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Remarks to the Heritage Foundation: NAFTA

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Date:
Location: Washington, DC

HEADLINE: REMARKS BY SENATOR JOHN MCCAIN (R-AZ)

SUBJECT: THE NORTH AMERICAN FREE TRADE AGREEMENT

THE HERITAGE FOUNDATION
214 MASSACHUSETTS AVENUE, WASHINGTON, DC

BODY:

SEN. MCCAIN: Thank you very much for welcoming me here this morning and I appreciate the opportunity of being with you.

As you know I come from a border state and one of the issues that continues to bubble up in my state is the issue of bilingual education and we all support the concept of every American being able to speak English, but we also see more and more advantages, very frankly, for Americans to know Spanish as well as other languages. And I would like to illustrate to you a story that took place early in the history of my state when it was still a territory.

A Mexican citizen came up to Yuma, Arizona and robbed the bank there and then fled back down to Mexico. In those days, the state of Arizona had an organization called the Arizona Rangers, just like the Texas Rangers. They formed up a posse and, with their usual reverence for international borders, proceeded down into Mexico in pursuit of the bank robber. After they some weeks, they apprehended him near Hermosillo and found out much to their chagrin that none of the Arizona Rangers spoke any Spanish and the culprit, Pedro by name, spoke no English.

So they went out and got a person from the local town who spoke both English and Spanish, brought him out to where they were holding Pedro and the head Arizona Ranger said, "Look. Tell Pedro that we want to know where the gold is," and the interpreter said, "Pedro, the Arizona Rangers want to know where the gold is." Pedro said, "Yo no se donde esta," and the interpreter said, "Pedro says he doesn't know where the gold is." They went back and forth for a couple of hours.

Finally, the head Arizona Ranger said, "Look. Tell Pedro if he doesn't tell us where the gold is, we're going to take him and string him up from that tree over there." The interpreter said, "Pedro, the head Arizona Ranger says that unless you tell them where the gold is, they're taking you and string you up from that tree over there." Pedro said, "Okay. Go back into town. Go two miles south. There's a ranch, there's a well in the back of the ranch. The gold is down in the bottom of the well." The interpreter said, "Thank you." The head Arizona Ranger says, "What did Pedro say?" The interpreter said, "Pedro says that he is prepared to die." (Laughter.)

So I think that that clearly emphasizes the importance of us communicating better not only with our neighbors to the south, but very frankly here in Washington, DC on the issue of free trade and the benefits that it brings to every single one of our citizens.

Every one of our towns and cities, every part of America in my view will clearly profit and that is the interest, to a large degree, that we have to appeal to. But there are many other interests that we have to appeal to as well, and very frankly, I am a bit concerned about a rumor that I hear that there's some people who are saying, "Well, we ought not to pursue the free trade agreement ratification next year because of the fact that it's an election year. In my view that would be a terrible mistake and I have made that input and I hope that it is just a rumor and remains so.

I am grateful for the invitation to participate in this important conference and for the opportunity to briefly associate myself with one of the many valuable contributions the Heritage Foundation has made to an informed public debate on the North Amercian Free Trade Agreement, NAFTA.

Let me begin by insulting your intelligence, by citing some statistics that are no doubt familiar to all of you. In 1990, exports accounted for 88 percent of GNP growth in the United States. The United States exported $394 billion in merchandise in 1990.

Reliable studies estimate that every $1 billion in US exports creates 20,000 jobs. In other words, nearly 8 million American jobs are export-dependent. Despite such documented evidence of international trade's critical relationship to the prosperity of Americans, the observation of an astute 19th century British statesman is as true today as it was when it was made nearly 170 years ago. "Free trade," wrote Lord Macauley, "one of the greatest blessings a government confers on a people, is in almost every country unpopular."

For proof of that observation's enduring relevance, we need to look no further than the recent Pennsylvania Senate election in which opposition to a free trade agreement with Mexico figured so prominently in the winning campaign. The fierce opposition to the extension of fast-track authority waged by organized labor, and other protectionist quarters of the American body politic, was another indication of how apprehensive many Americans are about the consequences of free trade.

