Can the labor side agreement save NAFTA? : hearings before the Employment, Housing, and Aviation Subcommittee of the Committee on Government Operations, House of Representatives, One Hundred Third Congress, first session, September 9, and October 7, 1993 PDF
Preview Can the labor side agreement save NAFTA? : hearings before the Employment, Housing, and Aviation Subcommittee of the Committee on Government Operations, House of Representatives, One Hundred Third Congress, first session, September 9, and October 7, 1993
/ CAN THE LABOR SIDE AGREEMENT SAVE NAFTA? y 4. G 74/7.1 11/11 Can the Labor Side Agreenent Save H. HEARINGS BEFORE THE EMPLOYMENT, HOUSING, AND AVIATION SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS HOUSE OP REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION SEPTEMBER 9, AND OCTOBER 7, 1993 Printed for the use of the Committee on Government Operations \ '.~ .>; '-' U.S. GOVERNMENT PRINTING OFFICE 74-588CC WASHINGTON : 1994 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-043463-7 . / CAN THE LABOR SIDE AGREEMENT SAVE NAFTA? Y4.G74/7:L 11/11 Can the Labor Side Agreenent Save H. HEARINGS BEFORE THE EMPLOYMENT, HOUSING, AND AVIATION SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION SEPTEMBER 9, AND OCTOBER 7, 1993 Printed for the use of the Committee on Government Operations r - 1 n U.S. GOVERNMENT PRINTING OFFICE 74-588CC WASHINGTON : 1994 ForsalebytheU.S.GovemmeniPrintingOffice SuperintendentofDocuments.CongressionalSalesOffice.Washington,DC 20402 ISBN 0-16-043463-7 COMMITTEE ON GOVERNMENT OPERATIONS JOHNCONYERS, JR., Michigan, Chairman CARDISS COLLINS, Illinois WILLIAM F. CUNGER, JR., Pennsylvania GLENN ENGLISH, Oklahoma AL MCCANDLESS, California HENRY A. WAXMAN, California J. DENNIS HASTERT, Illinois MIKE SYNAR, Oklahoma JON L. KYL, Arizona STEPHEN L. NEAL, North Carolina CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California STEVEN SCHIFF, New Mexico MAJOR R. OWENS, New York C. CHRISTOPHER COX, California EDOLPHUS TOWNS, New York CRAIG THOMAS, Wyoming JOHN M. SPRATT, JR., South Carolina ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California RONALD K. MACHTLEY, Rhode Island COLLIN C. PETERSON, Minnesota DICK ZIMMER, NewJereey KAREN L. THURMAN, Florida WILLIAM H. ZEUFF, JR., New Hampshire BOBBY L. RUSH, Illinois JOHN M. MCHUGH, New York CAROLYN B. MALONEY, New York STEPHEN HORN. California THOMAS M. BARRETT, Wisconsin DEBORAH PRYCE, Ohio DONALD M. PAYNE, New Jersey JOHN L. MICA, Florida FLOYD H. FLAKE, New York ROB PORTMAN, Ohio JAMES A. HAYES, Louisiana CRAIG A. WASHINGTON, Texas BERNARD SANDERS, Vermont BARBARA-ROSE COLLINS, Michigan (Independent) CORRINE BROWN, Florida MARJORIE MARGOLIES-MEZVINSKY, Pennsylvania LYNNC. WOOLSEY, California GENE GREEN, Texas BART STUPAK, Michigan JinJAN Epstein, StaffDirector Matthew R. Fletcher, Minority StaffDirector Employment, Housing, and Aviation Subcommittee COLLIN C. PETERSON, Minnesota, Chairman TOM LANTOS, California RONALD K. MACHTLEY, Rhode Island BOBBY L. RUSH, Hlinois CHRISTOPHER SHAYS, Connecticut FLOYD H. FLAKE, New York JOHN M. McHUGH, New York KAREN L. THURMAN, Florida BARBARA-ROSE COLLINS, Michigan Ex Officio JOHN CONYERS, JR., Michigan WILLIAM F. CLINGER, Jr., Pennsylvania Edith a. HOLLEMAN, StaffDirector Joy R Simonson, Professional Sta/fMember Andrea Nelson, Counsel June Saxton, Clerk Jane O. Cobb, MinorityProfessionalStaff (II) CONTENTS Page Hearingheldon: September9, 1993 1 October7, 1993 131 Statementof: Breffer,MarshallJ., seniorfellow, HeritageFoundation 80 Levmson, Jerome I., visitingscholar, EconomicPolicy Institute 104 Peterson, Hon. Collin C, a Representative in Congress from the State ofMinnesota, and chairman. Employment, Housing, and Aviation Sub- committee: Openingstatement 1 Skelton, Dennis, vice president. International Brotherhood ofTeamsters, accompaniedbyRobertNicklas, special projectscoordinator 31 Wallach, Lori, staffattorney. Public Citizen 122 Williams, Lynn