Copyright 2002 FDCHeMedia, Inc. All Rights Reserved. Federal Document Clearing House Congressional
Testimony
April 16, 2002 Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 3491 words
COMMITTEE:SENATE FOREIGN RELATIONS
SUBCOMMITTEE:
WESTERN HEMISPHERE AND PEACE CORPS AFFAIRS
HEADLINE: U.S. MEXICO RELATIONS
TESTIMONY-BY: GREG LEBEDEV,, CHIEF OPERATING OFFICER AND
EXECUTIVE VICE PRESIDENT
AFFILIATION:
INTERNATIONAL POLICY, U.S. CHAMBER OF COMMERCE
BODY: Statement of the U.S. Chamber of Commerce
ON:"STRENGTHENING U.S.-MEXICO RELATIONS: THE UNFINISHED
AGENDA" TO:SENATE COMMITTEE ON FOREIGN RELATIONS
BY:GREG LEBEDEV, CHIEF OPERATING OFFICER AND EXECUTIVE VICE PRESIDENT
FOR INTERNATIONAL POLICY, U.S. CHAMBER OF COMMERCE
DATE:APRIL 16, 2002
The Chamber's mission is
to advance human progress through an economic, political and social system based
on individual freedom, incentive, initiative, opportunity and responsibility.
Statement on "Strengthening U.S.-Mexico Relations: The
Unfinished Agenda" before the Senate Committee on Foreign Relations Subcommittee
on Western Hemisphere, Peace Corps, and Narcotics Affairs for the United States
Chamber of Commerce by Greg Lebedev April 16, 2002
Mr.
Chairman, thank you for allowing the United States Chamber of Commerce to submit
this statement today. I am Greg Lebedev, Chief Operating Officer and Executive
Vice President for International Policy at the United States Chamber of
Commerce, which is the world's largest business federation. On behalf of our
three million member companies of every size, sector, and region, I appreciate
this opportunity to comment not only on the spectacular success of the
U.S.-Mexico partnership over the past decade but on the unfinished agenda our
two countries face today. My testimony will address three major areas in the
U.S.Mexico relationship: trade, border management, and migration.
A Decade of Progress
First, I
would like to survey the dramatic improvements in this vital relationship in
recent years. The tremendous progress in U.S.-Mexico relations over the past
decade is a bipartisan success story. The first U.S. President named George Bush
changed the relationship between our countries forever by proposing and
successfully negotiating a completely new economic partnership under the North
American Free Trade Agreement (NAFTA). Likewise, President Clinton
deserves credit for his leadership in making the case for NAFTA's passage
before the Congress and for standing by Mexico during the 1995 financial
crisis.
But more than his predecessors, President
George W. Bush has signaled a new perspective on the U.S. relationship with
Mexico. By choosing Mexico as the site of his first foreign trip as president,
President Bush showed that Mexico and the other nations of the Americas would be
a principal focus of his administration's foreign policy. Mexico's President
Vicente Fox shares this commitment to finding new approaches to longstanding
challenges.
The key to the progress of the past decade
is clearly the enormously successful North American Free Trade Agreement. In the
eight years since the NAFTA came into force, trade between the United
States and Mexico has nearly tripled, with bilateral commerce topping $245
billion last year.
The explosion in U.S. trade with
Mexico has allowed U.S. companies to generate hundreds of thousands of new jobs.
By one calculation, the boom in U.S. exports to Mexico alone generated over one
million new U.S. jobs, to say nothing of new jobs created south of the Rio
Grande. Indeed, NAFTA was one reason why the U.S. economy generated over
20 million new jobs in the 1990s. There has been no giant sucking sound - just
the noise of three nations working together, raising incomes, and building a
prosperous, shared future.
Also, the NAFTA has
boosted international investment. By 2001, U.S. companies had direct investments
worth $35 billion in Mexico. Among emerging markets, the level of U.S.
investment in Mexico is second only to Brazil (by less than $1 billion) and is
more than four times the amount U.S. companies have invested in China. Partly as
a result of this new flow of investment, Mexican sovereign and corporate debt is
receiving investment grade ratings from international agencies, and Mexico has
paid off all its IMF debts years ahead of schedule.
After growing by nearly 8% in 2000, Mexico today has followed its
northern neighbor into a recession, but it is a North American recession
characterized by a contraction of less than 1% of GDP. It is not a classic Latin
American recession, in which economies can contract by 5-10% of GDP. North
America is moving toward a true single market.