This conference and others like it play an important role in disseminating information that will refute much of the patented nonsense that currently misinforms the national debate on free trade. We will have to be even more persistent in proclaiming the virtues of free trade and in directly relating the benefits of free trade to average American households if we are ever to consign Lord Macauley's lament to the ash heap of history.

Permit me to again resort to familiar statistics to illsutrate the case for free trade which we are obliged to make. The conclusion then after would place the United States in the center of a market of 360 million consumers, with a collective output of $6 trillion, a market much larger and much richer than the European Community. The recent explosive growth of our exports to Mexico, more than doubling in the last four years, attends much greater growth in a fully free-trading relationship with our southern neighbor.

The Commerce Department estimates that 538,000 American jobs are related to our exports to Mexico. Half of these jobs are a direct consequence of the trade liberalization policies that Mexico has undertaken since 1986.

As I stated, the best tonic for popular apprehension about a free trade agreement is a simple, direct connection of the benefits of free trade to the economic welfare of individual Americans. To most Americans, the Uruguay Round of the GATT negotiations is little more than some obscurely threatening process with an exotic name. But if the one-third cuts in global tariff and non-tariff barriers with the—which the United States envisioned for the Round were effected over the next ten years, they would generate a $1.1 trillion increase in our GNP. On average, that amounts to a $16,700 real income gain for every American family of four. That's the kind of message our advocacy of free trade should highlight. If we are to counter the simple sloganeering of protectionists who condemn the NAFTA for putting, quote, "American jobs on a fast track to Mexico."

Regrettably, in difficult economic times, it's easier for us to take counsel of our fears than our aspirations. Most Latin American leaders are reforming their countries historically insular economic policies, and appealing for the formation of a hemispheric free market. It is ironic that many political leaders in the US have premised their opposition to NAFTA on the kinds of fears that have been—formed the economic nationalism that Latin Americans, at our urging, are now abandoning.

The spectre of thousands of American jobs heading south is, of course, the most widely used instrument of terror in the anti-free trade arsenal. However, fears that a NAFTA would make Mexico a superior competitor to many US industries, or cause a large displacement of US production to Mexico, are misinformed. Lower wages and weaker occupation safety standards do not guarantee competitive advantage to a country. If that were so, India would be a better competitor than Japan, and Portugal a better competitor than Germany. There are a great many factors, other than low wages and lax enforcement of safety regulations, that contribute to an industry's competitiveness—productivity, technology, access to multiple transportation, quality of product—to name a few.

Indeed, when the AFL-CIO was lobbying for higher wages for American workers, one never hears them admit that higher wages will result in less competitiveness for the industries affected by the increases. Certainly Mexico will attract more foreign investment and production in a free trade environment. But the level of US investment in Mexico in 1990 represented 3.8 percent of all US direct investment abroad. Were US investment in Mexico to triple, it would represent only .7 percent of current investment in the United States. Most importantly, the economic growth engendered in Mexico by a free trade agreement would expand investment opportunities in Mexico without necessarily decreasing those opportunities in the United States. What most fearmongers of NAFTA's impact on American labor ignore is that new investment in Mexico will benefit both the US and Mexican economy. Obviously, a richer Mexico means healthier markets for goods produced in the United States and consequent job creation in those firms exporting to Mexico.

But production sharing with Mexico will increase US competitiveness in sectors like the automobile and electronics industry that suffer the most from nonregional competitors. Japanese manufacturers have long understood the advantage that co-production with lower-cost countries provides in penetrating foreign markets. Japanese electronic firms employ over 10,000 people in Tijuana and export over four million TVs to the US every year from Mexico.

The imperative for creating a North American free market should not be replacing a multilateral trading system with a system of protective regional blocs. But the United States obviously can't afford to ignore threats from bloc formation elsewhere in the world.

