US DEPARTMENT OF STATE DISPATCH VOLUME 4, NUMBER 37, SEPTEMBER 13, 1993 PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS ARTICLES IN THIS ISSUE: 1. The Middle East: Opening the Door to a Comprehensive and Lasting Settlement -- President Clinton 2. NAFTA: Embracing Change -- President Clinton 3. NAFTA: A Bridge to a Better Future for The United States and the Hemisphere -- Secretary Christopher 4. Fact Sheet: NAFTA--Key Provisions and Supplemental Agreements 5. What's in Print: Foreign Relations of the United States 6. Treaty Actions ARTICLE 1: The Middle East: Opening the Door to a Comprehensive and Lasting Settlement President Clinton Statement at the White House, Washington, DC, September 10, 1993 Today marks a shining moment of hope for the people of the Middle East; indeed, of the entire world. The Israelis and the Palestinians have now agreed upon a declaration of principles on an interim self-government that opens the door to a comprehensive and lasting settlement. This declaration represents a historic and honorable compromise between two peoples who have been locked in a bloody struggle for almost a century. Too many have suffered for too long. The agreement is a bold breakthrough. The Palestine Liberation Organization openly and unequivocally has renounced the use of violence and has pledged to live in peace with Israel. Israel, in turn, has announced its recognition of the PLO. I want to express my congratulations and praise for the courage and the vision displayed by the Israeli and Palestinian leadership and for the crucially helpful role played by Norway. For too long, the history of the Middle East has been defined in terms of violence and bloodshed. Today marks the dawning of a new era. Now there is an opportunity to define the future of the Middle East in terms of reconciliation and coexistence and the opportunities that children growing up there will have whether they are Israeli or Palestinian. I want to express the full support of the United States for this dramatic and promising step. For more than a quarter of a century, our nation has been directly engaged in efforts to resolve the Middle East conflict. We have done so because it reflects our finest values and our deepest interests--our interests in a stable Middle East where Israelis and Arabs can live together in harmony and develop the potential of their region, which is tremendous. From Camp David to Madrid to the signing ceremony that will take place at the White House on Monday, administration after administration has facilitated this difficult but essential quest. From my first day in office, Secretary Christopher and I have made this a priority. We are resolved to continue this process to achieve a comprehensive Arab-Israeli resolution. In 1990, the United States suspended the U.S.-PLO dialogue, begun 2 years earlier, following an act of terrorism committed against Israel by a faction of the PLO. Yesterday Yasir Arafat wrote to Prime Minister Rabin, committing the PLO to accept Israel's right to exist in peace and security, to renounce terrorism, to take responsibility for the actions of its constituent groups, to discipline those elements who violate these new commitments, and to nullify key elements of the Palestinian covenant that denied Israel's right to exist. These PLO commitments justify a resumption of our dialogue. As a result and in light of this week's events, I have decided to resume the dialogue and the contacts between the United States and the PLO. The path ahead will not be easy. These new understandings, impressive though they are, will not erase the fears and suspicions of the past. But now the Israelis and the Palestinians have laid the foundations of hope. The United States will continue to be a full and an active partner in the negotiations that lie ahead, to ensure that this promise of progress is fully realized. All the peoples of the Middle East deserve the blessings of peace. I pledge to join them, in our help and our support, to achieve that objective. I look forward to joining with Russia--our co-sponsor in the Middle East peace process--and with the people of the world in witnessing the historic signing on Monday. I also want to say I am very grateful for the overwhelming support this agreement has generated among members of both parties in the United States Congress. I especially thank leaders in the Congress from both parties who have foreign policy responsibilities and who have come to meet with me this morning in the White House, many of whom have stayed on for this statement. This is a time for bipartisan support for this agreement and, indeed, a bipartisan effort to reassert and define America's role in a very new world. We were talking today in our meeting about how this period is not unlike the late 1940s, a time in which America was the first nation to recognize Israel and in which we formed the United Nations and other international institutions in an attempt to work toward the world which everyone hoped would follow from World War II. Once again, we must develop a strong philosophy and a practical set of institutions that can permit us to follow our values and our interests and to work for a more peaceful, a more humane, and a more democratic world. This is an enormous step toward that larger goal. And I think all Americans should be grateful for the opportunity that we have been presented to help to make this historic peace work. ### Recent documents on the Middle East peace process will be printed in Dispatch Supplement Vol. 4, No. 4. ### ARTICLE 2: NAFTA: Embracing Change President Clinton Remarks at signing of NAFTA side agreements, Washington, DC, September 14, 1993 Thank you very much. Mr. Vice President, President Bush, President Carter, President Ford, ladies and gentlemen: I would like to acknowledge just a couple of other people who are in the audience, because I think they deserve to be seen by America since you'll be seeing a lot more of them--my good friend, Bill Daley, from Chicago and former Congressman Bill Frenzel from Minnesota, who have agreed to lead this fight for our Administration on a bipartisan basis. Would you please stand and be recognized? It's an honor for me today to be joined by my predecessor, President Bush, who took the major steps in negotiating this North American Free Trade Agreement; President