Uploaded by Ben Morehead, Associate Publisher of Policy Review magazine and authorized agent for the copyright owner(s). FREE TRADE'S FORGOTTEN AMIGOS Why Governors Want NAFTA by Douglas Seay and Wesley Smith From the Summer 1993 issue of Policy Review To subscribe to Policy Review, call (800) 544-4843 Prospects in Congress for the North American Free Trade Agreement (NAFTA) with Canada and Mexico look gloomy. Leon Panetta, President Clinton's director of the Office of Management and Budget and a proponent of NAFTA, says the proposed agreement is "dead." Although President Clinton, Treasury Secretary Lloyd Bentsen, and Labor Secretary Robert Reich all publicly support NAFTA, the administration is more ambivalent than the Bush administration, which pushed for NAFTA aggressively. Congressional opposition to the agreement is widespread and growing, most notably among Democrats, but among many Republicans as well. Labor and environmentalist lobbyists have mounted a well-financed effort to derail NAFTA. Their strategy is to argue that it would lead to massive job loss, the de-industrialization of the United States, and a lowering of labor and environmental standards to those of the Third World. In contrast to this intense hostility and feverish activity in the nation's capital is the view from the state houses, where NAFTA is regarded as self-evidently good for state economies. According to a Heritage Foundation survey in June 1993, 40 of the country's 50 governors actively support NAFTA -- 22 of the 30 Democrats, one of the two independents, and all of the 18 Republicans. This near-unanimous support comes from north and south, east and west, agricultural and industrial states. The universal reason the governors cite for their support is NAFTA's expected positive impact on their states, especially on job growth. This surprising consensus among the governors has gone largely unnoticed during the public debate, and NAFTA's supporters have overlooked a valuable set of allies. The contrast between their strong support and the growing opposition in Congress suggests a major difference in decision-making between Washington and the states. Congressmen and governors make different trade-offs between special interests and the general welfare. NAFTA's Tortuous Path NAFTA's path to congressional consideration has been long and difficult. First floated as an idea by Ronald Reagan in his presidential campaign of 1980, a free-trade zone among the three countries did not receive active consideration until proposed by Mexican President Carlos Salinas de Gortari to George Bush in the fall of 1990. Although Mr. Salinas's original proposal was for a bilateral U.S.-Mexican agreement, Canada soon requested participation to safeguard its gains from the 1988 U.S.-Canada Free Trade Agreement. The trilateral negotiations that began in 1991 proved much more difficult than anticipated, due largely to Mexico's desire to delay the opening of many of its most sensitive and politically powerful sectors, such as financial services. The resulting agreement, while not a perfect free-trade agreement, did provide for the removal of most barriers to trade among the three countries. Although substantially completed by May 1992, the delays in the negotiations had pushed the agreement far into the U.S. election year, and it was decided to shelve congressional action until after the election. George Bush's defeat removed the agreement's key proponent in the United States. Although candidate Bill Clinton repeatedly expressed his support for NAFTA in the campaign, he conditioned his approval on the negotiation of additional and unspecified "side agreements" on labor and environmental issues. Ross Perot, by contrast, denounced the agreement, predicting a "giant sucking sound" as U.S. jobs were drawn south to Mexico. In one of his last acts as president, Mr. Bush signed the completed agreement in December and forwarded it to Congress, where it awaited the new president. On taking office Mr. Clinton postponed congressional consideration until the completion of the side agreements, the negotiation of which began only in March. Since then, further delays have emerged, and Treasury Secretary Bentsen announced in April that, due to the administration's focus on its domestic economic package, a vote on NAFTA would not be forthcoming before fall. Enemies Organize These repeated delays have given the agreement's enemies time to organize. Among the first to lobby the new administration were representatives of the flat glass and sugar-growing industries, which sought to reopen the NAFTA text for modifications in their favor. Much more serious, however, are the efforts of labor unions and environmentalist lobbies, whose economic and ideological interests pit them against free trade. According to the Clinton administration's Department of Commerce, 700,000 jobs already have been created in the United States due to increased exports to Mexico. Most economic studies predict NAFTA will add several hundred thousand jobs in the United States. Nevertheless, the AFL-CIO makes no secret of its opposition to the agreement. Its secretary/treasurer, Tom Donohue, has