The difficulties attending the Uruguay Round certainly enhance the attractiveness of regionalism. But regionalism should not and need not be an end in itself. A NAFTA need not violate GATT principles or raise external barriers to North American markets.

Indeed, the very prospect of a North American free trade agreement has energized South American governments to reform their trading practices in pursuit of a hemispheric free market. I might add Chile, Argentina, the Central American countries are all very much interested. The President's Enterprise for the Americas Initiative is intended to capitalize on such sentiment.

We should note also that many of the most recent additions to GATT membership have come from Latin America. They can be expected to add weight to US appeals for greater liberalization of European and Asian trading practices. And in NAFTA, the United States seeks to develop a regionalism that is consistent with Article 24 of the GATT, permitting free trade and customs unions under certain circumstances and liberalized trade beyond what can be achieved currently in a multilateral framework.

The prospect of the world's leading economies abandoning efforts to liberalize the whole of the international trading system is disturbing, but the presumption that nations would rather raise neighborhood fortresses than build bridges to markets the world over is, I hope, incorrect. Seventy-four percent of US trade is conducted outside North America; 65 percent of Japan's trade is conducted outside of Asia. Admittedly, 70 percent of the European Community's trade is conducted within the EC.

Nevertheless, most nations still recognize that resorting to regional discriminatory practices will not stimulate the levels of economic growth that would be derived from regionalism that comfortably co-exists with and contributes to a healthier global trading system.

The rationalization of production between the three largest North American markets should reinforce that message to our European and Asian trading partners. Production sharing within North America will make the US, Mexico, and Canada more formidable global competitors, displace US imports from nonregional countries, and displace US investments in those countries.

These are the same advantages that Japan finds in Southeast Asia and Germany finds in Portugal. When the nations of North America seize similar opportunities, we will create jobs and raise income and living standards in all three societies. We will also considerably strengthen our hand in promoting greater global liberalization of trade and capital flows.

In closing, let me define briefly what larger mission I believe the formation of a North American free trade market serves.

Twice in this century, the United States has fought in world wars to defend the notion of how people should be governed. When our aspirations for a world of free, independent nations were betrayed first by the rise of the Third Reich, and next by the enslavement of half of Europe, we did not adapt our views to accommodate the disappointment of our dreams. We persevered, confident of the enduring truth that just government is derived from the consent of the governed. We did not abandon our aspirations to accommodate changing circumstances. We sustained our advocacy, and changed the world.

The United States should be no more inclined to modify our advocacy of free trade than we were our advocacy of free elections. That is especially true when trade as a source of national wealth has risen in importance as rapidly as communism has declined as an alternative to capitalism.

The North American Free Trade Agreement is merely the most recent affirmation of values the United States has been dedicated to since our inception as a nation. Its successful conclusion requires us only to be guided by our vision, not our fears.

Thank you very much. (Applause).

May I respond—yes, ma'am?

Q Senator, as someone who spent a lifetime in trade policy, I wanted to congratulate you on your speech today because everyone, I think, who works for NAFTA should consider that a required reading for the excellent summary of points that you make.

Now to the point that both Norm Bailey (sp) and I have been making yesterday for (this meeting?), that we need those arguments and they are desperately needed, but it will not be enough to make them to ourselves with a group like this where we are already sympathetic.

What is your political advice? Obviously, there will be a—lots of things that will be happening, that the border states will probably go along in support.

My industry, which is paper, works intensely on the Free Trade Agreement negotiations. We'll see what comes out of it, but nevertheless, what we found out, and I'm finding also by travelling and participating in meetings like this, that there is either a lack of understanding or a negative in the Middle West and in some of the other states. The statements are: "Oh, it's another foreign giveaway," that's the quote-unquote.

What would you advise from the political standpoint, since you may not be able to cover everything, should be taken? What can Heritage Foundation do specifically to take, as I suggested, your speech with the arguments which are really to the point, and take it to the places where it would be most useful? What would be your view? How do we go about it?