Jimmy Carter, whose vision of hemispherical development gives great energy to our efforts and has been a consistent theme of his for many, many years now; and President Ford, who has argued as fiercely for expanded trade and for this agreement as any American citizen and whose counsel I continue to value. These men, differing in party and outlook, join us today because we all recognize the important stakes for our nation in this issue. Yesterday, we saw the sight of an old world dying and a new one being born in hope and a spirit of peace. Peoples who for a decade were caught in the cycle of war and frustration chose hope over fear and took great risk to make the future better. Today, we turn to face the challenge of our own hemisphere, our own country, our own economic fortunes. In a few moments, I will sign three agreements that will complete our negotiations with Mexico and Canada to create a North American Free Trade Agreement. In the coming months, I will submit this pact to Congress for approval. It will be a hard fight, and I expect to be there with all of you every step of the way. We will make our case as hard and as well as we can. And though the fight will be difficult, I deeply believe we will win. And I'd like to tell you why: first of all, because NAFTA means jobs--American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement. As President, it is my duty to speak frankly to the American people about the world in which we now live. Fifty years ago, at the end of World War II, an unchallenged America was protected by the oceans and by our technological superiority and, very frankly, by the economic devastation of the people who could otherwise have been our competitors. We chose then to try to help rebuild our former enemies and to create a world of free trade supported by institutions which would facilitate it. As a result of that effort, global trade grew from $200 billion in 1950 to $800 billion in 1980. As a result, jobs were created, and opportunity thrived all across the world. But make no mistake about it: Our decision at the end of World War II to create a system of global, expanded, freer trade and the supporting institutions played a major role in creating the prosperity of the American middle class. Ours is now an era in which commerce is global and in which money, management, and technology are highly mobile. For the last 20 years, in all the wealthy countries of the world-- because of changes in the global environment, because of the growth of technology, because of increasing competition--the middle class that was created and enlarged by the wise policies of expanding trade at the end of World War II has been under severe stress. Most Americans are working harder for less. They are vulnerable to the fear tactics and the averseness to change that are behind much of the opposition to NAFTA. But I want to say to my fellow Americans: When you live in a time of change, the only way to recover your security and to broaden your horizons is to adapt to the change--to embrace, to move forward. Nothing we do--nothing we do in this great capital can change the fact that information can flash across the world, that people can move money around in the blink of an eye. Nothing can change the fact that technology can be adopted, once created, by people all across the world and then rapidly adapted in new and different ways by people who have a little different take on the way the technology works. For two decades, the winds of global competition have made these things clear to any American with eyes to see. The only way we can recover the fortunes of the middle class in this country so that people who work harder and smarter can, at least, prosper more--the only way we can pass on the American dream of the last 40 years to our children and their children for the next 40--is to adapt to the changes which are occurring. In a fundamental sense, this debate about NAFTA is a debate about whether we will embrace these changes and create the jobs of tomorrow or try to resist these changes, hoping we can preserve the economic structures of yesterday. I tell you, my fellow Americans, that if we learn anything from the collapse of the Berlin Wall and the fall of the governments in Eastern Europe, even a totally controlled society cannot resist the winds of change that economics and technology and information flow have imposed in this world of ours. That is not an option. Our only realistic option is to embrace these changes and create the jobs of tomorrow. I believe that NAFTA will create 200,000 American jobs in the first 2 years of its effect. I believe if you look at the trends--and President Bush and I were talking about it this morning--starting about the time he was elected President, over one-third of our economic growth and, in some years, over one-half of our net new jobs came directly from exports. And on average, those export-related jobs paid much higher than jobs that had no connection to exports. I believe that NAFTA will create 1 million jobs in the first 5 years of its impact. And I believe that that is many more jobs than will be lost--as, inevitably, some will be, as always happens when you open up the mix to a new range of competition. NAFTA will generate these jobs by fostering an export boom to Mexico by tearing down tariff walls, which have been lowered quite a bit by the present administration of President Salinas but which are still higher than America's. Already, Mexican consumers buy more per capita from the United States than other consumers in other nations. Most Americans don't know this, but the average Mexican citizen--even though wages are much lower in Mexico--the average Mexican citizen is now spending $450 per year per person to buy American goods. That is more than the average Japanese, the average German, or the average Canadian buys and more than the average German, Swiss, and Italian citizens put together. So when people say that this trade agreement is just about how to move jobs to Mexico so nobody can make a living, how do they explain the fact that Mexicans keep buying more products made in America every year? Go out and tell the American people that. Mexican citizens with lower incomes spend more money--real dollars, not percentages of their incomes--more money on American products than Germans, Japanese, or