proclaimed the defeat of NAFTA as the organization's "number-one priority." Opposition has been joined by environmentalist groups who charge that the agreement will lead to environmental degradation on both sides of the border. But the most potent political issue has been a fear that greater trade with Mexico will accelerate the loss of high-paying union jobs in many American industries. Union opposition to NAFTA has found resonance in the slow-growing U.S. economy, where fears of job security among the population have provided fertile soil. As a result of the intense lobbying by anti-NAFTA forces, what was once commonly regarded as a done deal now shows signs of unravelling. Although two-thirds of the Republicans in Congress support NAFTA, only one-quarter of Democrats do, according to surveys. The situation is worse among the newly elected members; slightly over one-third of the freshmen Republicans in the House oppose or are leaning against NAFTA. According to Robert Matsui (D-CA), a NAFTA supporter, only 5 of the 63 freshman Democratic congressmen openly support NAFTA. The leaders of both houses of Congress, Senator George Mitchell and Speaker Tom Foley, stated in April that, although they support the agreement themselves, a vote on NAFTA would lose in both the Senate and the House of Representatives. Among congressional opponents, the most commonly cited reason for their position is fear of a loss of U.S. jobs, especially in manufacturing. Evidence from the States It therefore is highly significant that 40 of 50 governors are confident that NAFTA will be beneficial for their states. Supporters of NAFTA range from James Hunt of North Carolina to Evan Bayh of Indiana to John Waihee of Hawaii to William Weld of Massachusetts. Governors are on the front line of expanding export opportunities for businesses in their states. They go on trade missions. They set up trade offices in foreign countries. They know that Mexico is overtaking Japan as America's second-largest market. Most of them have seen sharp increases in their states' exports to Mexico over the last five years as that country has removed many of its most egregious trade barriers. They say NAFTA simply will accelerate the opening of Mexico to U.S. business. With 70 percent of imports into Mexico coming from the United States, governors say that an expanding Mexican economy is great for American jobs. They maintain that the biggest job creation will come in small and medium-sized companies, the great employment engine in almost all states. Governor Pete Wilson of California, for example, points out that his state's exports to Mexico "more than doubled between 1987 and 1990, creating tens of thousands of new jobs." Nevertheless, the state's two senators, Barbara Boxer and Dianne Feinstein, as well as a large number of the state's congressmen, oppose NAFTA, fearing it will lead to job loss. But Governor Wilson argues that "commerce between the United States and Mexico freed of the constraints of tariff and non-tariff barriers means increased trade, and increased trade translates into vitally needed jobs on both sides of the border." Governor Wilson's comments are backed up by statistics. Last year, the state's businesses exported $6.6 billion to Mexico, an increase of 190 percent over five years. More than 110,000 Californians' jobs depend on exports to Mexico, and an additional 106,000 jobs are supported by U.S. companies operating in Mexico that draw upon the services of California's trucking, management, warehousing, and service industries. The opportunities of the Mexico market extend across the business spectrum. Over the past five years, California's exports have increased 489 percent in the food products sector, 382 percent in transportation equipment, 248 percent in electric and electronic equipment, 244 percent in chemical products, 169 percent in industrial machinery and computers, and 548 percent in apparel. Specific examples are even more revealing. Cal-State Lumber Sales' business in Mexico has increased by 700 percent in recent years, allowing the company to increase its work force in California by 30 percent. The positive impact on jobs extends beyond the company's own payroll. According to Mary Alice Acevedo, director of international relations: "We buy lumber from several mills; our purchases have helped the mills keep U.S. workers on the job." SJS Products of Rocklin that distributes U.S. manufactured electromechanical products, had faced layoffs due to the U.S. recession. SJS turned to Mexico to expand its sales and, according to William McGillivray, director of sales for the company, "We have not had to lay off one person since our involvement in Mexico. And all the products we export to Mexico are 100-percent U.S. manufactured." Regional Support The opposition to NAFTA within California's congressional delegation is unusual among the border states. In the rest -- Arizona, New Mexico, and Texas -- the governors' support for NAFTA is matched by that of their congressional delegations, with the exception of those members who are closely allied with environmental groups or organized labor. As Texas Democratic Governor