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FREE TRADE'S FORGOTTEN AMIGOS
Why Governors Want NAFTA
by Douglas Seay and Wesley Smith
From the Summer 1993 issue of Policy Review
To subscribe to Policy Review, call (800) 544-4843

     Prospects in Congress for the North American Free Trade
Agreement (NAFTA) with Canada and Mexico look gloomy. Leon
Panetta, President Clinton's director of the Office of Management
and Budget and a proponent of NAFTA, says the proposed agreement
is "dead." Although President Clinton, Treasury Secretary Lloyd
Bentsen, and Labor Secretary Robert Reich all publicly support
NAFTA, the administration is more ambivalent than the Bush
administration, which pushed for NAFTA aggressively.
Congressional opposition to the agreement is widespread and
growing, most notably among Democrats, but among many Republicans
as well. Labor and environmentalist lobbyists have mounted a
well-financed effort to derail NAFTA. Their strategy is to argue
that it would lead to massive job loss, the de-industrialization
of the United States, and a lowering of labor and environmental
standards to those of the Third World.
     In contrast to this intense hostility and feverish activity
in the nation's capital is the view from the state houses, where
NAFTA is regarded as self-evidently good for state economies.
According to a Heritage Foundation survey in June 1993, 40 of the
country's 50 governors actively support NAFTA -- 22 of the 30
Democrats, one of the two independents, and all of the 18
Republicans. This near-unanimous support comes from north and
south, east and west, agricultural and industrial states. The
universal reason the governors cite for their support is NAFTA's
expected positive impact on their states, especially on job
growth.
     This surprising consensus among the governors has gone
largely unnoticed during the public debate, and NAFTA's
supporters have overlooked a valuable set of allies. The contrast
between their strong support and the growing opposition in
Congress suggests a major difference in decision-making between
Washington and the states. Congressmen and governors make
different trade-offs between special interests and the general
welfare.

NAFTA's Tortuous Path

     NAFTA's path to congressional consideration has been long
and difficult. First floated as an idea by Ronald Reagan in his
presidential campaign of 1980, a free-trade zone among the three
countries did not receive active consideration until proposed by
Mexican President Carlos Salinas de Gortari to George Bush in the
fall of 1990. Although Mr. Salinas's original proposal was for a
bilateral U.S.-Mexican agreement, Canada soon requested
participation to safeguard its gains from the 1988 U.S.-Canada
Free Trade Agreement.
     The trilateral negotiations that began in 1991 proved much
more difficult than anticipated, due largely to Mexico's desire
to delay the opening of many of its most sensitive and
politically powerful sectors, such as financial services. The
resulting agreement, while not a perfect free-trade agreement,
did provide for the removal of most barriers to trade among the
three countries. Although substantially completed by May 1992,
the delays in the negotiations had pushed the agreement far into
the U.S. election year, and it was decided to shelve
congressional action until after the election.
     George Bush's defeat removed the agreement's key proponent
in the United States. Although candidate Bill Clinton repeatedly
expressed his support for NAFTA in the campaign, he conditioned
his approval on the negotiation of additional and unspecified
"side agreements" on labor and environmental issues. Ross Perot,
by contrast, denounced the agreement, predicting a "giant sucking
sound" as U.S. jobs were drawn south to Mexico. In one of his
last acts as president, Mr. Bush signed the completed agreement
in December and forwarded it to Congress, where it awaited the
new president.
     On taking office Mr. Clinton postponed congressional
consideration until the completion of the side agreements, the
negotiation of which began only in March. Since then, further
delays have emerged, and Treasury Secretary Bentsen announced in
April that, due to the administration's focus on its domestic
economic package, a vote on NAFTA would not be forthcoming before
fall.