Canadians. That is a fact. And there will be more if they have more money to spend. That is what expanding trade is all about. In 1987, Mexico exported $5.7 billion more of products to the United States than they purchased from us. We had a trade deficit. Because of the free market, tariff-lowering policies of the Salinas government in Mexico and because our people are becoming more export-oriented, that $5.7-billion trade deficit has been turned into a $5.4-billion trade surplus for the United States. It has created hundreds of thousands of jobs. Even when you subtract the jobs that have moved into the maquiladora areas, America is a net job winner in what has happened in trade in the last 6 years. When Mexico boosts its consumption of petroleum products made in Louisiana--where we're going tomorrow to talk about NAFTA--as it did by about 200% in that period, Louisiana refinery workers gained job security. When Mexico purchases industrial machinery and computer equipment made in Illinois, that means more jobs. And guess what? In this same period, Mexico increased those purchases out of Illinois by 300%. Forty-eight out of the 50 states have boosted exports to Mexico since 1987. That's one reason why 41 of our nation's 50 governors--some of them who are here today, and I thank them for their presence--support this trade pact. I can tell you, if you're a governor, people won't leave you in office unless they think you get up every day trying to create more jobs. They think that's what your job is if you're a governor. And the people who have the job of creating jobs for their state and working with their business community, working with their labor community--41 out of the 50 have already embraced the NAFTA pact. Many Americans are still worried that this agreement will move jobs south of the border, because they've seen jobs move south of the border and because they know that there are still great differences in the wage rates. There have been 19 serious economic studies of NAFTA by liberals and conservatives alike; 18 of them have concluded that there will be no job loss. Businesses do not choose to locate based solely on wages. If they did, Haiti and Bangladesh would have the largest number of manufacturing jobs in the world. Businesses do choose to locate based on the skills and productivity of the work force, the attitude of the government, the roads and railroads to deliver products, the availability of a market close enough to make the transportation costs meaningful, and the communications networks necessary to support the enterprise. That is our strength, and it will continue to be our strength. As it becomes Mexico's strength and as they generate more jobs, they will have higher incomes, and they will buy more American products. We can win this. This is not a time for defeatism. It is a time to look at an opportunity that is enormous. Moreover, there are specific provisions in this agreement that remove some of the current incentives for people to move their jobs just across our border. For example, today Mexican law requires U.S. automakers who want to sell cars to Mexicans to build them in Mexico. This year, we will export only 1,000 cars to Mexico. Under NAFTA, the Big Three auto- makers expect to ship 60,000 cars to Mexico in the first year alone, and that is one reason why one of the automakers recently announced moving 1,000 jobs from Mexico back to Michigan. In a few moments, I will sign side agreements to NAFTA that will make it harder than it is today for businesses to relocate solely because of very low wages or lax environmental rules. These side agreements will make a difference. The environmental agreement will, for the first time ever, apply trade sanctions against any of the countries that fails to enforce its own environmental laws. I might say to those who say that that's giving up our sovereignty, for people who have been asking us to ask that of Mexico: How do we have the right to ask that of Mexico if we don't demand it of ourselves? It's nothing but fair. This is the first time that there have ever been trade sanctions in the environmental law area. This ground-breaking agreement is one of the reasons why major environmental groups, ranging from the Audubon Society to the Natural Resources Defense Council, are supporting NAFTA. The second agreement ensures that Mexico enforces its laws in areas that include worker health and safety, child labor, and the minimum wage. And I might say, this is the first time in the history of world trade agreements when any nation has ever been willing to tie its minimum wage to the growth in its own economy. What does that mean? It means that there will be an even more rapid closing of the gap between our two wage rates. And as the benefits of economic growth are spread in Mexico to working people, what will happen? They'll have more disposable income to buy more American products, and there will be less illegal immigration because more Mexicans will be able to support their children by staying home. This is a very important thing. The third agreement answers one of the primary attacks on NAFTA that I've heard for a year, which is: Well, you can say all this, but something might happen that you can't foresee. Well, that's a good thing; otherwise, we never would have had yesterday. I mean, I plead guilty to that. Something might happen that Carla Hills didn't foresee, or George Bush didn't foresee, or Mickey Kantor or Bill Clinton didn't foresee. That's true. Now, the third agreement protects our industries against unforeseen surges in exports from either one of our trading partners. And the flip side is also true. Economic change, as I said before, has often been cruel to the middle class, but we have to make change its friend. NAFTA will help to do that. This imposes also a new obligation on our government, and I'm glad to see so many Members of Congress from both parties here today. We do have some obligations here. We have to make sure that our workers are the best prepared, the best-trained in the world. Without regard to NAFTA, we know now that the average 18-year-old American will change jobs eight times in a lifetime. The Secretary of Labor has told us--without regard to NAFTA--that over the last 10 years, for the first time, when people lose their jobs most of them do not go back to