dering what are we doing going into this arrangement. They see it as a bilateral effort. We do not see it as such. It is something like the European Community as you said earlier quite a number of years ago. And it is an opportunity for the United States to enhance our economic activity. I do not know why we should sit back and not enhance our economic activity. So essentially it will give the next President whoever that may be an opportunity to look at it with two options. A multilateral round and looking at it from a bilateral context. But I think the universal reaction has largely been that this is trade liberalization. It shows what you can do. And a lot of people want part of that as well. Mr. MILLER. Have there been any specific overtures from any other countries since this has come forth to enter into similar free trade negotiations? Ambassador MURPHY. Well, I would say Taiwan, Japan, ASEAN. We have already said from Tierra del Fuego, You know, I think there are a lot of people who are looking at it and are interested. Mr. MILLER. Thank you. UNITED STATES-CANADA ENERGY TRADE Mr. BONKER. Back on oil for just a moment because I missed out in the earlier discussion. I was always curious as to why Canada wanted access to that 50,000-barrel-a-day oil given the lopsided trade off here with our access to theirs. Anybody have any idea why they wanted access to this oil? Anything to do with pricing? Mr. MARTIN. Mr. Chairman, I think more than anything else it had to do with the principle of the matter. Mr. BONKER. Principle not pricing? Mr. MARTIN. Principle. The principle that if they were to free up their oil and gas, electricity, uranium, coal for sales to the United States, they could not live with a prohibition of export on a major resource right next to them. I think that is a very important point. I think there is also a practical point that this oil can economically serve part of Western Canada. But I think what we heard more than economics was principle. Mr. BONKER. Would this access to the 50,000 barrels, permit British Petroleum to increase its profits on North Slope crude by $1.50, $2 per barrel without any consideration to the impact of their exports on U.S. energy and defense and security without even as much as a penny of benefit to U.S. concerns? Mr. MARTIN. I have to see that in writing, sir. But there is certainly something to be said if you are transporting that oil more efficiently, there will be a higher netback to your producer, so, yes, there will be some benefit to that producer. Mr. BONKER. So, mostly true? Partially true? Mr. MARTIN. I would say a little bit true. I mean a little—yes, it is true with the right direction. But I do not think it is that great a profit. Mr. BONKER. Okay. Again I want to commend you. I view this whole process as Ambassador Murphy knows, with direct interest given the state I represent and its proximity to Canada. And we have gone through some very difficult moments over both the shake and shingle decision as well as the lumber decision, and I know tensions are very high on both sides. But it really boils down to this, if these two countries that have so much in common culturally, historically, socially, economically and, politically cannot come together in a trade accord like this, I do not think there is much hope for free trade in the world. I am not completely satisfied with the Agreement. I am concerned about plywood, about oil, about grain, and many other things. But we either are going to move more closely towards a free trade environment or we are going to move in the other direction. And if we cannot set the example between the United States and Canada, there really is not much hope that we can do it anywhere else. We are in an era of intense competition, and we will probably be getting into an era of over production. That is going to depress prices and bring a lot of political pressure back to the capitals of all of the industrialized nations. So we need skilled negotiators like you, and we need to take the high road. Everybody watches America to see what standard we are setting, and that is why if we go down that path of protectionism we are going to take the whole world down with us. That is not the answer. So hopefully this is a landmark. It does not mean that it is going to be greeted with great rejoicing here on the Hill-if it is a good agreement, there are going to be some sour parts to it as well as the good parts. But it certainly is not a more perfect document because of lack of effort. You have all done your job, and you have done it well. And I thank you. The subcommittee stands adjourned. [Whereupon, at 3:43 p.m., the subcommittee adjourned.] OVERSIGHT OF THE UNITED STATES-CANADA FREE TRADE AGREEMENT WEDNESDAY, MARCH 16, 1988 HOUSE OF REPRESENTATIVES, Washington, DC. The committee met at 10:05 a.m., in room 2172, Rayburn House Office Building, Hon. Dante B. Fascell presiding. Chairman FASCELL. The committee will come to order. Ambassador Yeutter, it is a pleasure to welcome you to the Foreign Affairs Committee. We have watched and learned with admiration of your capable work and of that of your chief negotiator. This seems to be the year for trade-the great focus on our huge trade imbalance, the Uruguay round, the ominibus trade bill, and the Canadian Free Trade Agreement. We all appreciate and respect the fact that you and your staff have your hands full on subjects of great importance to the people of America, who are today concerned about not only just our competitiveness in the world, but our actual future in terms of employment and survivability. Now that may sound like strong words, but I think I reflect the concern of Americans who are watching other nations becoming extremely competitive, having advantages which were there all the time anyway, whether it was in manpower, natural resources, or social reasons. And it does signify a major change in the concept of America. I think most Americans are now facing up to the fact that what's involved here is their standard of living and their future, and that it is now impossible for any one nation to have the power to dictate the world's economy. I think that is a difficult lesson for a lot of us in the United States, to realize that we are part of global economy, that, while we have a major role to play, we do not dictate. If is difficult for many people to understand that what seems to be endless negotiations and discussions are important efforts to get our trading partners to play by the same rules or to abide by any rules in order to give us an opportunity to export, which is critical for our economic future. After long, tough, negotiations, we finally have gotten a CanadaUnited States Free Trade Agreement. Having served as the chairman of the House delegation to the annual Canadian-American parliamentary group, I know that some Canadians have had a strong desire at many of their economic and political levels to conclude an Agreement of this kind. They have faced up to the tremendous po litical inertia and also direct opposition of many Canadians to even discuss a Free Trade Agreement, much like in this country. Canadians have exactly the same problems. It is wonderful, therefore, that we have at least reached the point where both countries can discuss this and that we are at the stage of drafting the implementing legislation. So this is a very opportune moment for our discussion, and we appreciate your appearance here today. Chairman FASCELL. Mr. Broomfield. Mr. BROOMFIELD. Thank you, Mr. Chairman. Mr. Ambassador, I want to join Congressman Fascell, our chairman, in welcoming you here this morning. We are anxious to hear your comments about not only the United States-Canada Free Trade Agreement, but other issues as well. I also want to compliment you generally for all your work as the U.S. Trade Representative during a period which saw drastic change in world trading relationships. The United States has been forced to reevaluate many aspects of its trade policies, from competitiveness to protectionism under the burden of the deficit, uncompetitive prices and unfair practices in other countries. You have achieved what I think have been remarkable results, and I have certainly been encouraged by the decreasing trade deficit and the continued economic growth in the United States. I give credit for these great accomplishments to President Reagan's policy and certainly his appointment of dedicated individuals such as yourself. Now just as economists are saying that the road to continued economic growth for our nation will require increased exports, you and the President bring to Congress what I consider an important guarantee of success: the United States-Canada Free Trade Agreement. Yes, Mr. Ambassador, the timing could not be better, as the chairman has pointed out. I do not know if it is possible to overstate the lasting benefit that Canada and the United States will both derive from the Free Trade Agreement. It will establish a relationship based on fair trade, and will serve as an example, I hope, for other nations as well. We look forward to your comments. Chairman FASCELL. Mr. Ambassador, if you have a prepared statement we would be delighted to hear from you, or you can put it in the record and proceed extemporaneously. Just don't tell jokes. Mr. YEUTTER. I would prefer the latter course, Mr. Chairman, and I would resist the temptation to try to entertain you with comedy. I do have a prepared statement for the record, along with some enclosures that I think might be of interest to the committee, Mr. Chairman. Chairman FASCELL. Without objection it will be included in the record. [Prepared statement of Ambassador Yeutter follows:] |