R., international president. UnitedSteelworkers ofAmer- ica 20 Yerxa, Rufiis, Ambassador, Deputy U.S. Trade Representative, accom- ganied by Jennifer Haverkamp, Director ofEnvironmental Policy, and lavidWalters, ChiefEconomist 139 Letters, statements, etc., submitted fortherecordby: Breger, Marshall J., senior fellow. Heritage Foundation: Prepared state- ment 84 Collins, Hon. Barbara-Rose, a Representative in Congress from the State ofMichigan: Preparedstatement 158 Conyers, Hon. John, Jr., a Representative in Congress from the State of Michigan, and chairman. Committee on Government Operations: New York Times article dated July 12, 1993, entitled, 'Mexicans FearforCom, ImperiledbyFree Trade" 79 Preparedstatement 77 Flake, Hon. Floyd H., a Representative in Congress from the State of NewYork:Prepared statement 19 Levinson, Jerome I., visiting scholar, EconomicPolicy Institute: F*repared statement 107 Peterson, Hon. Collin C, a Representative in Congress from the State ofMinnesota, and chairman. Employment, Housing, and Aviation Sub- committee: Articles entitled, "NAFTA and Mexican Wages" and "NAFTA is the rightwayto go; allthatis needed is leadership" 3 Joumtd 01 Commerce article entitled, "Mexico Official Defends NAFTA Dispute Process" 203 Washington Post article entitled, "AHigh-Tech, Low-Wage Lure" 133 Letters dated September 3, 1993, from Robert Reich, U.S. Depart- ment of Labor, and Michael Kantor, Office ofthe U.S. Trade Rep- resentative,concerning attendance athearing 7 Openingstatement 10 Rush, Hon. Bobby L., a Representative in Congress from the State of Illinois: Prepared statement 52 Skelton, Dennis, vice president, International Brotherhood ofTeamsters: Preparedstatement 34 Thurman, Hon. Karen L., a Representative in Congress from the State ofFlorida: Preparedstatements 17, 137 Wall Street Journal article entitled, "^Mexico's President Plans to CutBack Farm Subsidies" 187 Williams, Lynn R., international president. United Steelworkers ofAmer- ica: Prepared statement 25 (III) IV Page — Letters, statements,etc., submitted fortherecordby Continued Yerxa,Rufus,Ambassador, DeputyU.S. TradeKepresentative: Information concerning a Washington Post article entitled, "On Clos- er Look Firms See Less to Mexico; Infrastructure, ReliabilityProb- lemsSaidtoOutwei^ LowWages" 166 Informationconcerningthegeneruizedsystemofpreferences 191 Prepared statement 145 Zeliff, Hon. William H., Jr., a Representative in Congress from the State ofNewHampshire: Additional questions and answers ofLynn R. Williams, international president. UnitedSteelworkersofAmerica 70 Preparedstatement 14 APPENDIX Materialsubmittedforthehearingrecord 213 CAN THE LABOR SIDE AGREEMENT SAVE NAFTA? THURSDAY, SEPTEMBER 9, 1993 House of Representatives, Employment, Housing, and Aviation Subcommittee OF THE Committee on Government Operations, Washington, DC. The subcommittee met, pursuant to notice, at 1:45 p.m., in room 2247, Raybum House Office Building, Hon, Collin C. Peterson (chairman ofthe subcommittee) presiding. Present: Representatives Collin C. Peterson, Bobby L. Rush, Floyd H. Flake, and Karen L. Thurman. Also present: Representatives Grene Green, Craig Thomas, and William H. Zeliff, Jr. Staffpresent: Edith A. Holleman, staffdirector; Joy R. Simonson, professional staff member; Andrea Nelson, counsel; June Saxton, clerk; and Jane 0. Cobb, minority professional staff. Committee on Government Operations. OPENING STATEMENT OF CHAIRMAN PETERSON Mr. Peterson. The Subcommittee on Employment, Housing, and Aviation will come to order. I want to welcome the future ranking minority member, Mr. Zelifffrom New Hampshire, one who has been elevated to this high level so early in your career. Mr. Zeliff. Thank you very much. Mr. Peterson. On August 13, U.S. Trade Ambassador Mickey Kantor announced that the United States, Mexico, and Canada had negotiated two side agreements to the North American Free Trade Agreement. President Clinton had promised