Copyright 2001 Federal News Service, Inc.  
Federal News Service
July 31, 2001, Tuesday
SECTION: PRESS CONFERENCE OR SPEECH

LENGTH: 5003 words

HEADLINE: PRESS CONFERENCE WITH NAFTA REPRESENTATIVES: U.S. TRADE REPRESENTATIVE ROBERT ZOELLICK; CANADIAN MINISTER FOR INTERNATIONAL TRADE PIERRE PETTIGREW; AND MEXICAN SECRETARY OF THE ECONOMY LUIS ERNESTO DERBEZ FOLLOWING THEIR MEETING
 
LOCATION: THE TRUMAN ROOM, WHITE HOUSE CONFERENCE CENTER, WASHINGTON, D.C.

BODY:
(NOTE: Due to conditions at the site, most questions are not on mike.)B. ZOELLICK: Well, let me start by thanking all of you for coming, and for thanking my colleagues, Minister Derbez and Minister Pettigrew and their delegations for coming to Washington. We thought we had a very productive session. And let me start with just a few opening thoughts about NAFTA and what we did this morning, and then I will turn to each of them to see if they would like to make some comments, and then we'll take your questions.

I thought we had a very successful meeting today. We made some real progress on real issues. And before I discuss some of those specifics, let me make a more basic point, and that is we had clear agreement on the most fundamental issue, which is that the critics of NAFTA are dead wrong. NAFTA has been unfairly targeted by those who would close our borders and to try to peddle fear to the American people. NAFTA at seven is not only alive and well, but we consider it to be a model of success for the benefits of openness and growth and cooperation. We also believe that this is a model that will be a prototype for North-South relations more general.

And the facts speak for themselves. NAFTA has been able to benefit lower income Americans, consumers, families, workers, farmers, businesses. If you take the benefits from lower prices due to lower tariffs and the benefits of growth from the combination of the Uruguay Round and NAFTA together, you get an additional $1,300 to $2,000 a year for the average American family of four. Lower-income Americans bear disproportionate burdens of high tariffs because it affects the prices of their food and their clothes, the appliances that they bear (sic), and they have a higher proportion of their income spent on their consumption.

Ross Perot made the point that NAFTA would create a sucking sound. And the real sucking sound has been a boom of exports from the United States to Mexico. President Bush just returned from a G-7 meeting in Genoa. Canada was there as well. And it was striking to me when I looked at the export statistics of the United States with Mexico and saw that the United States exports more to Mexico than it does to the four European members of the G-7 -- Britain, Germany, France and Italy.

Overall, U.S. exports to NAFTA increased 104 percent between 1993 and 2000. And to give you some benchmark on that, that was twice as fast as our exports to the rest of the world. NAFTA supports 900,000 new jobs. And on average, jobs in trade pay an average of 13 to 18 percent higher. And all three of us can speak of the benefits that global trade provides in a win-win fashion.

As you know, there's a debate in Congress going on at this very moment on Mexican trucks. It's another assault on NAFTA. In my view, it violates the spirit of NAFTA by holding Mexico to a different standard than it holds Canada and the United States. I believe the American people are fair-minded, and when the story is told in pursuing road safety, I think they will agree that we should set the same high standards for all vehicles on our roads.

Let me make five specific points about this meeting. First, the session itself signifies the close cooperation among Canada, Mexico and the United States. We haven't had a meeting of the NAFTA Free Trade Commission since 1999, and we haven't had one in the United States since 1997. We've agreed to hold our next meeting of this commission in Mexico next year. You will see that we released a brief communique and a short publication about NAFTA at seven, some of the information about what NAFTA has produced. We also provided to you a copy of a speech that I gave the end of last week about NAFTA and its benefits for the Mexican people, the American people, and as a model for North-South relations.

Second, we agreed on some reforms of Chapter 11, which, as many of you may know, are the investment provisions dealing with investor state relations. There are really three parts to this. First, we agreed on some improvements in the area of transparency because we believe that it's important to clarify for the public the processes that take part under this chapter in disputes, and in particular we focused on the public release of documents to make sure that people have an awareness of the elements that go into these decisions. And we agreed to consider other possibilities to increase transparency in the future.