their old job; they go back to a different job. So we no longer need an unemployment system; we need a re-employment system. And we have to create that. And that's our job. We have to tell American workers who will be dislocated because of this agreement or because of things that will happen regardless of this agreement that we are going to have a re- employment program for training in America, and we intend to do that. Together, the efforts of two administrations now have created a trade agreement that moves beyond the traditional notions of free trade, seeking to ensure trade that pulls everybody up instead of dragging some down while others go up. We have put the environment at the center of this in future agreements. We have sought to avoid a debilitating contest for businesses where countries seek to lure them only by slashing wages or despoiling the environment. This agreement will create jobs, thanks to trade with our neighbors. That's reason enough to support it. But I must close with a couple of other points. NAFTA is essential to our long-term ability to compete with Asia and Europe. Across the globe our competitors are consolidating, creating huge trading blocks. This pact will create a free trade zone stretching from the Arctic to the tropics, the largest in the world--a $6.5-billion market, with 370 million people. It will help our businesses to be both more efficient and to better compete with our rivals in other parts of the world. This is also essential to our leadership in this hemisphere and the world. Having won the Cold War, we face the more subtle challenge of consolidating the victory of democracy and opportunity and freedom. For decades, we have preached and preached and preached greater democracy, greater respect for human rights, and more open markets to Latin America. NAFTA finally offers them the opportunity to reap the benefits of this. Secretary Shalala represented me recently at the installation of the President of Paraguay, and she talked to Presidents from Colombia, from Chile, from Venezuela, from Uruguay, from Argentina, from Brazil. They all wanted to know: Tell me if NAFTA is going to pass so we can become part of this great, new market. [It would create] hundreds of millions more of American consumers for our products. It's no secret that there is division within both the Democratic and Republican Parties on this issue. That often happens in a time of great change. I just want to say something about this because it's very important. I am very grateful to the Presidents for coming here, because there is division in the Democratic Party, and there is division in the Republican Party. That's because this fight is not a traditional fight between Democrats and Republicans and liberals and conservatives. It is right at the center of the effort that we're making in America to define what the future is going to be about. And so there are differences. But if you strip away the differences, it is clear that most of the people that oppose this pact are rooted in the fears and insecurities that are legitimately gripping the great American middle class. It is no use to deny that these fears and insecurities exist. It is no use denying that many of our people have lost in the battle for change. But it is a great mistake to think that NAFTA will make it worse. Every single, solitary thing you hear people talk about that they're worried about can happen whether this trade agreement passes or not, and most of them will be made worse if it fails. And I can tell you, it will be better if it passes. So I say this to you: Are we going to compete and win, or are we going to withdraw? Are we going to face the future with confidence that we can create tomorrow's jobs, or are we going to try against all the evidence of the last 20 years to hold onto yesterday's? Are we going to take the plain evidence of the good faith of Mexico in opening their own markets and buying more of our products and creating more of our jobs, or are we going to give in to the fears of the worst-case scenario? Are we going to pretend that we don't have the first trade agreement in history dealing seriously with labor standards and environmental standards and, cleverly and clearly, taking account of unforeseen consequences, or are we going to say this is the best you can do and then some? In an imperfect world, we have something which will enable us to go forward together and to create a future that is worthy of our children and grandchildren, worthy of the legacy of America, and consistent with what we did at the end of World War II. We have to do that again. We have to create a new world economy. And if we don't do it, we cannot then point the finger at Europe and Japan or anybody else and say: Why don't you pass the GATT agreement; why don't you help to create a world economy. If we walk away from this, we have no right to say to other countries in the world: You're not fulfilling your world leadership; you're not being fair with us. This is our opportunity to provide an impetus to freedom and democracy in Latin America and create new jobs for America as well. It's a good deal, and we ought to take it. ### ARTICLE 3: NAFTA: A Bridge to a Better Future for The United States and the Hemisphere Secretary Christopher Statement before the Senate Finance Committee, Washington, DC, September 15, 1993 Chairman Moynihan, members of the committee: I want to thank you for giving Secretary Bentsen, Ambassador Kantor, and me the opportunity to discuss with you the benefits of the North American Free Trade Agreement. I believe that this agreement between the United States, Canada, and Mexico deserves approval on its economic merits alone, especially now that it has been improved by the side agreements on the environment and labor that the President signed yesterday. It gives our exporters the opportunity to sell without barriers in what will be the world's largest free trade area--comprising about 370 million people. It will lock in-- and increase--the advantages that have boosted our exports to Mexico more than 200% since 1986, creating 400,000 jobs in this country in the process. It will create even more high-wage, high-skill American jobs and enhance our ability to compete globally. Secretary Bentsen and Ambassador Kantor will make this case in greater detail. I would like to focus