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United States-Mexico Economic Relations Hearings

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United States-Mexico Economic Relations Hearings 1liqz S. HRG. 100-424 UNITED STATES-MEXICO ECONOMIC RELATIONS HEARINGS BEFORE THE SUBCOMMITTEE ON ECONOMIC RESOURCES AND COMPETITJNENESS OF THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES ONE HUNDREDTH CONGRESS FIRST SESSION JUNE 12 AND 13, 1987 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 80-276 WASHINGTON: 1988 For sale by the Superintendent of Documents, Congressional Sales Office U.S. Government Printing Office, Washington, DC 20402 JOINT ECONOMIC COMMITTEE [Created pursuant to sec. 5(a) of Public Law 304, 79th Congress] SENATE HOUSE OF REPRESENTATIVES PAUL S. SARBANES, Maryland, LEE H. HAMILTON, Indiana, Chairman Vice Chairman WILLIAM PROXMIRE, Wisconsin AUGUSTUS F. HAWKINS, California LLOYD BENTSEN, Texas DAVID R. OBEY, Wisconsin EDWARD M. KENNEDY, Massachusetts JAMES H. SCHEUER, New York JOHN MELCHER, Montana FORTNEY H. (PETE) STARK, California JEFF BINGAMAN, New Mexico STEPHEN J. SOLARZ, New York WILLIAM V. ROTH, JR., Delaware CHALMERS P. WYLIE, Ohio STEVE SYMMS, Idaho OLYMPIA J. SNOWE, Maine ALFONSE M. D'AMATO, New York HAMILTON FISH, JR., New York PETE WILSON, California J. ALEX McMILLAN, North Carolina JUDITH DAVISON, Executive Director RICHARD F KAUFMAN, General Counsel STEPHEN QUICK, Chief Economist ROBERT J. TOSTERUD, Minority Assistant Director SUBCOMMITTEE ON ECONOM IC RESOURCES AND COMPETITIVENESS HOUSE OF REPRESENTATIVES SENATE DAVID R. OBEY, Wisconsin, Chairman JOHN MELCHER, Montana JAMES H. SCHEUER, New York JEFF BINGAMAN, New Mexico CHALMERS P. WYLIE, Ohio STEVE SYMMS, Idaho J. ALEX McMILLAN, North Carolina (11) CONTENTS WITNESSES AND STATEMENTS FRIDAY, JUNE 12, 1987 Page Bingaman, Hon. Jeff, member of the Subcommittee on Economic Resources and Competitiveness, presiding: Opening statement ...................... ...................... 1 Dehesa Davila, Mario, Center for United States-Mexican Studies, University of California, San Diego ............................................................... 4 Ortiz, Robert, vice president, Farah Manufacturing Co., El Paso, TX . 21 Dodson, Charles H., Jr., chairman. Elameh, S.A., Juarez, Mexico . .42 Gonzalez, Neal, executive secretary-treasurer, New Mexico State AFL-CIO ...... 55 Sadler, Louis R., director, Joint Border Research Institute, New Mexico State University, Las Cruces .............................................................. 66 Poirier, G. Brent, attorney, Las Cruces, NM . .............................................................68 Thomas, Gerald W., president emeritus, New Mexico State University, Las Cruces .............................................................. 78 SATURDAY, JUNE 13, 1987 Bingaman, Hon. Jeff, member of the Subcommittee on Economic Resources and Competitiveness, presiding: Opening statement ....................... ..................... 159 Coyle, Melissa, Director, Mexico Division, International Trade Administra- tion, Department of Commerce ......................... ..................................... 161 Herzstein, Robert E., attorney, Arnold & Porter, Washington, DC . ................ 197 Lohrding, Ronald K., Program Director, Energy and Technology, Los Alamos National Laboratory, Los Alamos, NM .............................................................. 214 Zanetti, Joseph M., Jr., on behalf of the New Mexico International Trade and Investment Council and the Greater Albuquerque Chamber of Commerce ..... 245 Gonzalez Barney, Salvador, representative of the New Mexico Trade Office, New Mexico Department of Economic Development and Tourism, and New Mexico Department of Agriculture ............................... ............................... 259 Castillo, Roberto, foreign trade consultant-business broker, the Vaughan Co .... 276 SUBMISSIONS FOR THE RECORD FRIDAY, JUNE 12, 1987 Bingaman, Hon. Jeff: Memorandum from J. Andy Kissner, executive director, Greater Las Cruces Economic Development Council, regarding the maquila impact on Dona Ana County, NM ................................... ........................... 60 Dehesa Davila, Mario: Prepared statement ............................................................. 9 Dodson, Charles H., Jr.: Prepared statement . ............................................................47 Ortiz, Robert: Prepared statement, together with an attached brochure .. 26 Poirier, G. Brent: Prepared statem ent .............................................................. 71 Thomas, Gerald W.: Prepared statement, together with attachments . 82 Vanick, Charles A., Washington representative, Coalition for North American Trade and Investment: Statement of .............................................................. 