Press Center

 TREASURY SECRETARY ROBERT E. RUBIN NAFTA AFTER THREE YEARS


7/11/1997

It is a pleasure to join all of you on theoccasion of the release of the report detailing the impact of thefirst three years of NAFTA.

America’s relationship with Mexicoimportantly affects our country in many ways, and in all theseways, and economically healthy Mexico is very important to ourinterest. Beginning in April of this year, Mexico became oursecond largest export market. Hundreds of thousands of Americansowe their jobs to trade with Mexico. Also, a prosperous, stableMexico is better able to work with us in addressing other issuessuch as immigration and drugs. In short, a healthy, growingeconomy in Mexico is not only in the interests of Mexico, but itis also very much in the national economic and security interestsof the United States.

Mexico today is growing at a healthy rate, aresult of its economic reforms, including NAFTA. Last year,Mexico’s economy grew more than five percent, more than mostprivate analysts had expected. Unemployment and inflation aredown, financial stability has returned, monetary and fiscalpolicy remain on track and foreign capital has returned. Thereare many challenges ahead, but much has been accomplished.

The foundation of our economic relationship withMexico is NAFTA. It has proved its mettle in bad times just as itis doing now in good times. In fact, it was probably even moreimportant to our interests during difficult times than it isduring good times. In 1995, as you all know, Mexico experienced asevere financial crisis. Realizing the potential impact to ourown economy if Mexico collapsed economically, the Presidentdevised an emergency support package to give Mexico somebreathing space to get its economic house in order, inconjunction with the Mexican government imposing strongest fiscaland monetary discipline. NAFTA, by eliminating the option ofraising tariffs, provided a strong incentive for the governmentto choose this reform path rather than turning inward, and NAFTAalso provided confidence about Mexico to investors. Moreover,because Mexico honored its NAFTA commitments and maintained itslower tariffs, U.S. exports to Mexico remained at much higherlevels than would have occurred had NAFTA not existed and Mexicohad turned inwards and raised tariffs.

This was a far different situation than inMexico’s 1982 economic and financial crisis, when Mexicoreacted to crisis by imposing prohibitive tariffs and our exportsfell by half -- and didn’t recover for seven years. Thistime, Mexico continued to reduce trade barriers to U.S. goodsdespite its deepest recession in 60 years -- allowing U.S.exports to Mexico to rise to new record levels in 1996. While ittook seven years for Mexico to return to international capitalmarkets after its 1982 crisis, this time it took just sevenmonths. And, of course, Mexico has fully repaid our loans.

NAFTA has served us well -- though obviously wemust always be focused on equipping people to deal withdislocations, as with all of the many changes that occur in ourdynamic economy -- and I believe NAFTA and trade liberalizationmore generally are critical to our economic future.

And now, I am pleased to introduce our leader inall of these trade efforts, Charlene Barshefsky, who has donesuch a terrific job as U.S. Trade Representative.

 

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