Enemies Organize

     These repeated delays have given the agreement's enemies
time to organize. Among the first to lobby the new administration
were representatives of the flat glass and sugar-growing
industries, which sought to reopen the NAFTA text for
modifications in their favor. Much more serious, however, are the
efforts of labor unions and environmentalist lobbies, whose
economic and ideological interests pit them against free trade.
     According to the Clinton administration's Department of
Commerce, 700,000 jobs already have been created in the United
States due to increased exports to Mexico. Most economic studies
predict NAFTA will add several hundred thousand jobs in the
United States. Nevertheless, the AFL-CIO makes no secret of its
opposition to the agreement. Its secretary/treasurer, Tom
Donohue, has proclaimed the defeat of NAFTA as the organization's
"number-one priority." Opposition has been joined by
environmentalist groups who charge that the agreement will lead
to environmental degradation on both sides of the border. But the
most potent political issue has been a fear that greater trade
with Mexico will accelerate the loss of high-paying union jobs in
many American industries. Union opposition to NAFTA has found
resonance in the slow-growing U.S. economy, where fears of job
security among the population have provided fertile soil.
     As a result of the intense lobbying by anti-NAFTA forces,
what was once commonly regarded as a done deal now shows signs of
unravelling. Although two-thirds of the Republicans in Congress
support NAFTA, only one-quarter of Democrats do, according to
surveys. The situation is worse among the newly elected members;
slightly over one-third of the freshmen Republicans in the House
oppose or are leaning against NAFTA. According to Robert Matsui
(D-CA), a NAFTA supporter, only 5 of the 63 freshman Democratic
congressmen openly support NAFTA. The leaders of both houses of
Congress, Senator George Mitchell and Speaker Tom Foley, stated
in April that, although they support the agreement themselves, a
vote on NAFTA would lose in both the Senate and the House of
Representatives. Among congressional opponents, the most commonly
cited reason for their position is fear of a loss of U.S. jobs,
especially in manufacturing.

Evidence from the States

     It therefore is highly significant that 40 of 50 governors
are confident that NAFTA will be beneficial for their states.
Supporters of NAFTA range from James Hunt of North Carolina to
Evan Bayh of Indiana to John Waihee of Hawaii to William Weld of
Massachusetts.
     Governors are on the front line of expanding export
opportunities for businesses in their states. They go on trade
missions. They set up trade offices in foreign countries. They
know that Mexico is overtaking Japan as America's second-largest
market. Most of them have seen sharp increases in their states'
exports to Mexico over the last five years as that country has
removed many of its most egregious trade barriers. They say NAFTA
simply will accelerate the opening of Mexico to U.S. business.
With 70 percent of imports into Mexico coming from the United
States, governors say that an expanding Mexican economy is great
for American jobs. They maintain that the biggest job creation
will come in small and medium-sized companies, the great
employment engine in almost all states.
     Governor Pete Wilson of California, for example, points out
that his state's exports to Mexico "more than doubled between
1987 and 1990, creating tens of thousands of new jobs."
Nevertheless, the state's two senators, Barbara Boxer and Dianne
Feinstein, as well as a large number of the state's congressmen,
oppose NAFTA, fearing it will lead to job loss. But Governor
Wilson argues that "commerce between the United States and Mexico
freed of the constraints of tariff and non-tariff barriers means
increased trade, and increased trade translates into vitally
needed jobs on both sides of the border."
     Governor Wilson's comments are backed up by statistics. Last
year, the state's businesses exported $6.6 billion to Mexico, an
increase of 190 percent over five years. More than 110,000
Californians' jobs depend on exports to Mexico, and an additional
106,000 jobs are supported by U.S. companies operating in Mexico
that draw upon the services of California's trucking, management,
warehousing, and service industries.
     The opportunities of the Mexico market extend across the
business spectrum. Over the past five years, California's exports
have increased 489 percent in the food products sector, 382
percent in transportation equipment, 248 percent in electric and
electronic equipment, 244 percent in chemical products, 169
percent in industrial machinery and computers, and 548 percent in
apparel.
     Specific examples are even more revealing. Cal-State Lumber
Sales' business in Mexico has increased by 700 percent in recent
years, allowing the company to increase its work force in
California by 30 percent. The positive impact on jobs extends
beyond the company's own payroll. According to Mary Alice
Acevedo, director of international relations: "We buy lumber from
several mills; our purchases have helped the mills keep U.S.
workers on the job."
     SJS Products of Rocklin that distributes U.S. manufactured
electromechanical products, had faced layoffs due to the U.S.
recession. SJS turned to Mexico to expand its sales and,
according to William McGillivray, director of sales for the
company, "We have not had to lay off one person since our
involvement in Mexico. And all the products we export to Mexico
are 100-percent U.S. manufactured."