NAFTA's Unfinished Agenda
But more can
be done to enhance the value of the trade and investment partnership Mexico and
the United States are building. Our two nations took a step forward a year ago,
when the U.S. Overseas Private Investment Corporation (OPIC) announced that it
would offer long-term financing to small U.S. businesses investing in Mexico.
This was a historic decision because OPIC support was not available to U.S.
companies operating in Mexico until now. President Fox welcomed OPIC's
announcement, which comes in response to strong demand by U.S. businesses to
expand into the Mexican market.
At present, OPIC is
authorized to lend from $100,000 to $200 million for small business projects in
Mexico in which U.S. businesses have at least a 25 percent ownership interest.
However, the business community is still waiting for an inter- governmental
agreement to allow OPIC to provide a complete array of investment services to
U.S. companies operating in Mexico. Over 140 countries around the world have
signed such agreements with the United States, but outdated concerns in the
Mexican Congress about such an agreement infringing on national sovereignty have
made Mexico one of just a handful of countries where OPIC services are not
generally available.
It's time for to leave these
antiquated views behind. Thanks to its free trade agreements with 32 nations,
Mexico is already showing the world that free trade is an engine of prosperity.
Outmoded thinking should not stand in the way of mutually beneficial trade and
investment.
One item that some critics of NAFTA
believe ought to be placed on the "unfinished agenda" for further work is the NAFTA's Chapter 11. Even some members of Congress have criticized
Chapter 11's "investor-state claims" process, asserting that
it gives foreign companies rights that are denied to U.S. firms. What these
critics overlook is that the United States is by far the biggest beneficiary of
investor-state claim mechanisms. Such mechanisms are included in literally
hundreds of bilateral investment treaties around the world and are an
established and beneficial part of international commercial jurisprudence.
Why is the investor-state claim process so important to
the United States? First, because the United States is the world's largest
overseas investor, with annual sales by overseas affiliates of U.S. companies
surpassing $2.5 trillion, a level roughly two and half times that of our
merchandise trade. While foreign investors in the United States can count on our
legal system to ensure due process, U.S. investors in many foreign countries
cannot enjoy similar security without effective treaty provisions. This is why
such provisions have been included in 45 U.S. investment treaties with other
countries. Even as we speak, U.S. investors in Argentina are invoking the
investor-state claim process laid out in the investment treaty between the
United States and Argentina, to the great benefit of U.S. companies and
workers.
Let me repeat this crucial point: that the
United States is the primary beneficiary of these protections against
discriminatory treatment. Rules permitting investor-state arbitration grant U.S.
investors access to an impartial, independent decision-making body when they
make claims against foreign governments for breaking rules established in trade
agreements and investment treaties. Why the United States should want to rewrite
these rules is unclear, and the U.S. Chamber urges the Congress to think long
and hard before making any changes to Chapter 11.
An additional area where our two countries are just
beginning to live up to the NAFTA's promise is cross-border trucking. The
U.S. Chamber of Commerce was pleased last year when the Bush Administration and
the Congress reached a consensus on legislation that will allow the United
States to live up to its NAFTA commitments on cross-border trucking.
Under NAFTA, the United States and Mexico pledged
to liberalize cross-border trucking, but the United States retains full
authority to inspect - and reject - trucks that do not meet U.S. safety
standards. However, beginning in 1995, the Clinton Administration hid behind
safety standards to deny Mexican trucks entry to the United States. That policy
maintained a cumbersome, environmentally damaging, and costly system that has
put a brake on further trade growth. With over 80% of our trade moving by truck,
neither country can afford to block our trucks at the border.
In the wake of a NAFTA dispute panel ruling that unanimously
found the United States in violation of the agreement, President Bush has pushed
forward with plans to bring our country into compliance with our solemn
commitments under NAFTA. The Department of Transportation has rolled out
regulations that will allow the United States to do just that beginning in the
second half of this year.
Clearly, the time has come
for our countries to open our borders to a modern cargo transportation system
that will allow our economic partnership to reach the next level of success. We
must insist that our countries make adequate - and smart - investments in border
infrastructure to accommodate the ever-expanding volume of trade.