instead on what NAFTA means for our relations with Mexico and with the Western Hemisphere more generally. I firmly believe that the foreign policy implications of NAFTA make an already compelling economic case even stronger. A central insight of this Administration is the need to reinforce the link between domestic and international economic growth. In his first year in office, President Clinton has translated that insight into several important initiatives: a credible deficit reduction package; a new framework for our economic and trade relations with Japan; the promotion of a New Pacific Community; and a successful conclusion to the Uruguay Round negotiations. NAFTA is a vital element in America's competitive strategy to make us stronger at home and abroad, and it is a key test of our global economic leadership. American foreign policy begins with our neighbors--Canada and Mexico. We have had a successful free trade agreement with Canada since 1989. As a result, bilateral trade and investment between the United States and Canada have increased. NAFTA will complement and improve the current free trade agreement between the U.S. and Canada, just as it will complement and improve our cooperation with Canada on environmental issues. For Mexico, too, NAFTA is about far more than tariffs and trade. It is the symbol of a new relationship and a new structure of cooperation with the United States and Canada. It is a turning point in the history of relations among our countries. And it is a turning point that is in the overriding national interest of the United States. Today, U.S.-Mexican relations are characterized not by distrust but by the pragmatic pursuit of cooperation that benefits the people of both nations. In less than a generation, Mexican attitudes toward the United States and the world have been transformed. NAFTA will reinforce Mexico's unprecedented efforts to open its economy and reform its political institutions, including the judiciary and the electoral system. Under President Salinas' leadership, Mexico has stabilized its economy, climbed out of much of its debt, renewed growth, privatized industries, welcomed foreign investment, and cut its tariffs unilaterally by 90% from their 1986 levels. Mexico is America's fastest-growing major export market, and we have a vital stake in its further growth and openness. By stimulating growth, NAFTA will also increase Mexico's capacity to cooperate with us on a wide range of important issues that spill across our 2,000-mile border. A stronger, more prosperous Mexico will have greater resources to address these cross-border problems that affect so many Americans. Let me briefly address three of them: narcotics, illegal immigration, and the environment. -- Mexico recognizes that illegal narcotics is a shared problem that can be solved only through close cross-border cooperation. President Salinas has tripled Mexico's counter-narcotics budget and has shown the resolve to attack corrupt government officials and drug barons. Some of Mexico's most notorious drug traffickers are now in prison. This is breakthrough progress, and it must be sustained. -- We must also consider the relationship between NAFTA and illegal immigration. Legal migration from Mexico and other nations will continue to make an important contribution to American diversity, vitality, and democracy. At the same time, the U.S. is committed to reducing illegal immigration. As Mexico's economy prospers, higher wages and greater opportunity will reduce the pressure for illegal migration to the United States. In the long run, this is the most effective solution. -- Like illegal immigration, pollution does not observe political boundaries. Mexico recognizes its problems and is moving to address them both on its own and in cooperation with us. We are continuing our work with Mexico to develop a far-reaching environmental plan that will help clean up the border. Unlike any previous trade agreement, NAFTA explicitly links trade with the environment--and that is an important achievement in itself. The side agreement just negotiated will improve the enforcement of environmental laws and increase cross-border cooperation to curb pollution. Today, we are working with Mexico not only to resolve issues along the border but to defuse hemispheric conflicts and crises. In June, Mexico and the United States together took the lead in calling for immediate action by the Organization of American States to stand by democracy in Guatemala. Our cooperation there made a difference and symbolizes the constructive way in which relations between Mexico and the U.S. are evolving. Mexico and the United States also came together in the same spirit of trust and friendship to support a successful, negotiated conclusion to the war in El Salvador. NAFTA will further solidify the productive new relationship that the United States has been seeking with Mexico and our other Latin neighbors. For more than half a century, every American President--Democrat and Republican alike--has stood for closer cooperation throughout the Western Hemisphere. NAFTA reflects a bipartisan commitment to widening and improving America's ties to our Latin neighbors. It was under President Carter that we negotiated the Panama Canal treaty, but it was with the help of his two Republican predecessors--Presidents Ford and Nixon--that Congress agreed to ratify the treaty. Similarly, NAFTA was conceived and negotiated under President Bush but substantially improved through side agreements on the environment and labor under President Clinton. President Clinton is committed to building what he calls "a hemispheric community of democracies linked by growing economic ties and common political beliefs." NAFTA will encourage democratic governments from Argentina to Venezuela that have opened their economies to trade and investment with the U.S. The agreement will be a bridge to a more promising future for the entire hemisphere. Another way to state the importance of NAFTA is to consider the foreign policy consequences for our country if it is defeated. Let me be clear: Rejection of NAFTA would seriously damage our relations with Mexico and erode our credibility with the other nations of the hemisphere and the world. For the United States, failure to approve NAFTA would be a self- inflicted setback of historic