We also agreed on two interpretations of what's called the General Treatment Clause because of some of the questions that have arisen in the cases. And this is a clause that, to paraphrase, says that we should accord to investors fair and equitable treatment in accord with international law. There have been issues raised by parties in these cases about the interpretations of that. And under NAFTA, the three trade commissioners have the authority to issue interpretations, and so today we are signing agreement that clarifies terms that first points out that the customary international minimum standard of treatment, which we are adopting through this, does not create a new legal standard. We are using the customary legal standard as opposed to creating a new one, as some litigants have argued. And we have clarified that the terms do not incorporate obligations under other provisions of NAFTA or other international agreements, as some litigants have sought to pursue. And these interpretations will apply to cases that are currently outstanding as well as future cases. And we've also agreed, as part of the need to keep NAFTA a living, breathing organism that adjusts to the future, that we'll consider other interpretations as necessary.

Third, we are working on a possible acceleration of tariff cuts to zero in certain categories by next year. As many of you may know, the United States and Canada under the U.S-Canada FTA are already at zero. That's not the case with Mexico. We're supposed to reach zero by January 1, 2003, but we're looking to see if in some categories by the end of this year we could move to zero more quickly.

Fourth, we had some work done on the rules-of-origin issue. As many of you know who cover trade, this is a technical topic, but one that's extremely important because it goes to the nature of what is considered a good, in this case, of North American origin. It has a lot of effect on businesses in terms of the paperwork and the nature of their production. As you see in the communique, we made some modest adjustments already, and we've agreed to discuss other possibilities in coming months that reflect changes in the trading system and changes in business models.

And fifth, in the spirit of the closer trade and economic and political relationships among our three countries, we talked about our common interest and strategy in terms of the global round of the WTO, the Free Trade Area of the Americas, and APEC.

So we managed to get a lot done. I want to thank our staffs of all three countries for the preliminary work that was put forward in this. And so I'll first ask Pierre and then Luis if they would like to make some comments.

MIN. PETTIGREW: Well, thank you very much, Bob. And I won't add very much because you've indeed covered very extensively and very well the fruitful, constructive meeting we've had this morning. It is true that we hadn't met in a while, and I believe it is is a very good thing that as a commission we met We have had the opportunity of meeting occasionally, the three of us together, and that was always very helpful, but meeting as a commission is a very important contribution to NAFTA because we have to overview the work of about 30 committees. There are about 30 committees and working groups of NAFTA making this agreement alive all the time and adapting to the needs of our economies and of our societies. So indeed, meeting as a commission is a very important way to demonstrate that NAFTA continues to evolve.

It's been very good. And I want to support what Ambassador Zoellick said; trade is not a zero-sum game. And I think that all countries have benefited a great deal of NAFTA. Certainly from the Canadian point of view, there is no doubt in my mind that NAFTA has been extremely good. And in our case, too, the numbers that Ambassador Zoellick gave about U.S. exports being more important than to -- very important European countries, we could certainly say the same thing about Canada, you know, within NAFTA. It is an absolute foundation of our international trade.

We remain, of course, completely committed to the WTO, which is the cornerstone of our international trade policy, clearly. However, NAFTA is extremely helpful. It's been very good to Canada. It is now seven years old, and I am pleased that it continues to improve with age, like a good wine. And I am in particular thinking of the Chapter 11 improvements that we are making this morning. I am very grateful to both Luis and Bob that we've been able to do this work together. All three countries are now moving constructively on both transparency and clarification of Chapter 11, which is a very important element of our work, that chapter on investment.

So basically, let me just conclude by saying that I have really appreciated very, very much our commission this morning. I am already looking forward to a commission meeting next year in Mexico, and I appreciate the -- I'm grateful for the regularity that we've committed to this morning.

(Repeats remarks in French.)