Regional Support

     The opposition to NAFTA within California's congressional
delegation is unusual among the border states. In the rest --
Arizona, New Mexico, and Texas -- the governors' support for
NAFTA is matched by that of their congressional delegations, with
the exception of those members who are closely allied with
environmental groups or organized labor. As Texas Democratic
Governor Ann Richards, an especially vocal supporter of NAFTA,
puts it: "For Texans, the successful conclusion of the Free Trade
Agreement cannot be overestimated. NAFTA will have an enormous
impact on our economy, putting us literally in the geographic
center of a hemispheric trade zone, one that is 25 percent larger
than the European Economic Community."
     This strong bipartisan support is often explained by the
assertion that since these border states will be the primary
beneficiaries of NAFTA -- perhaps even at the expense of other
U.S. states -- the broad support of the agreement among their
elected officials is to be expected.
     However, some of the strongest supporters of NAFTA are
located in the Midwest, the very heartland of U.S. manufacturing
that NAFTA opponents allege will be devastated by Mexican
competition. The governors of the industrial states of Wisconsin,
Illinois, Indiana, Michigan, and Ohio all are strong supporters
of NAFTA.

Michigan Can't Lose

     Of these, Michigan is the most interesting case, for the
state is depicted routinely as a certain loser from NAFTA, and
its congressional delegation leads the opposition to the
agreement. Michigan's Governor John Engler, however, is one of
NAFTA's most enthusiastic supporters. He points out that
Michigan's exports to Mexico are fast approaching the $2 billion
mark, that Mexico is Michigan's second-largest foreign customer,
that only two states export more to Mexico than Michigan does,
and that Michigan exports four times more goods to Mexico than
the entire nation of Canada.
     In March 1993, Governor Engler led a trade delegation of 110
Michigan business and government leaders to Mexico. What he saw
convinced him even more that lowering Mexico's trade barriers is
good for his state:
     "In a Mexico City showroom I saw an Olds like the one I
drive selling for $50,000. The price of that car, and every other
new Michigan car exported south of the border, will drop
dramatically once trade barriers are lifted. In fact, our
automobile exports to Mexico should double once all restrictions
are lifted -- and that means more jobs for our Michigan workers.
     "Another example. Our trade delegation was spirited from
meeting to meeting in buses that were powered by guess who?
Detroit Diesel. There's a success story. Detroit Diesel's sales
to Mexico have grown 80 percent in the last two years; 26 percent
of their new jobs are a direct result of exports to Mexico."
     Governor Engler says he has visited many factories in
Michigan that are benefiting from freer trade. He points to Masco
in Taylor, which produces car steering systems and other
automotive parts; Haworth in Holland, which has seen a 10-fold
increase in its office-furniture sales to Mexico over the last
two years; Steelcase, which manufactures metal and wood office
furniture. "I have seen the success stories in the faces of our
workers," says the governor. "Don't tell the 31,000 Michigan
workers who owe their jobs to sales in Mexico that we should go
back to the days of high tariffs and trade wars."
     Governor Engler also tackles head-on organized labor's
opposition to NAFTA: "If cheap labor were the key to company
location, then Vietnam or Somalia would be manufacturing meccas.
They are not. Our location, knowledge infrastructure, and
workers' skill level give us what I believe is the `Michigan
Advantage' -- and NAFTA will strengthen our advantages even
more."
     "The way to protect Michigan jobs," says Governor Engler,
"is not by building a wall around our state and ignoring the
competition. Michigan, remember, is made of peninsulas, not
islands. We live in, and are connected to, the global
marketplace. So the way to bolster Michigan jobs is by creating
the best entrepreneurial climate possible. That means lowering
taxes, reducing burdensome regulations, downsizing government,
educating our children for the future, making sure government
does no harm to our families. These goals in the long run will
keep Michigan competitive and enable our state to set the pace in
the global marketplace."