proportions. First, it would undermine Mexico's capacity to cooperate with us on vital cross-border issues that affect millions of Americans. Second, it would send a chilling signal about our willingness to engage in Latin America at a time when so many of our neighbors are genuinely receptive to cooperation with the United States. Third, it would hand our major economic competitors in Europe and East Asia a clear opportunity to gain advantage in what should be natural and growing markets for us. Fourth, it would undermine our position as a negotiating partner on global trade agreements vital to the economic renewal of the United States. Mr. Chairman and members of the committee, NAFTA is a test of America's confidence. It will measure whether Americans believe in our ability to compete in open markets or whether we will shrink from that challenge and cower in the face of a changing global economy. We must embrace change; we cannot escape from it. In foreign policy terms, NAFTA is a test of America's leadership. It will measure our willingness to cooperate across a diverse range of issues with our closest neighbors. Our relations in this hemisphere-- and our global economic leadership--will be substantially boosted by the decision of this Congress to approve NAFTA. NAFTA is good economic policy-- and good foreign policy. It is a once- in-a-generation opportunity. For the sake of future generations, NAFTA is an opportunity that must not be lost. ### ARTICLE 4: Fact Sheet: NAFTA--Key Provisions and Supplemental Agreements Overview The United States' leadership in the next century will depend on our ability to compete in the global marketplace. The North American Free Trade Agreement (NAFTA) will expand export markets in Mexico and Canada for U.S. goods and services, boost economic growth, create jobs, strengthen cooperation with our neighbors on labor standards and the environment, and enable us to better compete against Europe and Asia. NAFTA will enhance free trade in goods and services between the United States, Canada, and Mexico by eliminating import restrictions--such as tariffs, quotas, and licenses--and restrictions on foreign ownership and investment. Key Provisions Tariffs. NAFTA eliminates all tariffs on U.S., Mexican, and Canadian goods by 2008. Many will be removed immediately and others will be phased out over 5, 10, and 15 years. Rules of Origin. Rules of origin define goods eligible for NAFTA treatment and prevent "free riding" by third countries. Only goods produced in North America qualify for NAFTA treatment. Goods containing imported components qualify if they are transformed enough to result in a tariff classification change. In some cases, goods also must have a specified percentage of North American content. There is a special rule of origin for textiles and apparel. Customs. NAFTA expands and improves on procedures in the U.S.-Canada FTA and provides for uniform regulations to ensure consistent interpretation, application, and administration of the rules of origin. Quotas. NAFTA eliminates import and export quotas unless consistent with the GATT or explicitly mentioned in the agreement. National Treatment. NAFTA reaffirms GATT principles preventing discrimination against imported goods. Standards. NAFTA prohibits use of product standards as a trade barrier but preserves each country's right to establish and enforce its own product standards, particularly those designed to promote health and safety and to protect human, animal, and plant life and the environment. Government Procurement. NAFTA opens new procurement markets in Mexico, particularly the petrochemical, heavy electrical, and pharmaceutical areas. Safeguards. NAFTA partners can impose a safeguard action during the transition period if increased imports constitute a "substantial cause or threat" of "serious injury" to a domestic industry. This follows GATT practice. Agriculture. NAFTA eliminates immediately or phases out tariffs on agricultural goods. It converts most quotas and other quantitative restrictions to tariff rate quotas, which allow a certain quantity of a product to enter duty-free. These tariff rate quotas will apply to U.S. exports of corn, dry beans, powdered milk, poultry, malted barley, animal fats, potatoes, and eggs. For some products--such as wheat, grapes, tobacco, other dairy products, and day-old chicks--quotas and other quantitative restrictions will be converted to tariffs, which then will be phased out. U.S. standards regarding food imports will be maintained. Special agricultural safeguards for certain import- sensitive products will be available to limit the impact of sudden import surges. Energy. NAFTA lifts investment restrictions on most of the basic petrochemicals industry and on most electricity generating facilities. It eliminates or phases out tariffs on oil and gas field equipment and on coal. Autos. NAFTA provides for the immediate reduction of Mexican duties on vehicle imports and a timetable for their elimination. It eliminates Mexican quotas on new auto imports. It also removes tariffs on certain automotive parts and phases out others. It reduces the Mexican domestic-content requirement to zero over 10 years and reduces Mexico's trade balancing requirement. Textiles and Apparel. NAFTA eliminates some tariffs immediately and phases out others over a 10-year period. It removes quotas on imports from Mexico that qualify under the rules of origin. Financial Services. NAFTA allows investment by U.S. and Canadian firms in the Mexican banking market. It provides for the elimination of all restrictions on such investment by January 2000. U.S. and Canadian insurance firms with existing joint ventures in Mexico may increase their ownership to 100%. The agreement also permits U.S. insurance companies to issue reinsurance policies and establish subsidiaries in Mexico. It allows U.S and Canadian companies to invest in the brokerage industry in Mexico. Transportation. NAFTA eliminates, over a 5-year period, current restrictions on access by U.S. and Canadian trucking companies to Mexico. It gives charter and bus tour operators full access to the Mexican market. It allows U.S. and Canadian investment in Mexican bus and truck companies, in international cargo subsidiaries, and in Mexican port facilities. The agreement does not alter U.S. safety