Ann Richards, an especially vocal supporter of NAFTA, puts it: "For Texans, the successful conclusion of the Free Trade Agreement cannot be overestimated. NAFTA will have an enormous impact on our economy, putting us literally in the geographic center of a hemispheric trade zone, one that is 25 percent larger than the European Economic Community." This strong bipartisan support is often explained by the assertion that since these border states will be the primary beneficiaries of NAFTA -- perhaps even at the expense of other U.S. states -- the broad support of the agreement among their elected officials is to be expected. However, some of the strongest supporters of NAFTA are located in the Midwest, the very heartland of U.S. manufacturing that NAFTA opponents allege will be devastated by Mexican competition. The governors of the industrial states of Wisconsin, Illinois, Indiana, Michigan, and Ohio all are strong supporters of NAFTA. Michigan Can't Lose Of these, Michigan is the most interesting case, for the state is depicted routinely as a certain loser from NAFTA, and its congressional delegation leads the opposition to the agreement. Michigan's Governor John Engler, however, is one of NAFTA's most enthusiastic supporters. He points out that Michigan's exports to Mexico are fast approaching the $2 billion mark, that Mexico is Michigan's second-largest foreign customer, that only two states export more to Mexico than Michigan does, and that Michigan exports four times more goods to Mexico than the entire nation of Canada. In March 1993, Governor Engler led a trade delegation of 110 Michigan business and government leaders to Mexico. What he saw convinced him even more that lowering Mexico's trade barriers is good for his state: "In a Mexico City showroom I saw an Olds like the one I drive selling for $50,000. The price of that car, and every other new Michigan car exported south of the border, will drop dramatically once trade barriers are lifted. In fact, our automobile exports to Mexico should double once all restrictions are lifted -- and that means more jobs for our Michigan workers. "Another example. Our trade delegation was spirited from meeting to meeting in buses that were powered by guess who? Detroit Diesel. There's a success story. Detroit Diesel's sales to Mexico have grown 80 percent in the last two years; 26 percent of their new jobs are a direct result of exports to Mexico." Governor Engler says he has visited many factories in Michigan that are benefiting from freer trade. He points to Masco in Taylor, which produces car steering systems and other automotive parts; Haworth in Holland, which has seen a 10-fold increase in its office-furniture sales to Mexico over the last two years; Steelcase, which manufactures metal and wood office furniture. "I have seen the success stories in the faces of our workers," says the governor. "Don't tell the 31,000 Michigan workers who owe their jobs to sales in Mexico that we should go back to the days of high tariffs and trade wars." Governor Engler also tackles head-on organized labor's opposition to NAFTA: "If cheap labor were the key to company location, then Vietnam or Somalia would be manufacturing meccas. They are not. Our location, knowledge infrastructure, and workers' skill level give us what I believe is the `Michigan Advantage' -- and NAFTA will strengthen our advantages even more." "The way to protect Michigan jobs," says Governor Engler, "is not by building a wall around our state and ignoring the competition. Michigan, remember, is made of peninsulas, not islands. We live in, and are connected to, the global marketplace. So the way to bolster Michigan jobs is by creating the best entrepreneurial climate possible. That means lowering taxes, reducing burdensome regulations, downsizing government, educating our children for the future, making sure government does no harm to our families. These goals in the long run will keep Michigan competitive and enable our state to set the pace in the global marketplace." Consensus in the State Houses Other Midwestern governors support NAFTA for similar reasons, even though many of the region's senators and congressmen are strongly opposed. Governor George Voinovich of Ohio says that exports are responsible for one in seven manufacturing jobs in his state and points out that Mexico is Ohio's sixth most important export market. Senators Howard Metzenbaum and John Glen, however, oppose passage of NAFTA, citing fears of job loss. Governor Jim Edgar of Illinois says passage of NAFTA will mean "thousands of jobs for Illinois and an economic boost for our state, particularly in the long term. Illinois's exports to Mexico have more than tripled in the past five years, and the elimination of trade barriers will mean our businesses and their workers can continue to prosper from that trend." Last year Mexico beat out Japan as Illinois's second-largest export market. But Senators Paul Simon and Carol Moseley-Brown disagree and see NAFTA as a threat to Illinois's economy. One of NAFTA's most prominent supporters is Governor Tommy Thompson of Wisconsin (see sidebar). He suggested a free-trade agreement to