Clinton Makes His Case For Nafta "Nafta Will Create 200,000 American Jobs In Two Years."

Posted: September 19, 1993

We face the challenge of our own hemisphere, our own country, our own economic fortunes. (The North American Free Trade Agreement) means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement (with Mexico and Canada).

Fifty years ago at the end of World War II, an unchallenged America was protected by the oceans and by our technological superiority; and, very frankly, by the economic devastation of the people who could otherwise have been our competitors. We chose, then, to try to help rebuild our former enemies and to create a world of free trade supported by institutions which would facilitate it.

As a result of that effort, global trade grew from $200 billion in 1950 to $800 billion in 1980. As a result, jobs were created and opportunity thrived all across the world. But make no mistake about it: Our decision at the end of World War II to create a system of global, expanded, freer trade and the supporting institutions played a major role in creating the prosperity of the American middle class.

Ours is now an era in which commerce is global and in which money, management, technology are highly mobile. For the last 20 years in all the wealthy countries of the world, because of changes in the global environment,

because of the growth of technology, because of increasing competition, the middle class that was created and enlarged by the wise policies of expanding trade at the end of World War II has been under severe stress. Most Americans are working harder for less. They are vulnerable to the fear tactics and the adverseness to change that is behind much of the opposition to NAFTA.

But when you live in a time of change the only way to recover your security and to broaden your horizons is to adapt to the change, to move forward. Nothing we do - nothing we do in this great capital can change the fact that factories or information can flash across the world; that people can move money around in the blink of an eye.

For two decades, the winds of global competition have made these things clear to any American with eyes to see. The only way we can recover the fortunes of the middle class in this country so that people who work harder and smarter can at least prosper more, the only way we can pass on the American Dream of the last 40 years to our children and their children for the next 40, is to adapt to the changes which are occurring.

In a fundamental sense, this debate about NAFTA is a debate about whether we will embrace these changes and create the jobs of tomorrow, or try to resist these changes, hoping we can preserve the economic structures of yesterday. . . .

I believe that NAFTA will create 200,000 American jobs in the first two years of its effect. I believe if you look at the trends starting about the time (George Bush) was elected president, over one-third of our economic growth, and, in some years, over one-half of our net new jobs came directly

from exports. And on average, those export-related jobs paid much higher than jobs that had no connection to exports.

I believe that NAFTA will create a million jobs in the first five years of its impact. And I believe that that is many more jobs than will be lost, as inevitably some will be as always happens when you open up the mix to a new range of competition.

NAFTA will generate these jobs by fostering an export boom to Mexico; by tearing down tariff walls that have been lowered quite a bit by the present administration of President Salinas, but are still higher than America's.

Already Mexican consumers buy more per capita from the United States than other consumers in other nations. Most Americans don't know this, but the

average Mexican citizen, even though wages are much lower in Mexico, is now spending $450 per year per person to buy American goods. That is more than the

average Japanese, the average German, or the average Canadian buys; more than the average German, Swiss and Italian citizens put together.

So when people say that this trade agreement is just about how to move jobs to Mexico so nobody can make a living, how do they explain the fact that Mexicans keep buying more products made in America every year?

In 1987, Mexico exported $5.7 billion more of products to the United States than they purchased from us. We had a trade deficit. Because of the free market, tariff-lowering policies of the Salinas government in Mexico, and

because our people are becoming more export-oriented, that $5.7-billion trade deficit has been turned into a $5.4-billion trade surplus for the United States. It has created hundreds of thousands of jobs.

Even when you subtract the jobs that have moved into the maquiladora areas, America is a net job winner. . . . When Mexico boosts its consumption of petroleum products in Louisiana . . . , as it did by about 200 percent (between 1987 and 1993), Louisiana refinery workers gained job security. When Mexico purchased industrial machinery and computer equipment made in Illinois, that means more jobs. And guess what? In this same period, Mexico increased those purchases out of Illinois by 300 percent.

Forty-eight out of the 50 states have boosted exports to Mexico since 1987. That's one reason why 41 of our nation's 50 governors . . . support (NAFTA). I can tell you, if you're a governor, people won't leave you in office unless they think you get up every day trying to create more jobs. They think that's what your job is if you're a governor. . . .

Many Americans are still worried that this agreement will move jobs south of the border. There have been 19 serious economic studies of NAFTA by liberals and conservatives alike; 18 of them have concluded that there will be no job loss.