standards. Telecommunications. NAFTA eliminates duties and non-tariff barriers on most Mexican imports of telecommunications equipment--including private branch exchanges, cellular systems, satellite transmission, earth station equipment, and fiber optic transmission systems. It also eliminates restrictions on foreign investment in voice mail and other value-added and information services. North American firms will have access to and use of public telecommunications networks and services. Investment. NAFTA provides for member state investors to receive the more favorable of national or MFN treatment in setting up operations or acquiring firms. It phases out most performance requirements over 10 years and states that NAFTA partners may not impose new ones. The agreement guarantees the free transfer of capital and profits and that investors will be compensated at the fair market value of the investment in cases of expropriation. Intellectual Property. NAFTA protects North American producers in two new areas: computer programs and compilations of individually protected material. It establishes a minimum 50-year term for the protection of sound recordings and motion pictures. The agreement requires companies to register both service marks and trademarks. It prohibits compulsory licensing or mandatory linking of trademarks. It provides protection for independently created industrial designs and for trade secrets and proprietary information. Environment. NAFTA maintains existing federal and subfederal standards. It allows a country to prohibit entry of goods that do not meet its standards. The agreement states that parties, including states, may enact tougher standards and permits each country to impose environmental requirements on foreign investment. Implementation. The governments will establish the Free Trade Commission to ensure that NAFTA is implemented properly. Commission working groups will monitor implementation of the various chapters of the agreement. Dispute Settlement. NAFTA extends the dispute settlement provisions of the U.S.-Canada FTA to Mexico while providing new safeguards to ensure fairness. It establishes the North American Free Trade Commission and a Secretariat to administer the panel review system. The mechanism for resolution is as follows: (1) Notification and consultation between parties; (2) If no resolution, referral to the Commission; (3) If necessary, referral to a panel of private sector experts; and (4) Resolution or retaliation. If the defending party does not comply with the panel ruling, the other party may suspend equivalent trade benefits until the dispute is resolved. Supplemental Agreements The three parties also have concluded supplemental agreements on the environment, on labor, and on import surges. Environment. The NAFTA supplemental agreement on environmental cooperation creates the new Commission on Environmental Cooperation, which will: (1) Provide expertise to dispute settlement panels in cases where one party has failed to enforce its laws affecting a sector involving traded goods and services; (2) Consider the environmental implications of processing and production methods; and (3) Promote greater public access to information about hazardous substances. Labor. The NAFTA supplemental agreement on labor creates the new Commission on Labor, which will promote labor principles, laws, and standards and their effective application and enforcement. The supplemental agreement provides that each country will promote public awareness of its laws as well as ensure compliance. The agreement provides for the use of fines and trade sanctions as a last resort if a party believes that another is demonstrating a persistent pattern of failure to enforce labor laws. Import Surges. The NAFTA supplemental agreement on import surges allows parties to impose trade restrictions if increased imports cause or threaten serious injury to a domestic industry. Border Cleanup NAFTA partners are in basic agreement, although details are still being worked out, on a new institutional structure to coordinate environmental infrastructure projects, including those focusing on water pollution along the border. ### ARTICLE 5: What's in Print: Foreign Relations of the United States The Department of State has released Foreign Relations of the United States, 1958-1960, Volume X, Part I (Eastern Europe Region; Soviet Union; Cyprus). This volume of the Foreign Relations series documents U.S. diplomatic relations with the Soviet Union and the states of communist East Europe at the height of the Cold War. It also covers the early stages of U.S. involvement in the Cyprus question. Despite the Soviet suppression of the 1956 Hungarian revolution and a thwarted assertion of Polish independence from Soviet control, the United States looked for a loosening of the grip of the Soviet empire and encouraged gradual liberalization in Eastern Europe. Notwithstanding hostility from the communist regimes, the Eisenhower Administration continued its efforts to normalize relations with Eastern Europe and to expand trade as a tool to open these societies to Western influence. However, progress in loosening the Soviet grip was slow at best. The United States exploited its bilateral relationship with the Soviet Union to effect changes in the Cold War. High-level exchange visits with Soviet officials began in the spring of 1958, and in July 1959 Vice President Richard Nixon visited Moscow. The Nixon visit became famous for the "kitchen debate" with Soviet Premier Khrushchev but included other substantive private conversations between the Vice President and Soviet leaders. The Nixon visit was a prelude to Khrushchev's extraordinary September 1959 tour of the United States. He traveled to major U.S. cities, confronted media and local political personalities, and attempted to meet with average U.S. citizens. Prior to his tour and after his return to Washington, DC, Khrushchev had substantive talks with President Eisenhower, first at the White House and afterward at Camp David. The meetings created a cordial personal relationship between Eisenhower and Khrushchev. This rapport deteriorated in May 1960, when a U-2 reconnaissance aircraft crashed well within the Soviet Union. At the opening session of the Paris summit later that month, Khrushchev demanded that Eisenhower apologize and punish those