President Salinas when they met in Mexico City in November 1989. Mr. Salinas said the politics wasn't right at that time, but within a year, he and President Bush announced their commitment to the idea. The same support is found in all regions. Governor William Weld says "NAFTA holds great promise for Massachusetts. And that promise is jobs. When you consider that for every $50,000 in additional sales to another country means one job at home, the prospects are very bright and very real." In his speech to the 1992 GOP national convention, Governor Carroll Campbell of South Carolina gave a ringing endorsement of NAFTA, saying the agreement "will create hundreds of thousands of new jobs for Americans." Senators Ernest Hollings and Strom Thurmond, however, remain steadfastly opposed to NAFTA, fearing losses in South Carolina's important textile industries that most studies predict in fact will benefit from the agreement. Similarly, Governor William Donald Schaefer of Maryland called a news conference last year to urge prompt congressional action on NAFTA. He explained how Maryland's exports to Mexico had tripled from 1987 to 1991, and argued that "by extending to Mexico the same open trade policies that we have with Canada, the United States can create all types of new business opportunities for American companies, including those in Maryland." In a speech at the Southern Governors' Association, Governor Schaefer said he would like to see NAFTA extended to include the countries of Central and South America. Senators Barbara Mikulski and Paul Sarbanes, however, insist that NAFTA will harm Maryland's economy and lead to job losses. Unlike Schaefer, neither has visited Mexico with businesses and seen the opportunities for themselves. The same pattern is repeated throughout scores of states: rising employment due to increasing exports to Mexico, strong support for NAFTA by the business community at all levels, and strong support by the governor contrasted with opposition by members of the congressional delegation, many of whom cite fears of job loss and economic dislocation as the reason for their position, fears that are unsupported by any empirical evidence or independent study. This marked contrast between the positions of these two groups can be attributed to a number of factors. Undoubtedly, the most important is the differing political forces acting on them. Absolved of any executive responsibilities, legislators in Washington cannot prosper politically by promoting general interests, such as deficit reduction, but must instead devote their attention to advancing more particular interests, such as the angora wool industry, which punish or reward individual legislators according to very specific performance criteria. In addition, a congressman's power is tightly circumscribed and must be focused if it is to have measurable effect. As individuals, they have little power to determine policy on broad issues, but do have the ability to promote specific interests. Thus, it is not surprising that many representatives become closely identified with specific interest groups, who in turn provide them with both money and political support. Governors, by contrast, must be concerned with their state's general welfare, as the appearance of exclusive concentration on any narrow interest group is likely to be punished at the polls. Generally, a governor's political career will rise and fall with the state's economy. Consequently, most governors are quite eager to be seen as promoting state exports, attracting investment, aiding in job creation, and creating an overall healthy business environment for their state. Congressmen Too Detached Few congressmen or senators are directly credited for general economic conditions in their state, good or bad; to the contrary, they are rewarded for, and thus concentrate their attention on, the delivery of specific and identifiable assistance to their constituents (i.e., pork), such as a new highway or government grant. In that sense, representatives are free riders on a state's economic health -- receiving credit for assistance to specific groups, but having little responsibility for promoting the general welfare -- in a way that governors cannot emulate. Thus, Congress regularly enacts measures that impose significant economic burdens on the states, like federal mandates that require states to enact specific programs, but without providing federal funds for those programs. The same pattern exists with the current debate over NAFTA, where congressional concerns and suggested remedies seem tailored to please specific constituencies regardless of their consequences to the general welfare. For example, Senator Max Baucus (D-MT) has proposed a tax on goods crossing the U.S.