MR. DERBEZ: Everything that Pierre said in French goes the same in Spanish. (Laughter.) So I just want to thank Bob for an excellent meeting. I think that this is the spirit of cooperation that will be important in the future as we face some of the issues of the NAFTA implementation. I think that the treaty has proven to be good for the three countries. I think that it has also proven that we have to maintain these meetings so that we can iron out some of the small difficulties that will be present from time to time.

NAFTA works, and it has been shown to the world that when you open your economies and you have a free trade agreement, the reward is going to be success, growth, employment and better products and better quality of the products for the consumer buying them.

Thank you.B. ZOELLICK: So we'd be pleased to take your question, and I'd just ask if you would direct to whichever one of us you would like to -- (audio break) --

Q (Off mike.)B. ZOELLICK: Well, since Luis had some suggestions on improvements in borders, maybe I should invite him to go first.

SEC. DERBEZ: Thank you. Yes, we discussed, you know, what really becomes now an important issue, which is the implementation process itself in terms of how do you facilitate trade between countries. And that means that we have to improve the customs systems, make it more easier for the three countries, so that we can in a way, as the merchandise trade keeps growing, make it easier for everybody to do it that way.

We have agreed to set up a study group that will be looking at these issues. It will have then to be taken with each one of the agencies that will be involved, because as you know, it will be not only the ministries that we represent in this case, but also in our case, the minister of finance through the customs office and see what we can do.

We agree that we'll be working on that, that we'll be looking at some of those issues, and that as we move in that process, it will have to imply trilateral operations so that we can do it in a better way.

MIN. PETTIGREW: Yes, you know, anything we can do in order to facilitate trade is very important. But Luis is quite right, that it involves other agencies than our own respective departments. So we will make sure that we identify problems clearly, concretely, and that the people responsible beyond trade ministries -- in our case, in Canada, as you know, it's Treasury and the Customs Agency, sometimes Finance, but there are a number of players.

It could be Health, as well. So we will be continuing to try to improve, to facilitate trade between our three countries.

Q (Off mike.)B. ZOELLICK: Let me try to answer your first question, and integrate an answer to the second, and invite my colleagues to add to it.

I think what Minister Derbez was raising is very important, because what it reflects is the deeper integration that cuts across a whole host of issues. And in that sense, I think part of our message is how NAFTA is much more than a trade agreement, but it is a form of creating a North American community, in this case, I think, in contrast with the European Community, one that has a heavy emphasis on private sector networks, and I don't just mean business, but I also mean NGOs and others. We talked about the vital area of Customs in trade facilitation to help reduce the cost.

But I want to also emphasize another part of our border cooperation among all three countries, and that's on other transnational issues, whether they be environment, where I know the United States and Mexico has worked on a series of issues related to species crossing borders, as well as transborder pollution issues. I remember, frankly, the last time I was in government, the issue that was related to the Montreal Protocol and some of the questions of acid rain that were very important in the U.S.-Canadian context.

I do believe we still have three sovereign countries, and politically our legitimacy flows from the electorate of each country. I'm delighted to say that we now have three closely functioning democracies in our countries. And so the challenge is how to create this cooperation in a mutual fashion that reflects the political interests and demands of all countries. At times, there undoubtedly are disputes and differences. I, personally, am committed to frequently crossing the Canadian border to observe it myself because I go up to a cabin -- or cottage, as it's said, in Ontario.

MIN. PETTIGREW: Let me maybe add to this. I mean, you know, I am also very grateful to Secretary Luis Derbez for his leadership on this issue, because we need to facilitate that work. But let's be clear, what we have now between our countries is a free trade agreement, it is not a customs union. And when you have a free trade agreement, we must do everything we can to facilitate, of course, the crossing of the borders for goods, services and persons as well, persons who need to serve their clients on all sides of the economic professions. But this is not a customs union, so there is a need for a border between our countries as we have not the same level of integration that the European model has adopted, for instance.