A Secure and Efficient Border
Border Management has become not just a buzzword in Washington but also
an imperative in the wake of September 11. In many ways the renewed focus on the
operations of our borders has been a boon - for too long policymzakers in
Washington have paid little attention to the functioning of our borders, or,
when they did, it almost always dealt with stopping the flow of illegal
immigration or contraband. Little has been done over the past decades to update
our border management policies, border infrastructure or staffing to facilitate
the millions of legitimate travelers and billions of dollars in legitimate trade
that crosses our borders each day. Specifically, over 800,000 people cross the
U.S./Mexico border each dav. That includes 250,000 personal vehicles and over
12,000 trucks. Truck trade with Mexico amounted to $171.1 billion in 2000.
As I stated in the first part of my testimony, under
NAFTA, these border crossings represent a significant portion of our
international trade and our domestic economy. While we must ensure our physical
security and protect our country from the devastation that could be caused by
another terrorist attack, we must also protect our economic security, and ensure
the continuation of the legitimate travel and trade at our borders. We must
remember that the terrorists also targeted our economy when they struck at our
national symbols.
In the wake of the September 11
attacks, our nation's ports of entry have been on a Level 1 Security Alert. This
increased security has meant that commercial and passenger traffic at our
nation's land borders has been subject to increased scrutiny. While this
security is necessary, it has also resulted in significant disruptions to the
normal course of trade and travel across our borders.
In December, the Chamber conducted a survey of local and state chambers
of commerce on the Mexican border to assess the economic impact of the post-9/11
security measures. Every locality reported significant delays immediately after
the attacks. Delays have gone down since then as Customs and INS have been
operating on 14-16 hour shifts, mounting uncountable overtime hours, and
stretching resources to the limit. National Guard and local law enforcement have
been called in to assist with managing the traffic flow. But even so, border
crossings are still down as much as 30% in some areas and local economies that
are heavily dependent on the border traffic are continue to suffer. We are
gravely concerned that the current border situation is unsustainable in the long
term.
In response, the U.S. Chamber has created the
Americans for Better Borders (ABB) coalition. The coalition brings together over
100 regional business organizations, companies, and national trade associations
representing manufacturing, hospitality, tourism, transportation, recreation and
other industry sectors to work to ensure the efficient flow of exports and
tourism across our borders while addressing national security concerns.
The Chamber and ABB support S.1749, the Enhanced Border
Security and Visa Entry Reform Act, sponsored by Senators Kennedy, Brownback,
Feinstein and Kyl, which we believe takes good, reasoned steps toward security
while ensuring the continued flow of legitimate travel and trade. The House
passed a version of this bill in December and we urge the Senate to do so as
well.
But this bill is only a first step. We cannot
address our border security from our side alone. We must work in concert with
our neighbors. The Bush Administration has acknowledged this need and has moved
forward in a positive way to address border issues by engaging Canada and Mexico
in the creation of "smart border" accords. The 22-point accord with Mexico,
announced during President Bush's trip to Monterrey last month, commits the
United States and Mexico to moving forward on an expedited clearance program for
shipments by firms that participate in enhanced compliance regimes, dedicated
lanes for frequent border crossers with "smart cards," and exploration of joint
border infrastructure.
This new agreement also provides
a framework for future border cooperation and communication between the United
States and Mexico.
Many in Congress and in the
Administration have also urged the creation of a new border agency to achieve
the dual goals of improving security and facilitating trade at the border. The
Chamber is supportive of all measures that would move toward those two goals,
but we do not favor reorganization for the sake of reorganization alone. Any
agency consolidation or reorganization should be undertaken with specific goals
and outcomes in mind. We are also aware of the good work being done at the
agencies now toward improving border processes, and we would not want to see
those efforts derailed in the rush to make organization changes. It is a
daunting challenge to reform both the procedures at our borders and their
management oversight at the same time, and in an urgent manner. But let me say
this clearly - when it comes to our borders we cannot afford to make mistakes.
So we must think carefully about all such moves and gauge their impact before we
undertake them.
The Chamber can serve as a forum for
bringing together lawmakers and policymakers with the private sector to
accomplish these objectives. Later this month we will host a daylong forum with
Members of Congress and representatives from business and academia to discuss
cargo security and how to achieve the dual goals of security and efficiency. We
would like to work with Congress and the Administration on any broad reforms of
border oversight that might be proposed.