SEN. MCCAIN: My view is not really too complicated. Tip O'Neill, one of the most accomplished politicians in the history of this country, once coined a phrase where he said, "All politics is local."

Now, the way that we take advantage of "All politics is local" is by doing what we did with some success during the effort to attain the fast-track authority for the President in negotiating NAFTA, and that is to mobilize the Hispanic-American community in this country. Now many Americans who don't travel a lot think that the Hispanic community is confined to border states.

There's 500,000 Hispanic-Americans in Chicago. There's hundreds of thousands of them in every major city across this country.

Now, how do you—so, I believe that the Hispanic-American community played a key role in the size of the victory in the vote in the United States Senate for providing fast-track authority to the President.

How did we do that? One of the ways we did it was what I did, and we should do this in a significantly larger dimensions, in my view. Take Hispanic-American business people as well as political leaders down to Mexico. I took a group of fifteen Hispanic business people from my state to Mexico City. We met with President Salinas, we met the head negotiator, we met with members of their Parliament. Our ambassador had a reception for them at the embassy. And they came back to Arizona and they engaged in letter-writing campaigns, in lobbying legislators, in taking out—the Hispanic Chamber took out advertisements in the newspapers, and over the radio. They were galvanized into action because they were convinced that it's the best possible thing that can happen to Hispanic-Americans as well as our country.

Now, I understand that the Mexican government is just going to inaugurate a program where we bring on a weekly basis groups of people from all—Hispanic-Americans from all over the country to Mexico for the same kind of thing.

In my view, that the best way to counter the AFL-CIO, particularly with Democrats, is the Hispanic American community in this country. Why do I say that? Because we know that one of the base element and important parts of the Democrats' election machine is Hispanic Americans, who vote in significant majorities, generally speaking, except for the Cuban American community down in Miami, generally speaking, in significant majorities for Democrats.

Now, the Democrats are faced with a dilemma, in my view. They've got two of their pillars of support, one labor, organized labor, and the other the Hispanic American community, who are clearly split on this issue. All of our polls showed us that the overwhelming majority of Hispanic Americans supported—and Hispanic American leadership supported this agreement.

So, I would also add to that one other thing, because it's very important question—I'm sorry for the long answer. Hispanic media: Do you know that there's a chain of Hispanic television stations, across the Southwest in particular? Hispanic American citizens in my state watch Channel 33, not only (Boxeo ?) de Mexico, which is one of my favorite programs also -- (laughter) but they also watch Channel 33. They also, many of them, listen to our Hispanic radio stations all over.

And so I would suggest that we also use that by people like me, people all over this room who are informed on the issue, going to these television and radio stations and giving brief interviews and short statements. I send out statements to our Hispanic radio stations about once every two weeks on some Hispanic issue or something of interest. And about once a month it has something to do with the free trade agreement.

So I think politically, we go to the grassroots rather than trying to orchestrate it from here in Washington, DC, and I think we have enormous opportunity there. And I would also say again is, we know there are large numbers of Guatemalans, Guatemalan Americans, El Salvadoran, Nicaraguan, Central Americans—they also are very interested in it. So—and they see, clearly, the NAFTA with Mexico, the agreement with Mexico is just the first step, and then the next step follows. So— and I think that if the White House continues to work as hard as we did on the ratification of fast track authority, and a little harder, I think we can get it through next year.

Yes, sir?

Q (Off mike) -- since I believe on the trade side that the GATT renewal, and also the Uruguay Round will take precedence in the sequence of events, I'd like to know how your reading is on how that is moving forward, so that we can get going on the NAFTA.

SEN. MCCAIN: As you know, Herb, in the last couple of days—by the way, thank you for being in Arizona. Please spend all you can, expand—we're very grateful for that. (Laughter.) We take all plastic—even at 19 percent. (Laughter.)