Q (Off mike.)B. ZOELLICK: Well, let me start, since this is an issue that Minister Pettigrew has promoted over time, and maybe let him speak first on it, and then we'll respond.

MIN. PETTIGREW: Well, thank you very much. Yes, it is an issue, of course, on which Canada has had strong views for some time. And as I say, I'm very grateful to Secretary Derbez and Ambassador Zoellick for having accepted to consider it, and now to contribute to improve this important chapter that has been working reasonably well, but that has encountered some difficulties in some corners. And I think that by these interpretative clauses that will be affecting all cases pending, and future cases, will indeed be, I believe, better serving our three communities. So we will be signing today, as soon as the translations are ready, a declaracion -- is this the term, is it a declaracion? -- that the three ministers will be sending, and that will be binding to the panels looking into these Chapter 11 cases.

SEC. DERBEZ: Just to complement. The word you used was "catalyst." I mean, basically, with the change of government in Mexico, we don't have the concern; that these issues of transparency should be transparent. So what we are doing is just following what we predicated during the whole campaign and the result of the election. And we have agreed that it makes sense to be transparent in these processes. So the resistance that you were mentioning came mostly in the past from the Mexican government is no longer there, so we are now working on how to put it together so it will make sense in the future.B. ZOELLICK: And let me just add a couple of thoughts on this. One is, you know, I -- speaking for myself, but I think for all three of us, we believe the investment provisions are critical provisions in this agreement, and they are part of what adds to the economic quality of this agreement. But we're also very aware that there have been fears and anxieties related to a number of these cases. Frankly, a lot of the fears and anxieties, in my view, are groundless; just as you can bring cases in American courts and it doesn't mean that you're going to -- (off mike). But nevertheless, they've created a more antagonistic environment towards trade and investment.

And so here I want to particularly compliment the new Mexican government, that's openness on transparency issues was the key for us moving that forward, and I think all three of us believe, and Mexico has been helpful in this in the WTO context as well, is that we need to improve the transparency and openness of these institutions so, frankly, as to let the sunshine overcome some of the fears and concerns.

On the substance, I would say that, again, perhaps a difference on the United States side is, is that we're not frozen on these issues. People were so fearful of this topic they couldn't engage on it. And frankly, we looked at these issues in the general treatment and looked at the litigation and agreed with our colleagues that people were putting forth theories that none of us agreed with. That's what lawyers get paid to do. And -- but nevertheless, we thought it would also deal with some of the substantive concerns by clarifying the intention of these provisions.

And just the final point on this is that if you want to make NAFTA an active, growing, evolving structure, as all three of us are committed to do, this is what we're about, whether it deals with additional tariff cuts, rules of origin, things on the border, we talk with Mexico about NAD Bank issues, but we are committed to this North American community. It's a good example of U.S. multilateralism.

Q (Off mike.) B. ZOELLICK: Let me try to answer this question this way, and then let my colleagues respond.

I'm not a member of the arbitrable panels that will be deciding those cases, so it would be inappropriate for me to apply it. But I think for those of you with such newsletters that have looked closely at these cases, you have undoubtedly seen in the presentation some of the arguments that people have made, and you'll see how these clarifications might improve the understanding of what we are authorized under NAFTA believe are the interpretations.

Q (Off mike.) B. ZOELLICK: Well, let me start. I think what we've done on this is the United States has followed its procedures and Canada has followed its procedures, which vary, to suggest categories that we would be willing to move forward with zero.

And these are categories that are published in the Federal Register. I could just give you a sense that in the past, under prior accelerations of NAFTA tariffs, they've accelerated duty restrictions on roughly about $3 billion of trade, past ones. And with the U.S.- Canada FTA, we've accelerated about $9 billion. So this is a process that's been ongoing. So ours in the public record. I think the Canadians have a similar process. And we're in the process of discussing with Mexico its willingness to consider the ones we proposed and ones that they would like to propose.