Consensus in the State Houses

     Other Midwestern governors support NAFTA for similar
reasons, even though many of the region's senators and
congressmen are strongly opposed. Governor George Voinovich of
Ohio says that exports are responsible for one in seven
manufacturing jobs in his state and points out that Mexico is
Ohio's sixth most important export market. Senators Howard
Metzenbaum and John Glen, however, oppose passage of NAFTA,
citing fears of job loss. Governor Jim Edgar of Illinois says
passage of NAFTA will mean "thousands of jobs for Illinois and an
economic boost for our state, particularly in the long term.
Illinois's exports to Mexico have more than tripled in the past
five years, and the elimination of trade barriers will mean our
businesses and their workers can continue to prosper from that
trend." Last year Mexico beat out Japan as Illinois's
second-largest export market. But Senators Paul Simon and Carol
Moseley-Brown disagree and see NAFTA as a threat to Illinois's
economy.
     One of NAFTA's most prominent supporters is Governor Tommy
Thompson of Wisconsin (see sidebar). He suggested a free-trade
agreement to President Salinas when they met in Mexico City in
November 1989. Mr. Salinas said the politics wasn't right at that
time, but within a year, he and President Bush announced their
commitment to the idea.
     The same support is found in all regions. Governor William
Weld says "NAFTA holds great promise for Massachusetts. And that
promise is jobs. When you consider that for every $50,000 in
additional sales to another country means one job at home, the
prospects are very bright and very real."
     In his speech to the 1992 GOP national convention, Governor
Carroll Campbell of South Carolina gave a ringing endorsement of
NAFTA, saying the agreement "will create hundreds of thousands of
new jobs for Americans." Senators Ernest Hollings and Strom
Thurmond, however, remain steadfastly opposed to NAFTA, fearing
losses in South Carolina's important textile industries that most
studies predict in fact will benefit from the agreement.
     Similarly, Governor William Donald Schaefer of Maryland
called a news conference last year to urge prompt congressional
action on NAFTA. He explained how Maryland's exports to Mexico
had tripled from 1987 to 1991, and argued that "by extending to
Mexico the same open trade policies that we have with Canada, the
United States can create all types of new business opportunities
for American companies, including those in Maryland." In a speech
at the Southern Governors' Association, Governor Schaefer said he
would like to see NAFTA extended to include the countries of
Central and South America. Senators Barbara Mikulski and Paul
Sarbanes, however, insist that NAFTA will harm Maryland's economy
and lead to job losses. Unlike Schaefer, neither has visited
Mexico with businesses and seen the opportunities for themselves.
     The same pattern is repeated throughout scores of states:
rising employment due to increasing exports to Mexico, strong
support for NAFTA by the business community at all levels, and
strong support by the governor contrasted with opposition by
members of the congressional delegation, many of whom cite fears
of job loss and economic dislocation as the reason for their
position, fears that are unsupported by any empirical evidence or
independent study.
     This marked contrast between the positions of these two
groups can be attributed to a number of factors. Undoubtedly, the
most important is the differing political forces acting on them.
     Absolved of any executive responsibilities, legislators in
Washington cannot prosper politically by promoting general
interests, such as deficit reduction, but must instead devote
their attention to advancing more particular interests, such as
the angora wool industry, which punish or reward individual
legislators according to very specific performance criteria. In
addition, a congressman's power is tightly circumscribed and must
be focused if it is to have measurable effect. As individuals,
they have little power to determine policy on broad issues, but
do have the ability to promote specific interests. Thus, it is
not surprising that many representatives become closely
identified with specific interest groups, who in turn provide
them with both money and political support.
     Governors, by contrast, must be concerned with their state's
general welfare, as the appearance of exclusive concentration on
any narrow interest group is likely to be punished at the polls.
Generally, a governor's political career will rise and fall with
the state's economy. Consequently, most governors are quite eager
to be seen as promoting state exports, attracting investment,
aiding in job creation, and creating an overall healthy business
environment for their state.

Congressmen Too Detached

     Few congressmen or senators are directly credited for
general economic conditions in their state, good or bad; to the
contrary, they are rewarded for, and thus concentrate their
attention on, the delivery of specific and identifiable
assistance to their constituents (i.e., pork), such as a new
highway or government grant. In that sense, representatives are
free riders on a state's economic health -- receiving credit for
assistance to specific groups, but having little responsibility
for promoting the general welfare -- in a way that governors
cannot emulate.
     Thus, Congress regularly enacts measures that impose
significant economic burdens on the states, like federal mandates
that require states to enact specific programs, but without
providing federal funds for those programs. The same pattern
exists with the current debate over NAFTA, where congressional
concerns and suggested remedies seem tailored to please specific
constituencies regardless of their consequences to the general
welfare.
     For example, Senator Max Baucus (D-MT) has proposed a tax on
goods crossing the U.S.-Mexico border to create a special fund
for environmental projects in both countries. However, several
Democratic and Republican governors, from Ann Richards (D-TX) to
Tommy Thompson (R-WI), are against such tariffs on cross-border
trade because such a tax is directly counter to the very purpose
of a free-trade agreement and inevitably will inhibit trade. More
specifically, they are convinced such tariffs will reduce exports
from companies in their states by making their products more
expensive in Mexico, thereby reducing job growth.