Creating a
Legal Migration Framework
Although the challenges of
border management are enormous, arguably the biggest area of "unfinished
business" in the U.S./Mexico agenda is migration.
The
United States and Mexico share almost 2,000 miles of border in addition to
cultural, historic, economic and familial tithes that go back generations. The
links between our economies also extend to our workforce. These factors have
resulted in the patterns of migration that have evolved over centuries. And yet
our legal and regulatory mechanisms have been largely out of step with this
phenomenon, resulting in terribly unfortunate consequences: millions of people
living and working in the U.S. without legal status, but building our
communities and economy; hundreds of people dying each year on our border trying
to achieve the same American dream; and a thriving criminal underclass to take
advantage of this system.
It is time for us to
seriously address this reality. We need comprehensive, fundamental change in our
immigration system - not just more small band-aid fixes that create more
problems than they solve. We need to make it legal for, as President Bush says,
"willing employers to get together with willing employees."
And once again, President Bush has shown leadership in this difficult
area. He and President Fox announced in February 2001 the creation of a
High-Level BI-National Working Group on migration, and tasked these senior
cabinet officials with developing a new immigration framework for the United
States and Mexico. We have supported these discussions from the beginning.
Last fall, in fact only four days before the terrorist
attacks, U.S. Chamber President and CEO Tom Donohue testified before the Senate
Judiciary Committee, along with AFL- CIO president John Sweeney and
representatives of the Hispanic and religious communities to urge comprehensive
immigration reform in the course of the U.S./Mexico dialog. And, last Thursday,
these groups came together again for the first time since the attacks to renew
their call for immigration policy reform. We continue to state reality: we need
these workers and they are not going anywhere.
Month-to-month changes in the unemployment rate have not changed the
fundamental reality that America's population is aging and our pool of available
workers is shrinking. According to the Bureau of Labor Statistics, by 2010 we
will have 167.8 million jobs, a more than 15% increase from current levels. But
our workforce is expected to grow only 12%, to 158 million, in the same period.
And the median age of the workforce will be over 40 years old! We need to change
our policies, make legal immigration the norm, and expand-not limit-immigration
to meet our labor needs.
New immigration policy must
satisfy three important requirements.
First, we need to
address the need for employers to hire foreign workers legally when U.S. workers
are not available. We need to allow employers to fill jobs quickly and workers
to have the rights and dignity that come from having legal status.
Second, we need workable temporary and long-term visas. We
need to create new visas that go beyond seasonal needs and that have streamlined
processes that do not create additional, unnecessary burdens. We also need to
assure that everyone is playing fairly: offering the required wages, looking
first within the U.S. and treating workers well. We need a system that is
flexible to allow employers to train and promote these workers, to allow workers
to find the best employers for them, and for both employers and employees to
make the arrangement permanent, when both agree.
And
third, but possibly most importantly, we need to address the status of those who
are already here and contributing to our economy. We believe that those who have
already demonstrated their commitment to the United States by living here,
working and paying taxes, should have a means by which they can earn permanent
residence. There are many possible ways to accomplish this that are being
discussed by the policy-makers; but we simply want to ensure that these
individuals can continue their contributions to their employers and
communities.
Now there will be some who will say that
in light of the terrorist threat against us, how can we propose such a broad
expansion of our legal immigration system. The Chamber has been at the forefront
of creating a security framework in which business can continue to operate and I
would argue that immigration reform is fully consistent with our national
security imperative.
A regulated, structured
immigration system will tell us who is coming to our country, where they are
living, and assure us that they are not terrorists. We need to bring into the
light hard working, upstanding immigrants who deserve protection under our laws,
while exposing criminal gangs and terrorists that use the current system to
their advantage.
The relationship between the United
States and Mexico cannot flourish with this large issue remaining unaddressed.
As Tom Donohue said on Thursday to President Bush, President Fox and Congress:
"Do it. Work it out. And we ... will be here to work with you. But don't leave
this unfinished business."
Conclusion
In conclusion, Mr. Chairman, the U.S. Chamber of Commerce believes, as
the President does, that we have no more important relationship in the world
than with our neighbors in Mexico, and we need to do all we can to perpetuate
and strengthen that relationship, through increased trade, secure and efficient
borders and a migration framework that meets the needs of both nations. And we
look forward to working with Congress and the President to achieve those
goals.
Thank you, and I am happy to answer your
questions.
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