SEC. DERBEZ: Just if you want a few categories -- I mean, we are proposing that we will bring this list forward in the next two weeks, but, you know, examples will be shoes, that we would like to have, you know, a zero tariff on the exports from Mexico to the United States and Canada, ceramics, things of that sort. So we are putting all these things together. And what it will be, we will be providing a list. They already have a list that has been published, as was mentioned by Ambassador Zoellick. So you just put all these lists together, there will be a quick discussion, and then the acceleration will take place.B. ZOELLICK: Just to further expand that, I have footwear, instruments and heavy machinery as examples.

Q (Off mike.)B. ZOELLICK: Well, this is always the challenge of free trade, which is that the benefits are generally -- are felt generally throughout the society and the adjustments are often felt in specific sectors and in sensitive sectors. And there are a number of approaches that President Bush is and the administration is taking. First, which this meeting is a living representation of, is that we're not running away from NAFTA. We're making the argument on why we believe it's been excellent economically, politically, socially for all three countries and how we believe it's not only a thing of the past but something of the future.

Second, on particular items, we will resist those that take a protectionist course. And the president couldn't be more clear on this, on the whole issue of trucks. We are totally in agreement about the fact that trucks in the United States from whatever country and drivers from whatever country need to operate in a safe fashion. Frankly, however, some have used the safety issue for other purposes.

I was talking with Minister Pettigrew about the fact that if you look at the record, the most safe trucks are Canadian. So perhaps we should just have Canadian trucks. (Laughter.)

MIN. PETTIGREW: And I support that. (Laughter.)

AMB. ZOELLICK: You will be shocked that he joined me in that. (Laughter.)

In fact, and just to give a moment on that, some of the numbers that people have put on this are pretty disingenuous. It turns out that under the constrained rules of NAFTA so far, as you probably know, the Mexican trucks are limited to about a 20-mile border zone. And so when people have come up with the percentage of Mexican trucks that have been inspected, they keep counting the same truck over and over again even though it goes through basically a haulage over the past 20 miles. And so when you actually take the number of Mexican trucks operating in the United States is about 63,000, 43,000 have been inspected. That's an inspection rate of 73 percent, in contrast with the 1 percent that has been used because I guess they expect us to inspect the same truck as it goes over the border a number of times. In contrast, of the 8 million registered trucks in the United States, 2.3 million have been inspected, so that's 28.7 percent. So the inspection rate is about almost three times as great for Mexican trucks. So part of this is that people use these issues for other purposes.

A third element is exactly what we're doing today, is that we're going to stand for additional liberalization, whether it be dealing with tariff acceleration or rules of origin, where we can.

And a fourth part, I think, is the fact, you know, that President Bush's first state visitor will be President Fox of Mexico. He, obviously, started out his tenure by going out to President Fox's ranch. And so we want to emphasize the type of community we want to create with our two friendly neighbors that share, you know, thousands of miles of common border. But it won't be easy. And so it's a never-ending effort to maintain the vigilance on this.

Q If I could follow on that, what does this fight over trucking tell you about the broader political climate on the Hill for the administration's trade agenda? When you reach that moment when you go ahead with TPA, other issues, what have you learned about what awaits you as a result of this fight that we're going through now?B. ZOELLICK: I think one has to be careful about drawing too broad-based a message on this. And let me just give you another example. We just had a vote on the China normal trading relations issue, which used to be an extremely contentious issue, and this time it was barely a problem, even though a couple months ago people thought that it was going to be another difficult issue.

And so you can read different votes in the Congress on different things. What it tells me -- and this relates to the question -- is, is that some of those who basically took protectionist positions had organized themselves well; they had organized themselves well enough that the prior administration didn't fulfill our legal obligations for a number of years; and they organize themselves most effectively when they can find a cover for protectionism.

And that's why it's important for -- on this issue or any other issue, that we who promote free trade be ardent in dealing with the concerns that they raise -- for example, safety -- but also be ardent in pointing out when the arguments are fraudulent and misleading.

