COMMITTEE MEMBERS AND STAFF The members of the Senate Interim Committee on NAFTA: Senator Carlos F. Truan, Chairman Senator John Carona Senator Steve Ogden Senator Eliot Shapleigh Senator Mario Gallegos, Jr. The Committee staff: Salvador Mascorro Valdez, Director; Carla D. Buckner, General Counsel and Committee Clerk; Blanca Laborde, Policy Analyst; Sarah Acosta, Secretary, and Vick Hines, Chief Policy Analyst. EXECUTIVE SUMMARY Committee Interim Charge Number One: Evaluate the impact of NAFTA on the Texas economy and determine how different segments of the economy are affected. Committee Interim Charge Number Two: Determine how NAFTA has affected employment and identify any employment losses or gains. Assess how the state's workforce programs have responded to any employment changes and make any necessary recommendations to improve that response. Committee Interim Charge Number Three: Assess the impact NAFTA is having on the state's infrastructure, including but not limited to transportation, education, housing, the environment and health and human services. Committee Interim Charge Number Four: Develop a statewide strategic response plan to the effects of NAFTA in Texas which identifies available and needed resources at the local, state and federal level and provides a coordinated response. Lieutenant Governor Bob Bullock created the Senate Interim Committee on the North American Free Trade Agreement (NAFTA) in August 1997 to study the impact of NAFTA on the State of Texas. The central purpose of the Committee’s charges from the Lieutenant Governor was to determine if NAFTA has had an impact on the Texas economy and infrastructure, and if so, what we might do on a state level to address those affects. The Committee has concluded that it is nearly impossible to separate NAFTA’s impact on Texas from the general trend of globalization in world trade and production. Consequently, the Committee applied the charges to the general growth of international trade. Part I of the report examines structural changes in Texas, both local and statewide. Part II addresses the free trade effects on Texas employment. This section also examines the differential effects of trade growth on the state’s various geographic regions, and in particular the nearly crippling impact on the border region as opposed to record low unemployment rates in other areas of the state. Part III addresses the impact of free trade on Texas’ infrastructure, broadly construed as transportation, education, housing, the environment, and health and human services. The Committee received compelling testimony and evidence that argues for reevaluating the state’s strategies in most of these general areas. Charge IV presented the Committee with a particular challenge given the breadth of the task of developing a statewide strategic response plan. The report addresses the issue of governance of such a response, provides a structure for responding to the infrastructure demands of free trade, and presents a menu of short term and long term investments. ACKNOWLEDGMENTS The Senate Interim Committee on NAFTA would like to thank the following for their contribution to this interim report: AFL-CIO Mr. Bill Avila, McCall, Parkhurst & Horton, San Antonio Border Environmental Cooperation Commission Border Low Income Housing Coalition Border Trade Alliance Canadian Transit Co. City of Dallas City of El Paso City of Houston City of Mission City of San Antonio Mr. Randy DeLay, South Texas Border Partnership El Milagro Community Clinic Mr. Bob Evans, National Industrial Transportation League Frontera Audubon Society-McAllen General Land Commission General Services Commission Gulf Coast Council of La Raza Judge Jeff Moseley, North American Superhighway Coalition La Mujer Obrera Los Caminos del Rio-Texas North American Development Bank Office of the Canadian Consulate/Dallas Office of the Mexican Consulate Port of Corpus Christi Port of Houston Authority Proyecto Azteca Sierra Club-Lower Rio Grande Valley Small Business United Small Business Development Center-Del Mar College Texas Association of Mexican-American Chambers of Commerce Texas A&M Real Estate Center Texas A&M University-Texas Transportation Institute Texas A&M International University Texas Department of Economic Development Texas Education Agency Texas Higher Education Coordinating Board Texas Natural Resource Conservation Commission Texas Senate Media Services Texas Senate Research Center Texas Department of Transportation Texas Water Development Board Texas Workforce Commission Texas Senate Publications and Printing United Farmworkers University of Texas at Austin- Center for Transportation Research University of Texas at El Paso Small Business Development Center University of Texas- Pan American Small Business Development Center University of Texas at San Antonio- Southwest Trade Adjustment Assistance Center Valley Interfaith We also appreciate the numerous members of the public and interested parties for their involvement in this project, especially those who participated at our public hearings. Table of Contents Recommendations ........................................................................... 1 Charge I: The Impact of NAFTA on the Texas Economy ............................................. 8 What is NAFTA? ..................................................................... 8 Globalization of Trade ................................................................. 8 Changes in Texas since NAFTA ........................................................ 10 Charge II: The Effect of NAFTA on Texas Employment ............................................. 12 TWC Dislocated Worker Programs ...................................................... 13 Training the Dislocated Worker .................................................. 13 The “Trade Programs” ......................................................... 14 The El Paso Re-Employment Pilot Project ......................................... 16 JTPA Title III ................................................................ 20 Economic Dislocated and Worker Adjustment Assistance ............................. 20 Rapid Response .............................................................. 21 Worker Profiling and Re-employment Service....................................... 21 Unemployment Insurance ....................................................... 21 Other Workforce Development Programs.................................................. 21 Smart Jobs .................................................................. 21 Apprenticeship Training ....................................................... 21 Adult Literacy- Investing in the Basics ................................................... 22 Public Education .................................................................... 22 Bilingual Education ........................................................... 23 Public School Finance ......................................................... 23 Higher Education .................................................................... 25 Charge III: NAFTA’s Impact on Texas’ Infrastructure............................................... 27 Transportation ...................................................................... 27 Corridors ................................................................... 30 Intermodalism ............................................................... 33 Border-Crossing Technology .................................................... 34 Bridges ..................................................................... 37 Ports ....................................................................... 40 Texas Railroad Crisis and Texas Rail Policy ........................................ 41 A Texas Rail Policy ........................................................... 43 Establishing a State Telework Policy.............................................. 46 NAFTA and the Environment........................................................... 49 Knowledge is Power: Protecting Texas’ Interests .................................... 51 Senate Bill 1 ................................................................ 52 Protecting the Riparian Environment .............................................. 52 Water Supply ................................................................ 53 Drought Update .............................................................. 54 Water Quality................................................................ 55 Air Quality .................................................................. 58 Hazardous and Solid Waste ..................................................... 60 Additional Environmental Programs .............................................. 63 International Interlocal Agreements ...................................................... 63 Existing Authority ............................................................ 64 Not Necessarily a Federal Law Question ........................................... 64 Existing Federal Policy ........................................................ 64 Experience Along the U.S.-Canadian Border ....................................... 65 Bond Issue Risks ............................................................. 65 Border Health ....................................................................... 67 Disease Rates ................................................................ 68 Solutions ................................................................... 71 Border Health Institute........................................................