The Lobbyists

     The contrasting positions at the state and congressional
level are also attributable to the different pattern and make-up
of lobbying at the two levels. Given the enormous transfer of
power from the states to Washington over the last half-century,
most of the politically activist organizations concentrate their
efforts at the center, along with their money. Having little say
over national policy, governors are largely spared the pressures
of lobbying by national organizations, although they must contend
with the local variety.
     The most hard-core opponents of NAFTA in Congress are those
most closely associated with organized labor, which is quick to
reward those it favors with generous campaign financing and
assistance from sophisticated political organizations.
     Although labor unions often make demands on governors,
primarily on such issues as public sector employment and state
labor law, they have not persuaded any governors to oppose NAFTA
yet, but they have persuaded some of them to temporize.
     Such is the case of New York's Governor Mario Cuomo. Exports
to Mexico of manufactured goods have created over 23,000 jobs for
New Yorkers over the past five years, and are rapidly growing. In
addition, New York's enormous financial community will be among
the biggest gainers as NAFTA forces Mexico's formerly closed
financial sector to open to American competition on equal terms.
Exports are way up in all categories. Even such unlikely
exporters as New York's apple growers, which formerly were
effectively excluded from Mexico's market because of tariff
walls, have benefitted from Mexico's opening and see NAFTA as the
best way to ensure their long-term access to that growing market.
     Despite the agreement's beneficial impact on New York,
however, the normally outspoken Mr. Cuomo has been surprisingly
reticent regarding NAFTA. The New York governor told The Heritage
Foundation through a spokesman that "NAFTA could lead to
increased U.S. exports and greater economic opportunity in
Mexico" but said "we must remain vigilant about the far-reaching
impacts of such an agreement [on] Americans who may lose their
jobs due to imports." His reluctance to take a firm stand is not
attributable to a lack of information, as his own state
development agency has been quite active in promoting business in
Mexico and has kept his office informed regarding the strong
support for NAFTA among the state's businesses. Nor is Governor
Cuomo opposed to free trade: he repeatedly has spoken out against
"Japan-bashing." Instead, the reason for Mr. Cuomo's reluctance
to publicly support an agreement that is good for New York likely
lies in his close relations with organized labor. As important,
his political horizons are commonly seen as being more national
than state-centered in scope.
     This national vs. state orientation is of no little effect.
Its impact on positions toward NAFTA can be seen in President
Clinton's own evolving views. As governor of Arkansas, Mr.
Clinton was a strong supporter of free trade with Mexico. In his
presidential campaign, however, Mr. Clinton's interests shifted
to a different audience, and he pursued the votes and resources
of the core Democratic constituency, especially organized labor.
As a result, he tempered his support of NAFTA with the
requirement that additional measures would have to be taken in
the area of labor and environmental safeguards to ensure his
support of the agreement.
     Both individually and as a group, the governors are far more
informed, and with a broader range of vision, than anyone in
Washington could be about economic conditions in their states and
the potential impact of NAFTA. Far more than congressmen, they
must be responsive to the concerns of a broad range of interests,
and tend to work much more closely with, and listen to, the
small- and medium-sized businesses that provide most of the
employment in their states but which generally have little
presence in Congress.

Information and Experience

     The governors have experienced first hand the impact of the
international economy on businesses in their states. They
regularly attend meetings around the state of professional
business associations and groups, and talk with the range of CEOs
and managers about business concerns. Wisconsin's Governor
Thompson says he has learned about the benefits of trading with
Mexico by visiting factories of Oshkosh Truck, Metal Ware, Oscar
Mayer, and other firms in his state that export south of the
border.
     Most governors also are closely associated with their
economic development offices, which in turn are in close contact
with the exporting companies in their states. This working
relationship brings most governors in regular contact with
businesses that are becoming more dependent on exports and
strategic alliances across national borders in order to remain
competitive.
     Over the past five years, most state development offices
have sponsored trade delegations to Mexico by businesses in their
states. Often, governors have led these delegations, and thus
have gained direct experience with both Mexico and the reactions
of their businessmen. Governor Thompson of Wisconsin reported
after his visit to Mexico last year that businesses on his
delegation were overwhelmed by the opportunities they encountered
and were scrambling to take advantage of them. Governor Roy Romer
of Colorado proudly claims that his office is sending trade
delegations to Mexico on a monthly basis.
     By contrast, relatively few congressmen even have traveled
to Mexico, other than as tourists, and fewer still in the company
of businessmen. As a result, there is little appreciation of the
business opportunities that NAFTA would create and of the
enthusiasm of the businessmen themselves.