that these agreements would have teeth, they would, he said, guarantee the protection of workers' rights and the environment in all three countries. The major concern was Mexico, which has some good laws on the books and few resources or desire to enforce them. Workers in Mex- ico earn one-seventh ofthose in the United States and Canada and this is a wage advantage that needs to be lessened, obviously. Despite the administration's claims to the contrary, the labor side agreement is little more than lip gloss on a toothless face, or as they say in my part of the country, you can put lipstick on a pig and name it Monigue and it is still a pig. President Clinton claims that the agreement allows sanctions if Mexico's minimum wage does not increase as productivity goes up, but Mexico denies it. (1) As NAFTA's negotiators told congressional staffin a briefing ear- lier this week, **We have taken care not to require too much." The Mexican negotiators brag at home about the "exceedingly long" and convoluted dispute resolution process. Commerce Mm- ister Jaime Serra Puche told the Mexican Congress that it was 'Very improbable" that sanctions would ever be imposed. So we are hearing different stories on different sides of the bor- der. A recent commentary describes the sanctions as voluntary. It said the tripartite commissioners hardly qualify as economic brown shirts. They can only ask us to enforce our own laws and request that we fork over fines ifwe don't. Without objection, I will put both articles into the record. [The articles follow:] . NAFTA and Mexican Wises M — EXICANWAGEShave(uddenlybecome tlon—wagea plua fringe benefita in manufac* anuOorfactorinAmericanpoUtica.With turinginduatry. Intheturnaroundyearof1987, approac.hbiontghapavrottieetladteeerptlhyiadifavlildeodn,NCAoFngTrAe,aathiea awacgceoar-dpilnuga-tofrtihnegeUa.Si.nBMuerxeiacuoowfeLraebo7rpSetractieanttlcao,f North American Free Trade Agreement. The the American level. By 1992, they were 16 debate rellecta American uncertainty about thia KrcentoftheAmericanlevel—$2.35anhourin countr/aabilitytocompetewithlow-wagecoun- exlcova.$16.17intheynlte(lSUtea. triei—uncertamty and, perhapa, a loaa of aelf- Mr. Bonlor'a^^alllel';|D^the',jabor movement owtcoNhuopaoantpRgvtfoeeaitspahMdke.aeeatnioacDNdneeacwxA.v'aceFiMhneTdaekAnweg,atBaegog.gnetooihaMtoerwrit.inPottrd(BhoeaDoaay-natM.iqhla"uoecrarheIrc.tri)o'laea,lolruwwimoewognvrhhrlettoartthihMnafeaRniaxooearirbtytccehilearennlntyggy aahoamrlvrootiegnivwfreuai.etctcieBhtoareuhlmlatpyettahliaMafortteetwxafhwiliwe&avfleai<Mi^n^yle<.Kee(^a&l^^Br^>aars^eog?pn'deau*^cp.Aw-tjoiaiplyngiglcweetyIaJyci«raanciahenteoaalrci,dlaoiycmenrpfgedefaoetwtcuiaitbtinglivgeeoeadna, were in the late 1970a. In thoae daya, Mexico Andifthewageargumentlaright,howcome wulivingveryweD—farbevondItameana—on the American competition'haa been doing ao anenormouaflowofforeignbankloana.Withthe .well? Mexico began opening up ita economy to Latin debt criaia of 1982, that lending ended world trade in the fflid-1980a. NAFTA would abruptly,andtheMexicanatandardoflivingfeO rnitfurtheronitaoorthenborderandmake UkBeuatrotchke.Me•x-icangovernmentregaine.dc..o.nt.r,o•l.'chaioipgeMniInpgvepejrimlarenaednyt.beBeuntatchceomrpelaiUayheddr.amOavteirc oftheeconomybythemiddle 1980a,andthinga ^those same five years, i^om 1987 to last year, then began to improve rapidly. Mr. —Novakla AmericanexportstoMexico nearly tripled, and rightwhenheaayathatinrecentyeara apedfl* the trade balance between the two countriea cally, since 1987—Mexican wagea have been swungfroms |6UUion'S-yearAmericandeficit rialngaharply. to a $5 bUUon-f-year^American surplus. For The crucial compariaon in thia argument ia peopleidiooure.about'AmerlcsnJobs,thosesre betweien the two countriea' average compenaa- thenumbersthatreallymatter.'