Anyway, as you know, in just the last couple of days there has been a certain relaxation on the part of the Europeans as far as the agriculture is concerned. As you know, that's one of the major, major sticking points. And I understand that Carla Hills has also relaxed our position from requirement of doing away with 90 percent of their agricultural supports over a 5 to 10 year period, to reducing that requirement. I think we're coming closer.

It reminds me a little bit of situations that we have seen from time to time—in fact, we see them all the time in the Senate—it's impossible for there to be an agreement because everybody is just gridlocked and frozen in position. But somehow because of the urgency of resolving the issue, that we do reach agreement.

And by the way, I think that Carla Hills is the best thing that's happened to US trade in a long time. With all due respect to her predecessors, I would say that she has done a magnificent job, and she's tough. And that's what—there are times when you need to have somebody who's really tough. And yet at the same time she's not rigid.

So I think that—I'd say the prospects have gone from about 50-50 to about 60-40 -- I would say it's about that best that I can—and obviously, I follow it very closely and get periodic briefings. And I just think the urgency of—the alternative to no
agreement is becoming clearer and clearer to the Europeans and other countries as to being just unacceptable.

There's some of us that, like Ed Meese here, who was alive during the Hawley-Smoot tariff acts—in fact, I think he was one of the authors of it. (Laughter.) And there are those of us that—and there are those of us that read about it in history, and know what tariff barriers and doing away with free trade does to relations amongst nations. I'm not predicting World War III because of a failure to agree, but I certainly do suggest to you that the tensions would be incredibly heightened between ourselves and our ancient friends if these trade barriers aren't lowered. So that's why I think—why I have more optimism than pessimism about the result of it.

Yes, sir?

Q You were talking about the Overseas Development Council. I think it was good of you, (the points ?) about the politics as local issue to these problems, but you seem to have a single-track approach, which is let's make sure our guys have more votes, let's get the guys out who support the Free Trade Agreement and go for it.

One of the problems throughout history with trade policy is that the protected people are very well organized, very well financed, and Democrats, I think, in many ways are not always on their side, they are caught in the middle, because economics are also local. They have people who are going to lose jobs as well as people who are going to win. Even in Michigan, the gains will be better from the Mexico Free Trade Agreement than the losses, but the losses will be significant, and politically significant.

The question is, is there a second track that can be approached, somehow buying off, partially compensating, somehow weeding away some of the weaker protectionists to agree because essentially they're getting transition funds? You know, trade adjustment assistance has been offered in the past. Are there other alternatives that you might consider?

SEN. MCCAIN: Trade adjustment assistance, job training, all of those are part of the equation. Let me just—again, because I was asked for a political answer, I'll give you another poitical answer and try to expand a little bit.

What were the two major opponents of the fast track authority? Because, you know, the fast track authority was just a curtain raiser for the vote on the agreement itself. The two main organizations were organized labor, which is declining in membership, as we all know, and certainly declining in influence, thank God, or I would not be a member of the Senate, and the other was the environmental community. The environmental community, obviously, continues to increase in influence throughout America.

It seems to me that rather than trying to satisfy the concerns of organized labor, who are not going to change—they are not going to change. The AFL-CIO is not going to change their position. I don't care if we told them that we would guarantee every single worker in America a job no matter what the circumstance was. They're just not going to change. But the environmental community, which is very influential in America, has some legitimate concerns that need to be satisfied, and I'm happy to say that the Mexican government also realizes the importance of that political impact, and they have just in the last week, I believe—Juan, wasn't it about the last week? -- announced a $460 million commitment to the border environmental cleanup.

And by the way, the concerns of the environmental community are legitimate. Six months ago in Nogales, Arizona, raw sewage was flowing from Nogales-Sonora, right, straight into downtown Nogales, Arizona. I wouldn't want my kids playing there, and there were kids, both Mexican and American kids, playing in that raw sewage.

