41 



concern is the disparity in tariff treatment accorded to home appli- 

 ances. You know what I am going to say. 



We have three firms in Iowa: Maytag, Amana, and Frigidaire — 

 about 8,000 jobs, good-paying jobs. These companies over the last 

 several years or more have invested upwards of close to $1 billion 

 in U.S. plant modification. They have increased their productivity 

 with mechanization and state-of-the-art manufacturing. 



But under this agreement, as soon as we agree to NAFTA, if it 

 is agreed to, the tariffs on those major home appliances from Mex- 

 ico coming into the United States is 0, but going the other way it 

 stays at 20 percent and is phased out over 10 years. 



Now, I know that there is a large firm that invested in Mexico. 

 At least one, maybe two, invested in Mexico in making these home 

 appliances. 



So where is the fairness? Here are U.S. companies — Maytag, 

 Amana, Frigidaire — invested in their workers, invested in produc- 

 tivity, invested in America to upgrade their plant and equipment 

 to be more competitive. Two other companies go to Mexico; they get 

 the benefit. 



I don't understand how that is fair. 



Ambassador Kantor. Well, let me — I am not going to argue. Let 

 me make two points. Number one, on today's facts, the 20 percent 

 would stay and it is still 0. There are no tariffs on appliances, as 

 you know so well, Senator, coming from Mexico into the United 

 States. The NAFTA begins to change that. 



Now, not fast enough. Not fast enough. And we want to reach 

 agreement with the Mexican Government — and we have already 

 discussed it with them — to use the acceleration clause on the first 

 day this goes into effect and begin to negotiate a more rapid de- 

 crease of those tariffs in the appliance sector that you have cited. 

 But, remember — and I know you are — I am just saying this for rhe- 

 torical purposes only, Senator. Without the NAFTA, it is 20 to 

 nothing and it will never change. With the NAFTA, it changes 

 every year for 10 years, and we get rid of it. But we have the op- 

 portunity, which we have done three times, by the way, under the 

 Canadian Free Trade Agreement, to accelerate the lowering of tar- 

 iffs. It is a good deal for us. It is a better deal than we have right 

 now. 



Senator Harkin. Well, now, as a good lawyer, you left out one 

 thing. 



Ambassador Kantor. I am sure I left out more than one. 



Senator Harkin. No. You left out one thing, and that is the au- 

 thority we have now under GSP. We have the authority to impose 

 tariffs if imports go above a certain level. And we have done that. 

 We have a 4-percent tariff right now on stoves. NAFTA wipes that 

 out. 



So it is not 20 to nothing. It is 20 to nothing, but we can impose 

 tariffs if imports impinge on our manufacturing in this country. 

 And what happens is that this agreement prohibits us from doing 

 that. 



So you say it is 20 to nothing, but we have a little hammer over 

 here. Under NAFTA it is 20 to nothing, and we don't have a ham- 

 mer. 