And so the last point is, is that if you're going to promote free trade, you have to be vigilant and ever active. And one of the problems that I've spoken about in other contexts is, is that I compliment our predecessors for their work in '93 and '94 with the passage of NAFTA and the passage of the Uruguay Round, but then they basically left the field open for a number of years, and in the area of trade, if you do that, other people will define the issues. And that's one of the reasons why President Bush is committed to trying to regain momentum for free trade.

Q (Off mike.) B. ZOELLICK: Could you just explain where you're from, your name?

Q (Off mike.)B. ZOELLICK: Okay.

Q (Off mike.)

SEC. DERBEZ: (In Spanish.)

Q (In Spanish.)

SEC. DERBEZ: (In Spanish.)

Q Could you just -- (off mike) -- in English?

SEC. DERBEZ: Sure. (Laughter.)

Yeah, the question was -- you know, the question was, what will be the action if? The answer is, there is no "if" in this case. There is a very clear position from the administration of President Bush and Ambassador Zoellick where they are doing all the actions required to see that the treaty will be fulfilled exactly as it has been worded. And the Mexican administration is satisfied at this point in time that what is happening is this clear definition from the Bush administration going for the integrity of the NAFTA treaty. We are satisfied, and therefore, there is no action contemplated at this point.

Q Would you like to do that in French, as well? (Laughter; cross talk.)

(Off mike.)B. ZOELLICK: Let me start. As you know, the initiative that President Bush took on steel included, first, the investigation by the ITC of the -- under the safeguards provision, which I might again emphasize, for those who don't know, is an accepted WTO provision, as long as you follow the rules. But it also included international discussions about the issue of capacity and the issue of practices. And we have been consulting bilaterally with a number of our other partners, and we are now looking at the possibility of trying to pursue the issue of capacity first of all in an OECD context, perhaps later next month as a possibility.

And then I think the other questions were directed to my colleagues.

MIN. PETTIGREW: Well, on this -- Canada does not believe that its steel exports to the United States are causing any injury to the U.S. industry clearly, and we have informed the U.S. authorities of our strong views on several occasions on that front. And we will, as a government, continue to work very closely with Canadian industry to ensure that Canadian imports are exempted from any trade restrictions under Article 802 of NAFTA.B. ZOELLICK: I might just add, for the Canadian audience, that the head of the steelworkers who I deal with is a Canadian.

Q (Off mike) --

SEC. DERBEZ: Just let me point out, I'm sorry. I fully agree with Minister Pettigrew. I mean, exactly the position of the Mexican government is that we have talked to our counterparts in the United States, and particularly with Secretary of Commerce Evans, talking about this situation, and indicating that we don't believe that the exports represent any damage to the United States economy.

Now, what is more important is that the private sector participants in this case are talking among themselves, and I think there will be a common position of the private sector of the three countries. And that, to me, really indicates that under NAFTA, you know, agreements and the things that we have been doing working together, the private sector of the three countries now see each other eye to eye and work together in solutions.

Q But what about concerns that -- (off mike) --B. ZOELLICK: Excuse me, I think -- (off mike) --

Q (Off mike.)B. ZOELLICK: No, that's an excellent question, and we talked about that more generally. Given the fact that we are having a deeper integration of these economies, and given the extent of trade and shared jobs based on one another, it -- frankly, it's not at all surprising to me that we have conflicts and friction. The question is, do we have procedures to try to resolve those? And this is true under the international -- the global system as well as under a system dealing with North America. Businesses have disputes with each other. (Chuckling.) Some families even have disputes with each other! It's a natural sort of aspect of interaction.

And the question is whether you can try to follow rules in dealing with those issues, and that's what we do on these. We have cases where, you know, our trading partners feel the United States has taken actions that they want to challenge, and we accept that; and we have ones of the other kind. So this is not going to change in terms of the nature of investment and trade interaction. We tend to have the fewest trade disputes with countries that we have no interaction with.

So, I think with this --

Q Can I ask one quick follow up?B. ZOELLICK: Sorry, you missed it.

END

LOAD-DATE: August 1, 2001