So, there are clearly areas, so I would certainly do everything I can to assist from the humanitarian standpoint—trade adjustment assistance, job training—any other way that we can from a pure standpoint that we as a government and as a nation want to take care of those who need help. That's our obligation as a government. But I would not harbor any illusions about our ability to change the position of organized labor, and I would also focus an enormous amount of our attention to make sure that the environmental problems are taken care of.

And I would also point out that there have been numerous times, like the agreement between Tijuana and San Diego on raw sewage, like in a recent agreement that was made between Juarez and El Paso—wasn't that the one, Juan, where they—yeah and several others that have brought about a successful conclusion, like, for example, the agreement of the Mexican government to shut down a smelter just across the border from Arizona and Mexico, the Cananaya (ph) smelter, which cost them several hundred—actually, close to 1,000 jobs.

So, the Mexican government is helping out; we have to do more. What has been done? President Salinas and President Bush at Monterey directed the Director of SEDUE and also Mr. William Reilly to come up with a plan addressing long-term environmental issues on the border. Now we've got to address now the side of it which is the short-term emergency, such as the Nogales situation I told you that sprang up overnight. President Salinas has committed $4 million to a fund. We have tried to get legislation through, and I think we will this year, to establish a fund of some $25 million on our side to have funds immediately available to address short-term environmental emergencies. If we do that, then I think we satisfy the environmental community, I think it enhances our ability very significantly. So, in addition to what I was saying, I think we have to do whatever we can to satisfy environmental concerns. I hope that responds somewhat.

Yes, sir?

Q If there is no vote on the NAFTA in '92, how will that play politically with respect to the opponents? Will that put into play any kind of dynamic such as the Democratic platform?

SEN. MCCAIN: Listen, my friends, I'm not—I want it done, and I want to get it done, and I see no reason why we should not get it done, and I think it plays well for us not only politically, but the sooner we get that agreement through, the sooner American citizens are going to be better off. By the way, before I—let me just jump aside. I apologize for this.

In 1982, I happened to be in Cancun, Mexico, and got up in the morning and found out that the then-president had devaluated the peso. And then, I went up to Nogales, Arizona, and within weeks, I saw the stores and businesses close up all over Nogales, Douglas, Yuma, and it was true from San Diego over to El Paso and Laredo. I mean, it was a disaster. Thousands and thousands of Americans went out of work. Okay? And it was because of actions on the part of the Mexican government, which defy all economic rationality and rational behavior that we know of.

So, since then, what have we seen, thanks to President de la Madrid, who laid the groundwork, and now thanks to President Salinas? The economies all along the border are blooming. Yeah, we've got problems, these environmental problems that I was just talking about. But, by God, it's a lot—it's a dramatic change over a 10-year period than it has been, just because of changes in policies which have been fundamental and incredible.

What I'm worried about, and I have to speak to—because—in all candor. What I'm worried about more than anything else is the impact of President Salinas and his successor and their policies. Because the opposition in Mexico is strong, as you know.

And it comes from the left. And it comes from people who want to go to the grand old days of yesteryear where they basically doled out the oil money and kept everybody happy and kept sort of an uneasy coalition together.

And I'm deeply concerned that this would be viewed as a repudiation of the policies of President de la Madrid and President Salinas and would give great ammunition and strength to the opposition parties in the upcoming elections, which we know are more and more free and open elections. And that's my great concern, to tell you frankly. Because if we—if Mexico took a step backward, it not only would be very damaging to the Mexican people, but it would be to the people of my state and this country, in my view. That's my greatest fear of a delay, because then you get into the 1993 elections in Mexico.

MODERATOR: Shall we take one more question?

SEN. MCCAIN: Two more real quick. Yes, sir?

Q You talked about joint funds for short-term environmental emergencies. My understanding is that Mexico has the laws. They don't have the enforcement. What do you—how do you answer the concerns of environmentalists about the long-term ability of Mexico to enforce the rules that they've got?

SEN. MCCAIN: My only response is to say to look at the record. Now, first of all, I will always preface any remark I make with, yeah, they can do more. Okay? But I'll always preface any remark I made that we can do more. Okay?

