
Agreement in the late summer of 1992.
The voting delegates to the National Grange's 126th Annual
Convention strongly supported the NAFTA. In 1991, in the early
stages of the negotiations between the United States, Canada, and
Mexico, the Grange adopted the following resolution:
"The National Grange supports the efforts of the
United States, Mexico, and Canada to reach a North
American Free Trade Agreement. To provide protection to
91
the producers of import-sensitive commodities, we
recommend the following:
1) The U. S. -Canadian agreement phases out tariffs over a
10-year period, but many of the U. S. domestically-
produced and processed products will vigorously compete
in the United States' market with products that are
produced and processed in Mexico. The United States'
tariff phase-out period should be for a longer period
of time than 10 years, and the commodity coverage under
the General System of Preference should be terminated.
2) The NAFTA should also provide for a temporary "snap
back" restoration of tariffs during the peak harvesting
season or during times of import surges of agricultural
commodities that are above the trend line for that
commodity.
3) In addition to these two general provisions that would
apply to all commodities, there are some products that
may need to have special arrangements made to help
their industries adjust over a longer period of time to
a free trading environment.
4) We recommend: a) establishment of minimum technical
standards regarding pesticide use, quality control, and
disease control; b) protection of intellectual property
rights, including plant variety trademarks and brand
names; c) strong so-called country-of -origin protection
that would protect U.S. producers and processors from
92
competition from transshipment of Third Country prod-
ucts into the United States via Mexico's NAFTA provi-
sions; and d) elimination of Mexico's import licenses
that greatly reduce the amount of goods that are avail-
able for export and the product registration rules that
make it time consuming and costly to gain access to
Mexico's consumer markets."
We have determined that the agreed-to NAFTA meets the
National Grange's primary recommendation; therefore, we firmly
support its approval by the U. S. Congress.
Following the completion of the negotiations in August of
1992, the National Grange met in November '92, in Denver, CO, for
its 126th Annual Convention. At that time, the voting delegates
reaffirmed the above policy and adopted the following:
"The Grange must continue to support expanding
trade on a mutually beneficial basis. The success of
the North American Free Trade Agreement (NAFTA) will be
instrumental in accomplishing some of these objectives
and the Grange should give it strong support."
The Grange believes that the NAFTA, on the whole, will be
beneficial to the economic growth of the United States, Canada,
and Mexico. The greater economic activity will be between the
United States and Mexico because the majority of the NAFTA' s
provisions have already been implemented under the U.S. -Canada
Free Trade Agreement (U.S.-CFTA). This is particularly true for
agriculture because Canada chose not to enter into most of the
93
agricultural negotiations in the NAFTA, leaving the U. S. fanners
to reap the increase in farm trade.
As the International Trade Commission's report pointed out,
the NAFTA' s impact on the United States will vary by region and
product. The report "Potential Impact on the U.S. Economy and
Selected Industries of the North American Free Trade Agreement",
which was written by the Commission, stated it correctly - that
there would be short-term and long-term effects by the trade
agreement. The report said, in part, that the NAFTA is expected
to expand U.S. -Mexican trade substantially. The estimated gains
in U.S. exports to Mexico range from 5.2% to 27.1%. The projected
increases in U.S. imports from Mexico range from 3.4% to 15.4%.
The projected long-term gains in aggregate employment are
less than one percent for the United States and Canada, but are
up to almost seven percent for Mexico. The expected increases in
the average real wages are 0.3% or less for the United States,
0.5% or less for Canada, and 0.7% to 16.2% for Mexico. Although
the evidence on the direction of real wage effects for low- and
high-skilled U.S. workers is mixed, the preponderance of evidence
indicates an indiscernible effect on the United States' wage
rates for both low- and high-skilled workers.
According to the report, Mexico's improved access to ad-
vanced technology could lead to a long-term increase in Mexico's
rate of economic growth. As longstanding participants in a global
open trading regime, the United States and Canada may not realize
substantial dynamic gains from the NAFTA, but will benefit from
94
the market opportunities that are created by the economic growth
in Mexico.
The NAFTA will raise the standard of living in Mexico,
creating new markets for U. S. products, including those from our
farms. At the same time, the economic activity in Mexico, as a
result of freer trade between 360 million consumers, will result
in increased employment in Mexico, alleviating part of the human
misery that drives Mexican citizens across the Rio Grande to seek
illegal employment in the United States. It will also provide the
economic steam engine to help Mexico improve its labor and
environmental standards. Without the NAFTA, there is no assurance
that these things will ever happen. Which is the better hemi-
sphere to live in - pre-NAFTA or post-l'IAFTA?
The NAFTA will create new, long-term growth opportunities
for U.S. farm exports in the Western Hemisphere far into the next
century. The USDA's Office of Economics' most recent appraisal of
the Agreement's impact on agricultural trade contains the follow-
ing:
"In the year 2008, when the Agreement is fully
implemented, U.S. farm exports are estimated to be $2
to $2.5 billion higher than without the Agreement. Most
of that will be gains in U.S. farm exports to Mexico.
Farm exports to Mexico have been on an upswing due
primarily to Mexico's lowered barriers to U.S. agricul-
tural imports at the same time its economy boomed."
95
The further lowering and eventual removal of Mexico's tariff
and non-tariff barriers to trade will result in further increases
in U.S. farm exports. This will be true for a large number of
United States' agricultural commodities.