-Mexico border to create a special fund for environmental projects in both countries. However, several Democratic and Republican governors, from Ann Richards (D-TX) to Tommy Thompson (R-WI), are against such tariffs on cross-border trade because such a tax is directly counter to the very purpose of a free-trade agreement and inevitably will inhibit trade. More specifically, they are convinced such tariffs will reduce exports from companies in their states by making their products more expensive in Mexico, thereby reducing job growth. The Lobbyists The contrasting positions at the state and congressional level are also attributable to the different pattern and make-up of lobbying at the two levels. Given the enormous transfer of power from the states to Washington over the last half-century, most of the politically activist organizations concentrate their efforts at the center, along with their money. Having little say over national policy, governors are largely spared the pressures of lobbying by national organizations, although they must contend with the local variety. The most hard-core opponents of NAFTA in Congress are those most closely associated with organized labor, which is quick to reward those it favors with generous campaign financing and assistance from sophisticated political organizations. Although labor unions often make demands on governors, primarily on such issues as public sector employment and state labor law, they have not persuaded any governors to oppose NAFTA yet, but they have persuaded some of them to temporize. Such is the case of New York's Governor Mario Cuomo. Exports to Mexico of manufactured goods have created over 23,000 jobs for New Yorkers over the past five years, and are rapidly growing. In addition, New York's enormous financial community will be among the biggest gainers as NAFTA forces Mexico's formerly closed financial sector to open to American competition on equal terms. Exports are way up in all categories. Even such unlikely exporters as New York's apple growers, which formerly were effectively excluded from Mexico's market because of tariff walls, have benefitted from Mexico's opening and see NAFTA as the best way to ensure their long-term access to that growing market. Despite the agreement's beneficial impact on New York, however, the normally outspoken Mr. Cuomo has been surprisingly reticent regarding NAFTA. The New York governor told The Heritage Foundation through a spokesman that "NAFTA could lead to increased U.S. exports and greater economic opportunity in Mexico" but said "we must remain vigilant about the far-reaching impacts of such an agreement [on] Americans who may lose their jobs due to imports." His reluctance to take a firm stand is not attributable to a lack of information, as his own state development agency has been quite active in promoting business in Mexico and has kept his office informed regarding the strong support for NAFTA among the state's businesses. Nor is Governor Cuomo opposed to free trade: he repeatedly has spoken out against "Japan-bashing." Instead, the reason for Mr. Cuomo's reluctance to publicly support an agreement that is good for New York likely lies in his close relations with organized labor. As important, his political horizons are commonly seen as being more national than state-centered in scope. This national vs. state orientation is of no little effect. Its impact on positions toward NAFTA can be seen in President Clinton's own evolving views. As governor of Arkansas, Mr. Clinton was a strong supporter of free trade with Mexico. In his presidential campaign, however, Mr. Clinton's interests shifted to a different audience, and he pursued the votes and resources of the core Democratic constituency, especially organized labor. As a result, he tempered his support of NAFTA with the requirement that additional measures would have to be taken in the area of labor and environmental safeguards to ensure his support of the agreement. Both individually and as a group, the governors are far more informed, and with a broader range of vision, than anyone in Washington could be about economic conditions in their states and the potential impact of NAFTA. Far more than congressmen, they must be responsive to the concerns of a broad range of interests, and tend to work much more closely with, and listen to, the small- and medium-sized businesses that provide most of the employment in their states but which generally have little presence in Congress. Information and Experience The governors have experienced first hand the impact of the international economy on businesses in their states. They regularly attend meetings around the state of professional business associations and groups, and talk with the range of CEOs and managers about business concerns. Wisconsin's Governor Thompson says he has learned about the benefits of trading with Mexico by visiting factories of Oshkosh Truck, Metal Ware, Oscar Mayer, and other firms in his state that export south of the border. Most governors also are closely associated with their economic development offices, which in turn are in close contact with the exporting companies in their states. This working relationship brings most governors in regular contact with businesses that are becoming more dependent on exports and strategic alliances across national borders in order to remain competitive. Over the past five years, most state development offices have sponsored trade delegations to Mexico by businesses in their states. Often, governors have led these delegations, and thus have