responsible for the overflights. The President refused and the summit ended. The U-2 incident and the subsequent shooting down of a U.S. reconnaissance bomber ushered in a new era of East-West confrontation. In contrast to the souring of East-West relations, the lengthy Cyprus crisis appeared resolved at the end of the Eisenhower Administration. The U.S. role in the settlement was essentially secondary. Its diplomatic moves were designed to reinforce British efforts to negotiate a solution and to restrain two key NATO allies--Greece and Turkey--from direct confrontation. The settlement was fragile and left the United States with the diplomatic problem of securing its interests with the leadership of the emerging Cypriot state while encouraging pacification of the island. This volume of the Foreign Relations series is one of more than 70 volumes documenting the foreign policies of the Eisenhower Administration. Volume X, Part 2 documents U.S. policy on the issue of East-West exchanges and U.S. policies toward individual Eastern European states, Finland, and Greece; that volume will be released later in 1993. Volume X, Part 1 (GPO Stock No. 044-000-02356-3; ISBN 0-16-038069-3) may be purchased for $39 from: Superintendent of Documents Government Printing Office P.O. Box 371954 Pittsburgh, PA 15250-7954 To FAX orders, call (202) 512-2250. Checks payable to the Superintendent of Documents are accepted, as are VISA and MasterCard. For further information, contact Glenn W. LaFantasie, General Editor of the Foreign Relations series, at (202) 663-1133. ### ARTICLE 6: Treaty Actions Multilateral Copyrights Berne convention for the protection of literary and artistic works, of Sept. 9, 1886, as revised at Paris July 24, 1971, and amended on Oct. 2, 1979. Entered into force for the U.S. March 1, 1989. [Senate] Treaty Doc. 99-27. Succession deposited: Macedonia, July 23, 1993. Accession deposited: Bolivia, Aug. 4, 1993. Diplomatic Relations Vienna convention on diplomatic relations. Done at Vienna Apr. 18, 1961. Entered into force Apr. 24, 1964; for the U.S. Dec. 13, 1972. TIAS 7502; 23 UST 3227. Accession deposited: Guinea-Bissau, Aug. 11, 1993. Labor Instrument for the amendment of the constitution of the International Labor Organization. Adopted at Montreal Oct. 9, 1946. Entered into force Apr. 20, 1948. TIAS 1868; 62 Stat. 3485. Acceptance deposited: Georgia, June 22, 1993. Patents Budapest treaty on the international recognition of the deposit of microorganisms for the purposes of patent procedure, with regulations. Done at Budapest Apr. 28, 1977, as amended Sept. 26, 1980. Entered into force Aug. 19, 1980. TIAS 9768; 32 UST 1241. Accession deposited: Greece, July 30, 1993. International convention for the protection of new varieties of plants of Dec. 2, 1961, as revised. Done at Geneva Oct. 23, 1978. Entered into force Nov. 8, 1981. TIAS 10199; 33 UST 2703. Accession deposited: Norway, Aug. 13, 1993. Property Convention establishing the World Intellectual Property Organization. Done at Stockholm July 14, 1967. Entered into force Apr. 26, 1970; for the U.S. Aug. 25, 1970. TIAS 6932; 21 UST 1749. Succession deposited: Macedonia, July 23, 1993. Paris convention for the protection of industrial property of Mar. 20, 1883, as revised. Done at Stockholm July 14, 1967. Entered into force Apr. 26, 1970, and for the U.S. Sept. 5, 1970; except for Articles 1 through 12, which entered into force May 19, 1970, and for the U.S. Aug. 25, 1973. TIAS 6923, 7727; 24 UST 2140. Succession deposited: Macedonia, July 23, 1993. Accession deposited: Bolivia, Aug. 4, 1993. Nice agreement, as revised, concerning the international classification of goods and services for the purposes of the registration of marks. Done at Geneva May 13, 1977. Entered into force Feb. 6, 1979; for the U.S. Feb. 29, 1984. Succession deposited: Macedonia, July 23, 1993. World Health Organization Constitution of the World Health Organization. Done at New York July 22, 1946. Entered into force Apr. 7, 1948; for the U.S. June 21, 1948. TIAS 1808; 62 Stat. 2679. Amendment of Articles 24 and 25 of the Constitution of the WHO. Adopted at Geneva May 23, 1967. Entered into force May 21, 1975. TIAS 8086; 26 UST 990. Amendments to Articles 34 and 55 of the Constitution of the WHO. Adopted at Geneva May 22, 1973. Entered into force Feb. 3, 1977. TIAS 8534; 28 UST 2088. Amendments to Articles 24 and 25 of the Constitution of the WHO. Adopted at Geneva May 17, 1976. Entered into force Jan. 20, 1984. TIAS 10930. Acceptances deposited: Eritrea, July 24, 1993. Bilateral Colombia Agreement for the exchange of tax information. Signed at Santafe de Bogota July 21, 1993. Enters into force upon an exchange of notes by which the parties confirm their mutual agreement that they have met the constitutional and legal requirements necessary to effectuate agreement. Mozambique Agreement regarding the consolidation and rescheduling of certain debts owed to, guaranteed by, or insured by the U.S. Government and its agencies, with annexes. Signed at Maputo Aug. 13, 1993. Enters into force following signature and receipt by Mozambique of written notice from the U.S. that all necessary domestic legal requirements have been fulfilled. Peru Agreement regarding the consolidation and rescheduling or refinancing of certain debts owed to, guaranteed by, or insured by the United States Government and its agencies, with annexes. Signed at Washington Aug. 30, 1993. Enters into force following signature and receipt by Peru of written notice from the U.S. that all necessary domestic legal requirements have been fulfilled. Poland Agreement concerning economic, technical, and related assistance programs. Signed at Warsaw Aug. 10, 1993. Enters into force on the first day of the first month after the parties exchange notes confirming that they have completed their respective internal requirements. Romania Agreement relating to the employment of dependents of official government employees. Effected by exchange of notes at Washington July 1 and 28, 1993. Entered into force July 28, 1993. Agreement for the protection and preservation of certain cultural properties. Signed at Bucharest July 8, 1992. Entered into force provisionally July 8, 1992; definitively July 29, 1993. ### END OF DISPATCH VOL 4, NO 37.
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