Businesses do not choose to locate based solely on wages. If they did, Haiti and Bangladesh would have the largest number of manufacturing jobs in the world. Businesses do choose to locate based on the skills and productivity of the work force, the attitude of the government, the roads and railroads to deliver products, the availability of a market close enough to make the transportation costs meaningful, the communications networks necessary to support the enterprise. That is our strength, and it will continue to be our strength.

This is not a time for defeatism. It is a time to look at an opportunity that is enormous.

Moreover, there are specific provisions in this agreement that remove some of the current incentives for people to move their jobs just across our border. For example, today Mexican law requires United States automakers who want to sell cars to Mexicans to build them in Mexico. This year we will export only 1,000 cars to Mexico. Under NAFTA, the Big Three automakers expect to ship 60,000 cars to Mexico in the first year alone.

Side agreements to NAFTA . . . make it harder than it is today for businesses to relocate solely because of very low wages or lax environmental rules. These side agreements will make a difference. The environmental agreement will, for the first time ever, apply trade sanctions against any of the countries that fails to enforce its environmental laws. I might say to those who say that's giving up our sovereignty, how do we have the right to ask that of Mexico if we don't demand it of ourselves? It's nothing but fair.

This is the first time that there have ever been trade sanctions in the environmental law area. This ground-breaking agreement is one of the reasons why major environmental groups, ranging from the Audubon Society to the Natural Resources Defense Council, are supporting NAFTA.

The second agreement ensures that Mexico enforces its laws in areas that include worker health and safety, child labor and the minimum wage. And I might say, this is the first time in the history of world trade agreements (that) any nation has ever been willing to tie its minimum wage to the growth in its own economy.

What does that mean? It means that there will be an even more rapid closing of the gap between our two wage rates. And as the benefits of economic growth are spread in Mexico to working people, what will happen? They'll have more disposable income to buy more American products and there will be less illegal immigration because more Mexicans will be able to support their children by staying home. This is a very important thing.

The third agreement answers one of the primary attacks on NAFTA that I heard for a year, which is, well, you can say all this, but something might happen that you can't foresee.

The third agreement protects our industries against unforseen surges in exports from either one of our trading partners. And the flip side is also true. Economic change, as I said before, has often been cruel to the middle class, but we have to make change their friend. NAFTA will help to do that.

Without regard to NAFTA, we know now that the average 18-year-old American will change jobs eight times in a lifetime. The secretary of labor has told us, without regard to NAFTA, that over the last 10 years, for the first time, when people lose their jobs most of them do not go back to their old job, they go back to a different job; so that we no longer need an unemployment system, we need a re-employment system. And we have to create that.

We have to tell American workers who will be dislocated because of this agreement or because of things that will happen regardless of this agreement, that we are going to have a re-employment program for training in America, and we intend to do that.

Together, the efforts of two administrations now have created a trade agreement that moves beyond the traditional notions of free trade, seeking to ensure trade that pulls everybody up instead of dragging some down while others go up. We have put the environment at the center of this in future agreements. We have sought to avoid a debilitating contest for (businesses) where countries seek to lure them only by slashing wages or despoiling the environment.

This agreement will create jobs, thanks to trade with our neighbors. That's reason enough to support it. But NAFTA is essential to our long-term ability to compete with Asia and Europe. Across the globe our competitors are consolidating, creating huge trading blocs. This pact will create a free trade zone stretching from the Arctic to the tropics, the largest in the world - a $6.5 trillion market, with 370 million people. It will help our businesses to be both more efficient and to better compete with our rivals in other parts of the world.

This is also essential to our leadership in this hemisphere and the world.

For decades, we have preached and preached and preached greater democracy, greater respect for human rights, and more open markets to Latin America. NAFTA finally offers them the opportunity to reap the benefits of this. Secretary (of Health and Human Services) Donna Shalala represented me recently at the installation of the President of Paraguay. And she talked to presidents

from Colombia, from Chile, from Venezuela, from Uruguay, from Argentina, from Brazil. They all wanted to know, "tell me if NAFTA is going to pass so we can become part of this great new market." More, hundreds of millions more . . . consumers for our products.

It's no secret that there is division within both the Democratic and Republican parties on this issue. That often happens in a time of great change. I just want to say something about this because it's very important. . . . This fight is not a traditional fight between Democrats and Republicans, and liberals and conservatives. It is right at the center of the effort that we're making in America to define what the future is going to be about.

And so there are differences. But if you strip away the differences, it is clear that most of the people that oppose this pact are rooted in the fears and insecurities that are legitimately gripping the great American middle class. It is no use to deny that these fears and insecurities exist. It is no use denying that many of our people have lost in the battle for change. But it is a great mistake to think that NAFTA will make it worse . . . . I can tell you it will be better. . . .

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