Laying Foundations for New Industries

     The governors also have learned from first-hand evidence
that it is the small and medium-sized businesses that generate
most new jobs and that are laying the foundation of the new,
high-tech industries. These firms for the most part have more
contact with their governors than they do with their senators and
representatives in Washington.
     Saniserve Corporation is a typical example of the importance
of Mexico for medium-sized businesses. Based in Indianapolis,
Saniserve employs 130 people. Last year Saniserve sold $490,000
worth of equipment to Mexico, and expects sales to increase to
$650,000 this year. According to Saniserv's CEO Gabriel Aguirre,
17 of his employees would lose their jobs if not for exports to
Mexico. Says Aguirre, "If this continues I know I'll have to hire
more people." Aguirre plans to increase plant capacity in
Indianapolis to keep up with growing exports to Mexico.
     On a smaller scale, Air Hydraulics Incorporated, based in
Jackson, Michigan, employs 17 workers in the manufacture of
presses and impact machines. President Michael Clark has worked
closely with the Michigan state development office to increase
his exports to Mexico. Says Clark, "NAFTA will make it possible
for the average Mexican-owned facility to purchase machines and
industrial products from the United States. Without NAFTA, only
the large Mexican multinational corporations would be real
prospects." Within three years Clark expects sales to Mexico to
comprise 25 percent of his output. "Without NAFTA we will not
have a strong export program into Mexico or Latin America.
Without NAFTA we stay domestic and stagnant."
     Chicago-based Summit Industries has increased exports to
Mexico by 500 percent since 1987. But Summit, a small producer of
X-ray machines, cannot afford to lobby Washington continually to
ensure that its interests are protected. Similarly, Snider Mold
Company has a plant in Mequon, Wisconsin that employs 45 people
in high-paying jobs manufacturing moldings. Snider has tripled in
size in the past six years, due in large part to increases in
exports to Mexico (today 25 percent of their products head south
to Mexico). At present, Snider faces a 20-percent Mexican tariff,
which NAFTA will eliminate and allow them to increase their sales
further. But Snider has little clout in Washington, along with
the tens of thousands of other small and medium-sized businesses
like it whose muted voices in Congress are drowned out easily by
the clamor of the professional lobbyists. Thus, it is not
surprising that the strong support of NAFTA by this crucial
sector of the U.S. economy plays so little role in the
congressional deliberations.

Capitol Hill Opposition

     Senator Bill Bradley of New Jersey has termed the passage of
NAFTA President Clinton's "most important foreign policy
priority." This centerpiece of U.S. policy toward Latin America
and international trade, however, has encountered tough and
increasing opposition on Capitol Hill. There, a panoply of
interest groups opposed to free trade -- labor unions,
environmental organizations, and activists on the political left
-- have mounted an aggressive, no-holds-barred campaign to defeat
the agreement or alter it so radically as to erect new and
imposing barriers to U.S.-Mexico trade.
     Against these protectionists stand America's governors,
Democrats as well as Republicans, who have experienced first hand
the powerful impact of Mexico's opening markets on their states'
economies, and want more of the same as soon as possible. More
attentive to, and informed about, their states' welfare than any
Washington representative could be, their attitude toward
congressional opponents is one of frustration and mystification.
Individual congressmen will not suffer from the jobs and
opportunities lost from NAFTA's defeat, but many individuals in
their states certainly will, as will the governors whose
political fortunes track closely the economic health of their
states.
     NAFTA has not been defeated yet; there is ample time for the
broad public in every state to organize and insist that those in
Washington who are pledged to represent them act to ensure the
agreement's implementation. To the governors has fallen a key
responsibility for articulating and leading that effort. For
NAFTA's sinking fortunes raise troubling questions about whose
interests Congress actually is representing and who really speaks
for the national interest.

SIDEBAR: GOVERNOR TOMMY THOMPSON ON NAFTA

[From a speech to businessmen in West Middleton, Wisconsin on
March 22, 1993.]

