Date: 1988-08-09
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Chairman. the United StatesCanada Free Trade Agreement repre. sonts more than 3 years of work on the part of our two Governments to fashion a more open and fair trading framework. In general the agreement is excellent trade ministration could submit legislation containing policy. As it relates to trade in financial serv- the objectionable provision to the Congress ices. it is a major step forward for American . and we would be forced to accept the entire firms doing business inCanada. In the past package or risk embarrassing our national the Canadian operations of American firms leaders by defeating a major international have been hampered by restrictions which agreement. Under this fasttrack agreement placed them at a competitive disadvantage there is the very real possibility that a commitagainst Canadian firms. There were limitations tee can be ignored in a way that is simply not on the branching ability of United States possible under normal legislative procedure. banks that didnt apply to Canadian banks. Mr. Chairman. I understand that there is no There were limits on the financial service mechanism for us to repair this serious defect products that American banks could provide today. This is a problem with any free trade that did not apply to Canadian banks. And agreement not only the agreement before us there were even limits on the total share of today. I do want to put any future United the Canadian market that could be controlled States administration or Canadian Governby American firms. ment on notice that changes in laws under the These restrictions stood in stark contrast to jurisdiction of the Committee on Banking Fithe manner In which the United States treated nance and Urban Affairs will be closely scrutiCanadian firms. Since the passage of the nized and that problems which remain beInternational Banking Act of 1978. Canadian tween our countries within the committees banks. indeed all foreign banks. have been jurisdiction would best be handled through the accorded national treatment. That meant that normal legislative process if we are to inCanadian banks were treated the same as crease the likelihood of support by the CommitAmerican banks. As a result of this agreement tee on Banking. Finance and Urban Affairs. American banks will not be hampered by Mr. GRADISON. Mr. Chairman. I strongly supthose unfair restrictions. They will be able to port the United StatesCanada Free Trade compete freely with Canadian financial Institu- Agreement and the implementing legislation. tions. As this agreement concerns trade In fi- and I urge my colleagues to vote in favor of it. nancial services. the vast majority of changes The free trade agreement will create the in existing law will have to be made in Ottawa. largest free trade area In the world. exceeding not in Washington. the European Economic Community by more Section 308 of the legislation before us than $1 trillion. The reduction of tariff and today. would amend section 16 of the Banking other trade barriers over the next 10 years beAct of 1933 t6 authorize United States and twecn our two countries will provide substanCanadian banks to underwrite. deal in and tial benefits to both our economy and the Capurchase for their own account debt obliga nadians. Importantly. this historic agreement tions backed by the full faith and credit of Ca- reaches beyond Just trade in goods and esnadian Governments to the same extent as tablishes freer trade in services. energy and they can currently trade In similar debt obliga- investment. tions of United States Governments. Because This agreement holds out the promise of of our Nations adherence to the principle of millions of new jobs and a higher standard of national treatment. U.S. banking law does not living for all Americans. Studies indicate that have to be extensively amended. This change U.S. GNP could increase by $45 billion as a does have symbolic importance however be- result of this agreement. That Is an average cause it signifies our Nations willingness to increase of $740 for family of four. The bonebecome full and fair trading partners with our fits do not stop there however. Consumer closest neighbor. prices will fall as well. This accord will directly As a result. I can support the substance of lead to a higher standard of living in both the legislation before us today. however I countries. would be remiss if I did not express my con- American companies should register significern over another subject that may lead me to cant gains. Canadian tariffs will be reduced vote against the bill. The free trade agreement from an average of 9 percent to zero. while provides that any further amendments to ex- United States taiiffs are reduced from an avisting law required by future changes to the erage of 4.5 percent to zero. Tnrough these agreement be considered under the fast track reductions. American companies will be better procedure. While I am pleased that H.R. 5090 able to compete in Canada. contains limited changes in laws under the ju- American industry will be more competitive risdiction of the Committee on Banking. Fi- on a global scale because of this agreement nance and Urban Affairs. there is no assur- The reduced costs of Canadian Imports will ance that this will be the case in the future. I lower domestic production costs. Greater do not believe that the fast track procedure access to the Canadian market will mean should be used for substantial changes in law. larger economies of scale. The more efficient It provides any administration with an opportu- allocation of resources will benefit the econonity to evade the committee process and the mies of both countries. normal deliberations that are needed to per- Aside from the removal of all tariff barriers fect legislation. by 1999. the accord ends all restrictions on In this Instance the administration did con- energy imports and exports. This will provide suIt with the Banking Committee and did more secure and lower cost energy supplies submit legislation that was responsive to the for America. It also removes barriers to trade committees concerns. However other admin- in services and Investment. The accord will istrations. on other issues may not be as re- permit United States banks to acquire Canadisponsive. For any committee of this House an assets. and Canadian banks will receive the fasttrack procedure Is fraught with equal treatment under American securities danger. In the future it is possible that an ad- laws. ministration could package several noncontro- The agreement Improves the 1965 United versial provisions with a provision that is vig- StatesCanadian Auto Pact. It immediately reorously opposed by a committee or by this peals Canadas embargo on used cars and its House. Under the fasttrack procedure the ad- export tariff subsidies. All other restrictions are eliminated in 5 or 10 years. These provisions liberalize the trade In automobiles. but still protect American and Canadian automotive manufacturers by requiring that at least 50 percent of the value of the vehicle be made in North America to receive the benefits of the free trade agreement. Free trade is in the interests of the United States. Now. we need to build upon this agreement. and continue to create freer trade in the world. The United StatesCanadian Free Trade Agreement and Implementing legislation deserve our overwhelming support. They are clearly In the best Interests of both our countries. America and Canada will benefit directly from our Increased bilateral trade. and will benefit from Increased competitiveness in the world economy.