The Heritage Foundation

Executive Memorandum #323 on Trade, Economic Freedom

February 13, 1992

February 13, 1992 | Executive Memorandum on Trade, Economic Freedom

U.S. Needs "NAFTA Czar" to Promote Free Trade in the Americas


(Archived document, may contain errors)

2./13/92 323

66N U.S. NEEDS AFTA, CZAR TO PROMOTE FREE TRADE IN THE AMERICAS

Congress last Jui. ne I gave George Bush special authority for an additional two years to negotiate the free trade agreement with Mexico and Canada called the North American Fr ee Trade. Agreement (NAFTA). Since-'ffik-tire free trade opponents have been making pointg.in Congress against the proposed -accord. Election year p6liticsand the recession combine to threaten passage -of the NAFrA this' year or even next, unless thd Bush Administration campaigns more *aggressively for the NAFTN. To avoid a setback for free oadiih this. hemisphere, the Bush Administration should appointan - Adibassador-At-Large, or "NAFTA .C . zar,-to-coordinate the public efforts of the federal agencies i n educating -Congress and the American peo- plebn the benefits of expanding free trade in North America, organize the American business community in ..support of the NAFTA, and give direction and assistance to.a grass roots, campaign for a NAFTA. The impor t ance of a North American Free Trade Area cannotbe understated':The NAFTA will create a free trade zone linking the United States to its first (Canada) and third (Mexico) Jargest trading partners. This zone would have a combined output of $6 trillion and a consumer market of .360 million people. Most important@ the NAFTA would help America stay internationally competitive. A NAFTA would lower production costs for American firms, helping them to compete against the Japanese 'and Europeans. It also would conv i nce other Latin American countries of the benefits of open: markets-and trade, bringing America closer to a hemisphere-wide free trade area. With the increasing threat of protectionism around the world, -the U.S. must lead as a strong free trade. advocate . The NAFTA will keep America.on that path. Yes or No Vote. Congress understood the importance'of the NAFTA for America when it extended for two more years the President's authority to negotiate under the so-called 'Yast track" procedures. This au- thority had been granted to Bush in the 1988 Omnibus Tmde and COmpetitiveness Act, allowing him to ne- gotiate a trade agreement with minimal congressional interference. Under fast track authority, Congress must vote either to reject or accept the agreement in wh o le:'i,. amendments are not allowed. Thisgives Bush the credibility -he needs to negotiate an agreement with Mexico. The Mexicans would know that promises he makes in the negotiations will not later be changed by Congress. Congress approved the two-year ex t ension of fast track authority last June after intensive lobbying- by the VVhite House, the U.S. business community, Hispanic groups, and other free trade forceq. Yet once -the Ad- ministration received fast track authority and began negotiating the NAFTA , 'the coalition that came to- gether topromote the NAFTA lost momentum for lack of leadership and direction from the@White House. The Bush: Administration hoped to have@ the NAF17A signed and ready to p'resent'to Congress', by early this spring, toinsure C ongress would vote on the agreement this year. Therelare several reasons, however, why the NAFTA probably will not reach Congre Iss fa 'r`a'vot@ this year. First, -under -the fast track provis- ions, which require Congress to deliberate for months b6fore signing an agreement, the Administration - - must present a draft copy of the NAFTA to Congress within the next two months to avoid a partisan vote as

the Novemuer election approaciies. Second, -,nvironmentalists, labor unions, and other special interest groups opposing the NAIFTA will have gmawr influence on Congress because it is an election year. Add to this the sluggish economy that has created a rise in pretectionist rhetoric by politicians like Democrat presi- dentiai candidate and U.S. Senator Joh n Kerry and Republican presidential candidate Pat Buchanan, and the prospects for passage of a NAFTA are weakened. New Battle. The Administration also faces a completely new battle when the NAFTA goes to Congress for approval. Last year's campaign to obtai n "fast track" authority was defensive in nature. Bush received this authority because all Bush had to do was to stop NAFTA opponents from voting against an automatic extension of the authority embodied in the 1988 Omnibus Trade and Competitiveness Act. In contrast, when Bush presents the NAFTA to Congress this year, he will be asking for outright approval of the agree- ment. Gaining just the simple majority required for ratification is more difficult politically than simply try- ing to prevent Opponents fr o m killing the measure, as was the case in last year's fast track vote. since it will be more difficult than before to get congressional approval, it is imperative that Bush com- plete the NAFTA negotiations with the Mexicans and Canadians as soon as possi b le. Delay will strengthen the anti-NAFTA forces unless the Administration does much more to promote the benefits of the agree- ment. Most important should be to appoint a NAFrA "Czar"--a top official who could rally NAFTA sup- ff porters and strengthen th e coalition that supports North American free trade. This o icial could correct a glaring deficiency in Bush's current game plan: a lack of information in Congress, among businessmen, in the media, and in the public at large about the job and competitivene s s benefits of a NAFTA. Even natuml supporters of NAFIA such as multinational corporations, and potential NAFTA supporters such as small and medium size U.S. businesses, have received little sustained support or direction from the Administration in promoti n g the NAFIrA. This is mainly because there is no single person or agency within the Administration responsible for the NAFTA. The Environmental Protection Agency (EPA), the Depart- ments of Commerce, Labor and State, and the Office of the United States Tr a de Representative are the main agencies in charge of working on the NAFTA. Yet they have other mandates and institutional agendas that prevent them from giving passage of the NAFTA top priority. The Trade Representative's office, for example, also is busy negotiating the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), and the EPA's primary mandate is enforcing U.S. domestic environmental laws. Sole Mandate. Since no federal government department or agency can wage a successful public ca m - paign in support of a North American free trade area, Bush should appoint a NAFTA Ambassador-At- Large or "Czar" whose sole mandate is to secure passage of the NAFTA. The Czar's responsibilities should be: 1) to coordinate the public efforts of differen t federal agencies toward passage of a NAFTA; 2) to edu- cate U.S. business previously uninterested in free trade matters, such as small to madiurn sized companies, on the opportunities for growth under a NAFTA; and, 3) to direct efforts of other private o r ganizations, such as those in the Hispanic community, in organizing grassroots support for the trade agreement. For the NAFTA Czar to win cooperation from the various agencies, the office of NAFTA Czar should report di- rectly to the President. This will p revent any agency within the Administration from controlling the NAFTA office and diverting it from its primary mission to promote passage -of the NAFTA. At a time when American businesses and America's trading partners are questioning the commitment of t h e U.S. to open markets, the appointment of a NAFTA Czar would be a clear symbol of America's contin- ued commitment to free aide. And it would be much more than symbolic. A NAFTA Czar could become the key to turning the NAFTA into law. Without it, electio n year politics may destroy the chance to take a critically important step toward creating a prosperous and vast free trade zone in this hemisphere. Wesley R. Smith Policy Analyst

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