     My message to you today is simple: NAFTA is good for
Wisconsin.
     ...
     The reason why NAFTA is good for Wisconsin is because it
will only enhance our already strong economy.
     Wisconsin has already benefitted from the U.S.-Canada Free
Trade Agreement. Since 1989 -- when the CFTA was implemented --
Wisconsin exports to Canada have increased from $1.4 billion to
almost $2 billion.
     Our exports to Mexico have also grown. On average, Wisconsin
exports to Mexico have been growing at an average rate of 39
percent a year. In one year alone, exports jumped 83 percent!
     As a whole, the economic impact of trade with Canada and
Mexico in Wisconsin is considerable:

     - Wisconsin exports to Mexico totaled $250 million in 1991.
     Exports to Canada totaled $1.9 billion.
     - Canada is our number-one export market. Mexico is our
     sixth-largest market.
     - In 1991, exports to Mexico generated 7,400 jobs in
     Wisconsin. Exports to Canada generated 57,000 jobs. That's a
     total of over 64,000 jobs!
     - Since 1987, 8,500 new jobs have been created by increased
     exports to Canada and Mexico. Wisconsin jobs related to
     trade in Mexico alone has increased almost seven times in
     the last four years.
     - And these export-related jobs are good jobs ... among the
     highest-paying jobs in the state.

     And NAFTA will increase investment and job opportunities
here in Wisconsin. Our export market to Canada -- as I have
already stated -- is very strong ... and we are continually
working to make it even stronger. Where Wisconsin stands to gain
the most from NAFTA is from increased trade opportunities with
Mexico.
     That's why I led a trade mission there at the end of last
year ... the largest and most successful trade mission of my
administration. In the five short days of the mission, Wisconsin
companies were able to lay the groundwork for promising business
deals ... in everything from milking and farm equipment to
Christmas trees.
     One businessman on the trip said afterward: "It changed the
whole spectrum of plans I had for the future. I'm going to have
to change my strategic planning for the next five years to
include Mexican business."
     Another business owner from Manitowoc went on the trip
simply to explore export possibilities ... but he soon found
solid sales opportunities. "It looks like I'll have to go back
down there" to negotiate deals, he said.
     And I am convinced that a Wisconsin trade office in Mexico
will enhance our trading position ... which is why I asked for
one in my budget this year.
     NAFTA will open and expand the Mexican market. And this
translates into opportunity for Wisconsin.
     Our strong manufacturing base provides great export
opportunities.
     Miller Brewing Company, for example, expects the beer market
in Mexico to continue to grow. Wisconsin companies such as
Ambrosia Chocolate ... S.C. Johnson and Company ...
Kimberly-Clark ... and Land's End ... all stand to gain.
     Our agricultural sector will also benefit. NAFTA is expected
to increase U.S. agricultural exports to Mexico by $1.5 to $2
billion over the next 15 years.

     - Exports of U.S. milk powder are expected to grow by about
     20,000 metric tons.
     - Mexican demand for beef, pork, corn, and wheat are also
     expected to increase.
     - Demand for food-processing equipment and agricultural
     chemicals are also expected to grow. All of this means
     opportunity for Wisconsin.

     As the Mexican infrastructure develops, demand for products
from our big industrial employers will grow ... companies such as
Allen-Bradley, Allis Chalmers, Briggs and Stratton, Kohler, and
Ladish.
     Wisconsin's numerous auto parts producers -- companies such
as International Stamping or Modine Manufacturing -- will benefit
from increased Mexican demand for automobiles.
     Increased Mexican demand for pollution control equipment
will fuel demand for the high-tech products of such Wisconsin
firms as Tec Systems or Nicolet Instruments.
     And all of these increased business opportunities will
translate into one thing: more jobs for Wisconsin.
     And -- as I said before -- these are high-paying jobs. For
example, in 1991 the average hourly wage for workers in
industrial machinery and computers was $12.88 ... for workers in
publishing and printing, $12.07 ... and for workers in
transportation equipment, $15.14.
     Through my work with the National Governors' Association --
most particularly as the head of the Intergovernmental Policy
Action Committee on Trade -- I know that NAFTA will greatly
benefit the United States as a whole.
     As governor, of course, my main concern is how it will
benefit us here at home.
     As I said at the beginning ... NAFTA is good for Wisconsin.
And I am asking all of you today to help us get NAFTA passed. It
is good for your businesses.... It's good for Wisconsin ... and
it's good for the U.S.

DOUGLAS SEAY is deputy director of Foreign and Defense Policy
Studies at The Heritage Foundation. WESLEY SMITH is a policy
analyst at The Heritage Foundation.

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