So, yes, they can do more, but President Salinas, because he has the authority—in fact, more authority in many ways, as you know, than our own president does—shut down some 1,700 companies that were violating their environmental laws. I guess the most significant event that I know of was when he shut down a steel mill in Mexico City which employed some thousands of workers because of obviously the severe problem that they had with air pollution in that country. I think that the Mexican government has shown the willingness to act, particularly when we bring many of these issues to their attention.

In all due respect, I would have to say to you, and I probably shouldn't have to say this, but one of the most impressive things about going to Mexico City and meeting not only with President Salinas that we all know about, but the people that work for him—the level of intellectual capability that exists there. Harvard graduates, Stanford, Chicago School of Economics, Berkeley, you know. (Laughter.) And they're all free enterprisers and free traders. And they are very, very intellectually capable people, and they realize, they fully realize, the absolute criticality that they take certain steps in order to satisfy the concerns that many Americans have concerning particularly the environmental issues.

So, the assurance that I have that they're going to act, one, is that we as a country are going to put their feet in the fire, but also that is balanced by the appreciation and the realization at practically every level of the Mexican government that they must carry out these things.

But let me just add one other caveat: Nogales, Arizona. You drive over to Nogales, Arizona and you will see public housing going up at a dramatic and rapid rate for the workers of the maquiladoras. But you know what you also see? You see the shacks going up right along side of them. Why is that? Obviously, because the growth is so explosive and so dynamic that they simply cannot keep up. I think the United States can be helpful in certain ways in arranging loans from certain international organizations to accommodate for some of this area, particularly where housing and living conditions for workers are concerned. That's an area I think that we ought to try and work on as well.

Yes, sir?

Q How can we get the message to the consumers of how much the trade restraints are costing them on individual products in their market basket?

SEN. MCCAIN: One person that can do that clearly is the President of the United States. And he has the bully pulpit; he could go to places like San Antonio, San Diego, plaes like that; I think he could make a high-visibility visit. I think he could highlight the issue on his annual visits that he makes with the President of Mexico. As you know, they have scheduled an annual visit together. And I think the President can do a lot more in that area.

But I think that we have to probably convince the American people of that, and one other aspect of this that is sometimes a little sensitive, and that's the issue of immigration. Many Americans are deeply concerned about illegal immigration. The fact is that we could build fences, which are, and we can hire helicopters, and we can do a whole lot of things to try to put a brake on this illegal immigration into this country and we can spend a whole lot of money doing it, as we do in the war on drugs.

But the fact is, as long as Mexican—particularly young male Mexicans cannot feed themselves and their families where they live, they're going to go somplace where they can. Now if I was a Mexican citizen and I couldn't feed myself and my family I would try to go someplace where I can.

So one of the messages that we have to give to the American people, if you're really concerned about illegal immigration, which many Americans are deeply concerned about, the best way and frankly the only way to stop it is to have a viable and healthy Mexican economy where Mexican citizens can work, live and have the same kinds of hopes and aspirations for the future.

And let me remind you that we have seen a reduction in illegal emigration from Nicaragua since the -- (word inaudible). We have seen a reduction in illegal emigration from Guatemala. We have seen some slight drop-off even from El Salvador, although I don't think you're going to see that signifiantly reduced until there's true peace in that country. And we have seen a reduction in illegal emigration from Mexico, not so much because of all the measures that we've taken but because of the rising economy and job opportunity in the maquiladoras. Those people that are working in the maquiladoras, if it weren't for the maquiladoras they'd be a few miles further north—or a lot of miles further north—because they've got to work, they've got to feed themselves.

And so I think that's one area where we can convince the American people, not so much the benefits but the fact that if you really don't want to stop this illegal immigration into this country you've got to create conditions where people aren't going to want to leave where they live. And how do you do that best? I think by a thriving economy, which is directly related to the free trade agreement.

I've taken too much time and I do thank you very much.

(Applause.)

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