64 



standards in Mexico and the United States, flaws in the dispute settlement process, 

 and a lack of protection against exchange rate manipulation. 



Last week, President Clinton signed the side agreements on labor, the environ- 

 ment and import surges. While the agreements on labor and the environment rep- 

 resent unprecedented attention to these issues in a trade agreement, I am not con- 

 vinced that they go far enough in addressing these important issues. 



In addition, and most importantly from the perspective of my State, they do not 

 even address many of the issues I raised in my February 24 letter to Ambassador 

 Kantor. I hope that these issues will still be addressed before the NAFTA comes to 

 a vote, because I recognize that our economy is becoming increasingly integrated 

 with the Mexican economy. In my view, we ought to manage this integration in a 

 way that benefits farmers and workers and small businesses on both sides of the 

 border. 



But, frankly, I am skeptical that the NAFTA and its implementing legislation will 

 be modified sufficiently. If these issues — and others that have come to my attention 

 as I have studied the agreement and Mexico more closely — are not addressed, the 

 NAFTA will be bad for North Dakota. And I believe it will be bad for the country 

 as well. 



There are several reasons why I cannot support the agreement in its current 

 form. These range from specific concerns regarding agriculture to more general con- 

 cerns regarding the low wages and incomes in the Mexican economy, Mexican en- 

 forcement of environmental standards, access to and the impartiality of the Mexican 

 legal system, and the state of human rights and democracy in Mexico. I expect that 

 there will be many opportunities over the next several months to debate these is- 

 sues. Today, I want to focus on the impact of the NAFTA on North Dakota agri- 

 culture. 



North Dakota producers of Durum, Hard Red Spring wheat, and barley know first 

 hand what a few loopholes in a trade agreement can do to their incomes. Ever since 

 the United States-Canada Free Trade Agreement was implemented, North Dakota 

 grain growers have suffered from a flood of unfairly subsidized Canadian imports. 

 Canada has used huge transportation subsidies and the secretive, anticompetitive 

 pricing practices of the Canadian Wheat Board to undercut U.S. prices. Imports of 

 Canadian Durum have climbed from before 1985-86 to an average of 15 million 

 bushels in the past 2 years. Imports of Hard Red Spring wheat reached a record 

 35.4 million bushels last year — or more than seven times the average during the 5 

 years preceding implementation of the CFTA. As a result, North Dakota producers 

 have lost hundreds of millions of dollars in income, and USDA supply management 

 and export programs have been undermined. 



The NAFTA, as negotiated by the Bush administration, follows in the same path. 

 It does nothing to correct the problems created by the CFTA, even though the Presi- 

 dent was required by the CFTA implementing legislation Lo enter into consultations 

 to resolve these issues. In fact, the NAFTA will make things worse by allowing Can- 

 ada to use westbound transportation subsidies to ship wheat into Mexico. 



I am encouraged that Ambassador Kantor and Secretary Espy have been much 

 more sympathetic to the concerns of wheat growers than their predecessors. Their 

 efforts to approve the use of EEP to counter aggressive Canadian subsidies in the 

 Mexican market is a clear step in the right direction. Yet the basic problems of the 

 CFTA have not been resolved; much more must be done. 



I have urged USDA to recommend that the President invoke Section 22 of the Ag- 

 ricultural Adjustment Act of 1933 to limit Canadian imports. And I have aggres- 

 sively championed end-use certificates to prevent the illegal commingling of Cana- 

 dian grains into U.S. export programs. It is my hope that these steps will eventually 

 lead to a negotiated agreement that closes the loopholes in the CFTA and levels the 

 playing field in the North American grain trade. 



The NAFTA also creates significant problems for sugar producers. Sugar is a $1.5 

 billion industry in the Red River Valley of North Dakota and Minnesota, but it could 

 be wiped out by a loophole in the NAFTA. In its present form, the agreement could 

 allow Mexico, which is currently a net importer of sugar, to export unlimited 

 amounts of sugar to the United States starting in year seven of the agreement if 

 Mexico becomes a "net surplus producer" of sugar. If Mexico had to increase its pro- 

 duction by diverting resources from other types of agriculture and dramatically in- 

 creasing the efficiency of its processors, this would seem reasonable. But Mexico 

 doesn't have to do this. Instead, because of an ambiguity in the text, Mexico may 

 be able to achieve a net production surplus simply by converting its beverage indus- 

 try from sugar to high fructose corn sweetener. This provision must be clarified in 

 order to ensure that the sensitive U.S. sugar industry — an industry that is highly 

 competitive in the world market and supplies sugar to the American consumer at 