gained direct experience with both Mexico and the reactions of their businessmen. Governor Thompson of Wisconsin reported after his visit to Mexico last year that businesses on his delegation were overwhelmed by the opportunities they encountered and were scrambling to take advantage of them. Governor Roy Romer of Colorado proudly claims that his office is sending trade delegations to Mexico on a monthly basis. By contrast, relatively few congressmen even have traveled to Mexico, other than as tourists, and fewer still in the company of businessmen. As a result, there is little appreciation of the business opportunities that NAFTA would create and of the enthusiasm of the businessmen themselves. Laying Foundations for New Industries The governors also have learned from first-hand evidence that it is the small and medium-sized businesses that generate most new jobs and that are laying the foundation of the new, high-tech industries. These firms for the most part have more contact with their governors than they do with their senators and representatives in Washington. Saniserve Corporation is a typical example of the importance of Mexico for medium-sized businesses. Based in Indianapolis, Saniserve employs 130 people. Last year Saniserve sold $490,000 worth of equipment to Mexico, and expects sales to increase to $650,000 this year. According to Saniserv's CEO Gabriel Aguirre, 17 of his employees would lose their jobs if not for exports to Mexico. Says Aguirre, "If this continues I know I'll have to hire more people." Aguirre plans to increase plant capacity in Indianapolis to keep up with growing exports to Mexico. On a smaller scale, Air Hydraulics Incorporated, based in Jackson, Michigan, employs 17 workers in the manufacture of presses and impact machines. President Michael Clark has worked closely with the Michigan state development office to increase his exports to Mexico. Says Clark, "NAFTA will make it possible for the average Mexican-owned facility to purchase machines and industrial products from the United States. Without NAFTA, only the large Mexican multinational corporations would be real prospects." Within three years Clark expects sales to Mexico to comprise 25 percent of his output. "Without NAFTA we will not have a strong export program into Mexico or Latin America. Without NAFTA we stay domestic and stagnant." Chicago-based Summit Industries has increased exports to Mexico by 500 percent since 1987. But Summit, a small producer of X-ray machines, cannot afford to lobby Washington continually to ensure that its interests are protected. Similarly, Snider Mold Company has a plant in Mequon, Wisconsin that employs 45 people in high-paying jobs manufacturing moldings. Snider has tripled in size in the past six years, due in large part to increases in exports to Mexico (today 25 percent of their products head south to Mexico). At present, Snider faces a 20-percent Mexican tariff, which NAFTA will eliminate and allow them to increase their sales further. But Snider has little clout in Washington, along with the tens of thousands of other small and medium-sized businesses like it whose muted voices in Congress are drowned out easily by the clamor of the professional lobbyists. Thus, it is not surprising that the strong support of NAFTA by this crucial sector of the U.S. economy plays so little role in the congressional deliberations. Capitol Hill Opposition Senator Bill Bradley of New Jersey has termed the passage of NAFTA President Clinton's "most important foreign policy priority." This centerpiece of U.S. policy toward Latin America and international trade, however, has encountered tough and increasing opposition on Capitol Hill. There, a panoply of interest groups opposed to free trade -- labor unions, environmental organizations, and activists on the political left -- have mounted an aggressive, no-holds-barred campaign to defeat the agreement or alter it so radically as to erect new and imposing barriers to U.S.-Mexico trade. Against these protectionists stand America's governors, Democrats as well as Republicans, who have experienced first hand the powerful impact of Mexico's opening markets on their states' economies, and want more of the same as soon as possible. More attentive to, and informed about, their states' welfare than any Washington representative could be, their attitude toward congressional opponents is one of frustration and mystification. Individual congressmen will not suffer from the jobs and opportunities lost from NAFTA's defeat, but many individuals in their states certainly will, as will the governors whose political fortunes track closely the economic health of their states. NAFTA has not been defeated yet; there is ample time for the broad public in every state to organize and insist that those in Washington who are pledged to represent them act to ensure the agreement's implementation. To the governors has fallen a key responsibility for articulating and leading that effort. For NAFTA's sinking fortunes raise troubling questions about whose interests Congress actually is representing and who really speaks for the national interest. SIDEBAR: GOVERNOR TOMMY THOMPSON ON NAFTA [From a speech to businessmen in West Middleton, Wisconsin on March 22, 1993.] My message to you today is simple: NAFTA is good for Wisconsin. ... The reason why NAFTA is good for Wisconsin is because it will only enhance our already strong economy. Wisconsin has already benefitted from the U.S.