69 



Today's testimony, I believe, gets us going down that road. There are tough ques- 

 tions to be asked and I know our excellent witnesses will have helpful answers. 



Finally, I want to commend the chairman's staff for pulling together a thorough 

 report that summarizes the comments of scores of agriculture groups regarding 

 NAFTA.* 



Senator Cochran 



Mr. Chairman, thank you for convening this hearing to discuss the North Amer- 

 ican Free Trade Agreement. I join you in welcoming Secretary Espy, Ambassador 

 Kantor and the other witnesses who will testify. 



I'm convinced NAFTA will break down trade barriers, create more jobs, and im- 

 prove living standards in Mexico, Canada, and the United States. It will create the 

 world's largest market with over 370 million people and $6.5 trillion of production, 

 and an estimated 200,000 jobs in the first 2 years of its implementation. 



Opponents of NAFTA claim that only Mexico will benefit from this agreement. 

 But Mexico already enjoys one-way free trade with the United States because of its 

 high tariffs, which range between 10 and 20 percent. Incidentally, they now have 

 the legal right to raise tariffs to 50 percent. To make matters worse, Mexico applies 

 a restrictive import licensing system for many of our agriculture commodities. That 

 would all be phased out under NAFTA. 



In contrast, the United States applies much lower tariff duties on Mexican 



foods — averaging less than 4 percent — and over half of agriculture imports from 

 lexico already enter duty free or subject to a minimal tariff. 



NAFTA will force Mexico to make deeper cuts on its tariffs than we will on ours. 

 There are also prohibitions in this agreement to prevent Mexico from raising tariffs 

 on U.S. products in the future. 



To illustrate the importance of NAFTA to U.S. agriculture interests, we can cite 

 the case of U.S. frozen beef patties. Earlier this year, the Mexican Government im- 

 posed a 25-percent tariff on American frozen beei products. 



NAFTA would phase out this tariff and others that are imposed on American food 

 products. It will bring down trade barriers and eliminate special license require- 

 ments for American exporters of agriculture products. 



NAFTA is good for U.S. agriculture. Mexico already buys $1.5 billion more farm 

 products from us than we do from them. NAFTA would create 26,000 jobs in Ameri- 

 ca's farming industry for every $1 billion in exports. By the end of NAFTA's 15-year 

 phase-out period, U.S. agriculture exports will be $1.5 to $2 billion higher than they 

 would be without NAFTA. The U.S. Department of Agriculture estimates that farm 

 income would rise by 2 to 3 percent as a result of this agreement. 



If NAFTA is rejected, farmers of commodities such as cotton, corn, wheat, rice, 

 soybeans, dairy, beef, poultry and many others will lose access to over $2 billion in 

 new markets, and our competitors in Europe will gain an advantage over American 

 producers in Mexico. It will also be difficult for the United States to gain Mexico's 

 cooperation on other important issues that affect our two countries such as illegal 

 immigration. 



It is clear that NAFTA holds great importance for North America's economic fu- 

 ture. I applaud the administration's commitment to work hard to pass this agree- 

 ment and remain convinced that free trade and open competition will stimulate our 

 economy and create jobs for American workers in the farming industry. 



Senator Dole 



Mr. Chairman, American agriculture is the most productive and competitive in 

 the world. With NAFTA, we will capitalize on this competitive advantage. 



The U.S. Department of Agriculture projects that by the end of the transition pe- 

 riod, annual U.S. agricultural exports will be $2 billion to $2.5 billion higher than 

 they would be without NAFTA. This will create an additional 50,000 agricultural 

 jobs in the United States, in addition to the 81,000 agricultural jobs that currently 

 depend on agriculture exports to Mexico. 



NAFTA is good for Kansas, too. Overall, since 1987 Kansas' exports to Mexico 

 have increasea at an average annual rate of 126 percent. Further market opening 

 under NAFTA will accelerate and strengthen the benefits of Kansas' trade with 

 Mexico. 



"See page 153. 