The NAFTA' s provisions are well known to you and the members
of your Committee. We believe that there are sufficient safe-
guards and other measures to protect the imoort-sensitive commod-
ities. Designated guantities of these safeguarded products may
enter at a low tariff, with imports larger than those guantities
paying a higher tariff. The United States can apply such safe-
guards to a wide range of impacted commodities, including fresh
tomatoes, eggplants, chili peppers, sguash, watermelons, and
onions.
There are other safeguards built into the NAFTA. The prod-
ucts that receive favorable tariff treatment must originate (or
be substantially transformed, such as through a manufacturing
process) in Mexico, Canada, or the United States. Under the Rules
of Origin, a country cannot import farm goods and ship them to a
NAFTA partner under the Agreement's more favorable tariff treat-
ment. Mexico's tariffs with other countries will not be changed
by the NAFTA.
Opponents of the NAFTA argue that the Agreement will result
in unsafe food entering the United States because of another
country's lower standards. Under the NAFTA, we can maintain our
stringent standards for health, safety, and the environment, and
prohibit imports that do not meet the United States' standards.
96
state and local governments can enact their own import standards
if they are based on scientific grounds. Each country in the
Agreement can maintain the grade standards to fit its marketing
rules. The local content reguirements of Mexico's manufacturing
rules will be eliminated under the Agreement, opening up new
markets for U.S. goods.
Some of the highlights on increased U.S. farm exports to
Mexico under the NAFTA are: 20% increase in wheat, 2.5 million
ton duty-free quota for corn that will increase 3% each year, 10%
to 20% increase in rice, $400 to $500 million increase for
soybeans, 8% rise in peanut exports, pom fruits (peaches, apples,
and pears) may nearly double, 20,000 ton increase in milk powder,
and increased exports of pork and hogs.
We live in a global economy, and no sector of the United
States' economy can escape that fact. The fastest growing sector
of our economy is our exports, and Mexico is an important part of
that growth. The NAFTA will lock in the gains in exports we have
made with Mexico and open new opportunities for growth.
New trade agreements will be more important to the restruc-
tured United States' agricultural sector and rural America than
any new farm bill. U.S. agriculture heavily depends on exports.
About one-third of our production is sold to foreign customers.
If we are to just maintain the present agricultural productivity,
let alone bring back the millions of acres that are now being
held out of production, help preserve family farms, and enhance
rural America, we have no choice but to expand agricultural
97
exports. Otherwise, we must take resources out of agriculture in
order to maintain a balance between supply and demand at reason-
able prices. That means even fewer farms and fewer farmers.
Mexico is just the beginning. Three-quarters of mankind
lives in squalor. Our economic future lies in using our nation's
productive capacity to relieve the awful suffering of the great
bulk of the world's people. No amount of foreign aid can accom-
plish this task. Only foreign trade holds the key to world
prosperity.
We strongly support the NAFTA, and urge its approval by the
U.S. Congress. To conclude that the United States stands to lose
by eliminating trade barriers with Mexico, a small economically-
depressed nation, takes some mighty creative reasoning. In the
short run, we may have to restructure parts of our economy so
that poorer nations can more robustly consume our farm and
industrial goods and services in the long run. The world had to
restructure demand to bring about an end to the Great Depression.
World War II was the primary reason behind that restructuring.
Now we have a chance to accomplish it through peaceful means -
trade expansion through regional and international trade agree-
ments.
The Grange will have to wait and see what the President's
side agreements on labor and tne environment bring before we can
endorse their content. However, we do not believe that a side
agreement on import surges is necessary because there is ample
protection in the present Agreement's language.
8
BOSTON PUBLIC LIBRARY
98
3 9999 05018 420 7
A recently released study by the Canadian-American Commit-
tee, a bi-national group of prominent business, labor, agricul-
tural, and academic leaders which is co-sponsored by the Toronto-
based C. D. Howe Institute and the Washington-based National
Planning Association, said the negotiators of the side agreements
on labor and the environment have a difficult challenge ahead.
The study made the following important points that I would
like to draw to your attention:
* "Too forceful a position in favor of a maximal approach
to labor and environmental issues could gut the trade
liberalization provisions of the NAFTA or cause it to
collapse altogether."
* "People who are enthusiastic about raising labor and
environmental standards in North America - and particu-
larly in Mexico - should be mindful of the importance
of strong commercial relations in achieving those
ends . "
* "The closer ties between the three countries as a
result of the NAFTA will increase the mutual interest
in domestic policies, even to the point of an American
equivalent to the European Community's 'Social
Charter' . But it cautions against agreements that could
become potent weapons in the hands of protectionists,
or that could undermine each country's flexibility in
dealing with distinctive labor and environmental is-
sues. "
99
* "Increased trade opportunities made available to Mexico
via the NAFTA is a better way to gain agreement on
these issues than threatening sanctions."
One of the authors of the study, Peter Morisi, the head of
the Canadian-American Center at the University of Maine, said,
"There is strong economic logic for the side deal negotiations.
Nonetheless such discussions are no more and no less an affront
to Mexican sovereignty than Mexican efforts to seek contraints on
U.S. and Canadian application of dumping and other trade remedy
laws would be an affront to U.S. and Canadian sovereignty."
A complete copy of the report can be obtained from the
National Planning Association, 1424 16th St., N.W. , Suite 700,
Washington, D.C. 20036. I would like to encourage the members of
the Committee to obtain a copy.
Thank you for allowing the Grange to present its position on
this matter. We would like to request that this statement be made
part of the hearing record on the NAFTA.
10
O
ISBN 0-16-041522-5
9 780160"415227
90000
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