..i NAFTA way is the right to go; all that is needed is leadership ByJACKKEMP The Nonh American Free TradeAgreement(NAFTA)is nnder siege. Not from the White House or Republicans, btit fromprotectionistsandisolationists on the far right and left who are armedwithmisleadingnumbersand colorful metaphors. Faced with a tough battle toget NAFTAthroughCongress,theClin- ton administration appears to be weakand vacillating. The adminis- tration's rhetorical suppon for NAFTAhasyettobemetbyconcrete action.ThecampaigntopassNAFTA mustnotberevived,itmustbegin. The ruling by US. District Court JudgeCharlesRichey,callingforan environmental impactstatementthat could set NAFTA backseveralyears, drivesanothernailinNAFTA'scoffin. Now the recently established side agreements complicate matters fur- ther. This issue so too important to allowsuchaleadershipvacutmt Why?Becauseournationisatrisk oflosingoneofthemostimportant trade expanding initiatives in post- WorldWarnAmericanhistory.The agreement between the United States,MexicoandCanadawouldcre- ate a trade alliance of 370 million consumerswithanannualeconomic outputofmorethan$6.5trillion.By reducingandeventuallyeliminating expensive tariffs and other trade barriers, NAFTA will dramatically TeusInternationalFeatures/PAULKOLSTI increaseeconomicactivitybetween thethreecountries. 1987due to increased tradeamong illegal immigration from Mexico to As VS. exports increase, more thethreetradingpartners. theUS.,particularlyinCaliforniaand American jobs will be created The ThetrendofIncreasingexport-re- otherborderstates.Mostillegalimmi- CommerceDepartmentestimatesthat latedjobsinPennsylvaniawUlaccel- grants come to America seeking 19,100Americanjobsarecreatedfor erate under NAFTA Canada and greateropportunitiesforthemselves every$1billionincreaseidUS.manu- Mexico are already Pennsylvania's andabetterlifefortheirfamilies.By facTuring exports. Today more than first and third largest export mar- buildingonthehistoricfreemarket 6c0a0u,s0e00ofAomuerriecxapnosrtsarteoeMmepxilcooy.edWibteh- ktehtess,ercesopuencttriiveeslya.lIonne19w92e,reexp$1o.r6tsbitlo- rdeenftorCmasrlaodsvSaanlcineadsdbyeGMoertxaircia,nNAPrFeTsiA- NAFTA,that numberisestimatedto lion. Since Mexico began reducing will expand economic growth, jobs jumpto1 millionby 1995. tariffs in 1987, 23 Pennsylvania in- and opportunities within Mexico, BeforeMexicojoinedtheGATTin dustries have more than doubled therebyreducingtheincentivetoille- 1986,tariffsonUS.exportswereas their exports to Mexico, providing gallycrossourborder. high as 100 percent. Now they are much-neededsourceofjobgrowth. WhatdowestandtoloseifNAFTA down to an average of 10 percent. The"giantsuckingsound"ofdisap- Is defeated? Economic growth will These declining tariffs produced a pearing US. jobs doesnl come from belower,illegalimmigrationwillbe windfall of export activity, shifting expandedtradewithMexico.Itcomes higher, jobs will be lost, and US. ourtradestatuswithMexicofroma fromgrowingtaxandregulatorybur- leadershipandprestigewillsuffer. deficitof$4billiontoasurplusof$9 dens on the businesses that create NAFTA is a critical issue. It will billion. Our Southern neighbor has jobs. Higher taxes and government create jobs, fuel economic growth now become the fastest-growing ex- red tape will force American busi- andleadtomorechoicesforAmeri- portmarket,secondbehindonlyCan- nessestomovesouthoftheborderin canconsumers.Theonlythingthat ada,forUS.exportsofmanufactured search of low-tax, low-regulation canstopNAFTAisalackofleader- goods. countries.Theansweristwo-fol±re- shipandcommitmentbytheQinton ForPennsylvania,thebenefltsof versing the debUitating effects of administration. NAFTAareclear.Morethan126,000 President Clinton's S250 billion tax jobsinPennsylvaniaarealreadyde- increase and passing NAFTA as the JackKempistheformef pMeexnidceon.tAobnouttrhaadlefwoiftthheCseanjaobdsahaanvde zfiornset.steptoahemisphericfreetrade caonndgUrrebsasnmaDnevaenldopsemcernettairnytohteHBouusshing bee^icreatedin Pennsylvaniasince NAFTAwillalsoeasetheproblemof administration.
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