-Canada Free Trade Agreement. Since 1989 -- when the CFTA was implemented -- Wisconsin exports to Canada have increased from $1.4 billion to almost $2 billion. Our exports to Mexico have also grown. On average, Wisconsin exports to Mexico have been growing at an average rate of 39 percent a year. In one year alone, exports jumped 83 percent! As a whole, the economic impact of trade with Canada and Mexico in Wisconsin is considerable: - Wisconsin exports to Mexico totaled $250 million in 1991. Exports to Canada totaled $1.9 billion. - Canada is our number-one export market. Mexico is our sixth-largest market. - In 1991, exports to Mexico generated 7,400 jobs in Wisconsin. Exports to Canada generated 57,000 jobs. That's a total of over 64,000 jobs! - Since 1987, 8,500 new jobs have been created by increased exports to Canada and Mexico. Wisconsin jobs related to trade in Mexico alone has increased almost seven times in the last four years. - And these export-related jobs are good jobs ... among the highest-paying jobs in the state. And NAFTA will increase investment and job opportunities here in Wisconsin. Our export market to Canada -- as I have already stated -- is very strong ... and we are continually working to make it even stronger. Where Wisconsin stands to gain the most from NAFTA is from increased trade opportunities with Mexico. That's why I led a trade mission there at the end of last year ... the largest and most successful trade mission of my administration. In the five short days of the mission, Wisconsin companies were able to lay the groundwork for promising business deals ... in everything from milking and farm equipment to Christmas trees. One businessman on the trip said afterward: "It changed the whole spectrum of plans I had for the future. I'm going to have to change my strategic planning for the next five years to include Mexican business." Another business owner from Manitowoc went on the trip simply to explore export possibilities ... but he soon found solid sales opportunities. "It looks like I'll have to go back down there" to negotiate deals, he said. And I am convinced that a Wisconsin trade office in Mexico will enhance our trading position ... which is why I asked for one in my budget this year. NAFTA will open and expand the Mexican market. And this translates into opportunity for Wisconsin. Our strong manufacturing base provides great export opportunities. Miller Brewing Company, for example, expects the beer market in Mexico to continue to grow. Wisconsin companies such as Ambrosia Chocolate ... S.C. Johnson and Company ... Kimberly-Clark ... and Land's End ... all stand to gain. Our agricultural sector will also benefit. NAFTA is expected to increase U.S. agricultural exports to Mexico by $1.5 to $2 billion over the next 15 years. - Exports of U.S. milk powder are expected to grow by about 20,000 metric tons. - Mexican demand for beef, pork, corn, and wheat are also expected to increase. - Demand for food-processing equipment and agricultural chemicals are also expected to grow. All of this means opportunity for Wisconsin. As the Mexican infrastructure develops, demand for products from our big industrial employers will grow ... companies such as Allen-Bradley, Allis Chalmers, Briggs and Stratton, Kohler, and Ladish. Wisconsin's numerous auto parts producers -- companies such as International Stamping or Modine Manufacturing -- will benefit from increased Mexican demand for automobiles. Increased Mexican demand for pollution control equipment will fuel demand for the high-tech products of such Wisconsin firms as Tec Systems or Nicolet Instruments. And all of these increased business opportunities will translate into one thing: more jobs for Wisconsin. And -- as I said before -- these are high-paying jobs. For example, in 1991 the average hourly wage for workers in industrial machinery and computers was $12.88 ... for workers in publishing and printing, $12.07 ... and for workers in transportation equipment, $15.14. Through my work with the National Governors' Association -- most particularly as the head of the Intergovernmental Policy Action Committee on Trade -- I know that NAFTA will greatly benefit the United States as a whole. As governor, of course, my main concern is how it will benefit us here at home. As I said at the beginning ... NAFTA is good for Wisconsin. And I am asking all of you today to help us get NAFTA passed. It is good for your businesses.... It's good for Wisconsin ... and it's good for the U.S. DOUGLAS SEAY is deputy director of Foreign and Defense Policy Studies at The Heritage Foundation. WESLEY SMITH is a policy analyst at The Heritage Foundation. To reprint more than short quotations, please write or FAX Ben Morehead, Associate Publisher, Policy Review, 214 Massachusetts Avenue, NE, Washington, DC 20002, FAX (202) 675-1778.