111 SATURDAY, JUNE 13, 1987 Castillo, Roberto: Prepared statem ent .............................................................. 280 Coyle, Melissa: Prepared statement ............................................ 167 Gonzalez Barney, Salvador: Prepared statement . ................................ 264 Herzstein, Robert E.: Prepared statement . .............................................................201 (III) IV Page Lohrding, Ronald K.: Prepared statement.................................................................. 219 Zanetti, Joseph M., Jr.: Prepared statement.............................................................. 250 APPENDIX Statements of: Casso, Henry J., president, National Institute for Professional Develop- ment, Inc ........................................................... 289 McDowell, Elisa, vice president, U.S. Hispanic Chamber of Commerce ........ 294 Lee, Min, member, Chinese Chamber of Commerce .......................................... 298 Yu, Daniel, member, Chinese Chamber of Commerce ...................................... 301 Waller, Rod, director, International Marketing & Development Co. of New Mexico ........................................................... 303 Chavez, Patricia, chairperson, Albuquerque Hispano Chamber of Com- merce ........................................................... 306 Castenada, Carlos, member, Juarez Chamber of Commerce, Juarez, Mexico..................................................................................................................... 309 Arroyo, Daniel, member, Small Business Chamber of Commerce, Juarez, Mexico..................................................................................................................... 311 Antone, Joseph, member, Albuquerque Hispano Chamber of Commerce ..... 313 UNITED STATES-MEXICO ECONOMIC RELATIONS ECONOMIC ISSUES ALONG THE BORDER FRIDAY, JUNE 12, 1987 CONGRESS OF THE UNITED STATES, SUBCOMMITTEE ON ECONOMIC RESOURCES AND COMPETITIVENESS OF THE JOINT ECONOMIC COMMITTEE, Washington, DC. The subcommittee met, pursuant to notice, at 2 p.m., in the Cor- bett Center, New Mexico State University, Las Cruces, NM, Hon. Jeff Bingaman (member of the subcommittee) presiding. Present: Senator Bingaman. Also present: Kenan Jarboe, legislative assistant to Senator Bingaman. OPENING STATEMENT OF SENATOR BINGAMAN, PRESIDING Senator BINGAMAN. Let us begin. We've got some excellent people prepared to testify this afternoon. I would like to go through a very short statement first, and then acknowledge some digni- taries who are here, and probably miss a few others, and then go ahead with the testimony. This is a hearing of the Joint Economic Committee. I hope that it's the first of a series of hearings on the changing world economy. We have this hearing today in Las Cruces and a hearing tommor- row afternoon in Albuquerque. The subject of these hearings is going to be the United States and Mexico's trade relations. The subcommittee is going to focus, to some extent, today on border issues. COMPETITION AND THE CHANGED WORLD ECONOMY The importance of the topic of the changing world economy, I think, is clear to everybody. America faces a crisis in its ability to compete in international markets. We're running record trade defi- cits. While our trade deficits may improve somewhat this year, I think it's clear that it will continue to be over $100 billion in 1987. This results, over the long term, in a decline in the standard of living in the country, a decline in the opportunities for our chil- dren and grandchildren. Many of our current problems in economic competitiveness are due to the fact that we find ourselves today in a global economy. The old sets of economic relations between America and the rest of (1) 2 the world have been replaced. If we're to compete in this new world economy, we need to learn how this new set of economic re- lations works. Our relations with Mexico, which are particularly important, of course, here in our State, are a key study with which to begin the analysis. The border region exemplifies many of the issues involved in United States-Mexico economic relations. RISE OF PRODUCTION SHARING One of the dramatic changes in the world economy has been the rise of production sharing. That's a phrase that Peter Drucker coined a decade or so ago. Rather than one nation specializing in the production of a particular good or service, and exporting that good or service, we now live in a world where the production of a good, in many cases, is shared by several countries. Components are made in one nation for subassembly in a second nation, with final assembly in a third nation, and the product is, perhaps, sold in even a fourth nation. U.S. trade laws encourage this form of production through sec- tions 806.3 and 807 of the tariff schedule. For products assembled abroad using U.S.-made components
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