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maquiladora factories operating in Mexico, the overwhelming number of which were 

 established by U.S. and Mexican corporations, employing more than 400,000 Mexi- 

 can workers. 



In addition, Mexican import protection and rules requiring firms selling in the 

 Mexican market to locate in Mexico made it difficult if not impossible for firms pro- 

 ducing in the United States to sell into Mexico. Nontariff barriers — licensing, citi- 

 zenship requirements, and a host of other regulations — were especially hard on 

 small businesses in the United States, which do not have the resources to navigate 

 through the bureaucratic maze in Mexico. 



The result of the maquiladora program and Mexican protection has been to distort 

 U.S. -Mexican trade, limiting exports from the United States to Mexico and exagger- 

 ating exports from Mexico to the U.S. NAFTA transforms the situation by opening 

 Mexico's market and eliminating the distortions created by the maquiladora pro- 

 gram. Under NAFTA, Mexico eliminates its import protection and the maquiladora 

 program is also effectively eliminated, permitting firms to sell in the Mexican mar- 

 ket without restriction. 



Much of the opposition to NAFTA reflects justifiable concern about the policies of 

 the past that have disadvantaged U.S. workers. Despite Mexican progress in volun- 

 tarily opening markets, Mexican tariffs remain, on the average, 2.5 times higher 

 than ours. By contrast, over 50 percent of our imports from Mexico already enter 

 duty free. Our average tariff on imports is only 4 percent. 



Mexico currently has no obligation to continue recent market-opening moves on 

 which thousands of U.S. jobs already depend. NAFTA will not only lock in current 

 access but expand that access. 



NAFTA will require relatively little change on our part — while requiring Mexico 

 to sweep away decades of protectionism and overregulation. NAFTA will eliminate 

 especially burdensome tariffs and nontariff barriers in a number of key sectors 

 where the United States is competitive vis-a-vis Mexico, such as autos and agri- 

 culture. 



NAFTA lets U.S. workers compete on a level playing field with fair rules. And 

 we are confident, in those circumstances, U.S. workers will succeed. 



NAFTA will give U.S. exporters a significant preference in the rapidly expanding 

 Mexican market over Japanese, European, and other foreign suppliers. As I have 

 already noted, Mexico's tariffs average 10 percent. Countries other than the United 

 States (and Canada) will continue to face Mexican duties. In addition, Mexico's cur- 

 rent import licensing requirements on agricultural imports would disappear for the 

 United States (and Canada, for most products) when the NAFTA goes into effect. 

 However, a license would be required to bring in covered products from all other 

 countries. 



U.S. exporters of most agricultural products will share unrestricted access to the 

 Mexican market with their Canadian counterparts. For dairy, poultry, and egg prod- 

 ucts, however, U.S. shippers will have exclusive access to Mexico's market: Canada 

 and Mexico agreed to exempt these items from their agreement. It should be noted 

 that Mexico is the world's largest import market for powdered milk, and demand 

 is expanding for all dairy, poultry and egg products. With the access provided by 

 NAFTA, our proximity to the market, and our potential to produce large supplies 

 of competitively priced dairy, poultry and egg products, NAFTA will provide an ex- 

 cellent opportunity for boosting export sales of these products. 



MAJOR FEATURES OF NAFTA 



Reduction of Mexican Tariffs. Under NAFTA, half of all U.S. exports to Mexico 

 become eligible for zero Mexican tariffs when NAFTA takes effect on January 1, 

 1994. Those exports which will be tariff free include some of our most competitive 

 products, such as semiconductors and computers, machine tools, aerospace equip- 

 ment, telecommunications equipment, electronic equipment, and medical devices. 

 Within the first 5 years after NAFTA's implementation, two-thirds of U.S. industrial 

 exports will enter Mexico duty free. That makes U.S. products more competitive. 



Removing Mexican nontariff barriers. NAFTA reduces or eliminates numerous 

 Mexican nontariff barriers which today require U.S. companies to invest in Mexico 

 or manufacture in Mexico in order to supply the Mexican market. For example, 

 NAFTA will eliminate the requirements that force U.S. companies to purchase 

 Mexican goods instead of U.S. -made equipment and components. Moreover, NAFTA 

 abolishes the requirements that force our companies to export their production, usu- 

 ally to the United States, instead of selling directly into the Mexican market. Re- 

 quirements that make U.S. companies produce in Mexico in order to sell there will 

 also be phased out. 



