[Congressional Record Volume 140, Number 29 (Wednesday, March 16, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                          THE BALANCE OF TRADE

  Mr. DORGAN. Madam President, I would like to follow up on something 
that was said briefly with respect to the amendment we were discussing. 
Somebody talked about the balance of trade. I decided to take the floor 
today to say a good word about the Clinton administration. I suppose 
they could use a good word these days, because most of the floor time 
on issues affecting this administration is taken up with negative 
comments.
  Let me, for a moment, talk about something this administration is 
doing that is new and fresh and exciting, something that should have 
been done a long time ago, which is starting to deal with our vexing 
and troublesome trade deficit. This administration has stood up and 
said: We are not going to put up with this. We want trade policies that 
resolve the unfair trade circumstances that exist between us and some 
of our trading partners. We must resolve this burgeoning trade deficit.
  I want to speak about that for a couple of minutes and about why I am 
excited about what the Clinton administration is doing.
  First, let me say the G-7 meeting in Detroit this week, in which the 
leaders of the industrial countries get together to talk about jobs, 
ought to be a time in which the industrialized countries should 
understand that we may well be witnessing an apparent economic recovery 
without jobs. I have said before that that is like having a meal 
without food.
  Why do we not have jobs or at least the kind of jobs we would expect 
in economic recovery? Because we have seen a great shift of resources 
and production in the last couple of decades in which our major 
producers, the large manufacturing corporations, decided they want to 
continue to sell in the U.S. market, but they want to produce 
elsewhere. They want to sell in our industrial countries, but they want 
to produce where they can pay $1 hour for wages and no benefits.
  That is a mismatch, a disconnect in the apparatus between production 
and consumption. Inevitably, it leads to shrinkage of our economy, to a 
loss of jobs here. We had part of this discussion on NAFTA, but that is 
only a small part of it.
  I would like the leaders of the G-7 countries to understand that at 
some point in the longer term there is a responsibility to produce 
where your market access is; where you decide you are going to sell, 
you must have a responsibility to produce. Otherwise, we are not going 
to long remain the industrial countries of the world.
  Let me talk briefly about our U.S. trade policy. We have a new Trade 
Ambassador, Mickey Kantor. We have had some differences on trade 
issues, I might say, but he is doing what should have been done for the 
last 20 years as a Trade Ambassador. Also, President Clinton, in 
support of the Trade Ambassador, and this administration has said we 
are not going to put up with unfair trade anymore. We are going to take 
action against trading partners who are racking up very large trade 
surpluses with us, or having us incur large trade deficits with them, 
often as a result of unfair trade. We are going to do something about 
it.
  Well, that is a refreshing change in U.S. policy. The major problems 
we face are bilateral trade deficits of enormous proportions with both 
Japan and China. There are other problems, of course. One of the more 
significant problems for those of us in grain country is the problem 
with Canadian grain exports, which we are trying to address.
  Let me speak a minute about the bilateral problems we have with Japan 
and China--a $59 billion trade deficit with Japan; a $24 billion trade 
deficit with China. That is an $84 billion aggregate trade deficit with 
Japan and China, which is two-thirds of our total trade deficit with 
just two countries.
  What does that mean? When you have a $59 billion trade deficit with 
Japan, it means we are buying $59 billion more from them than we are 
selling to them. It means instead of jobs being here, they are there. 
It means instead of profits vesting here, it is profits vesting there; 
new investment there rather than here. The huge deficits weaken our 
country.
  Should we always have a zero trade balance? No, not at all. Should we 
allow this to happen? Let me refer to this chart. This represents the 
trade deficits going back to 1960 with Japan. Take a look at it. You 
can see all along the line through the administrations--Kennedy, 
Johnson, Johnson, Nixon, Ford, Carter, Reagan--the trade deficit gets 
worse and worse and worse. Throughout all of these trade deficits, we 
have new 5-year plans. The new 5-year plan in Japan is: Yes, we are 
sorry, we will open our markets and let more American goods into Japan.
  The fact is that it has not happened. We went back and took a look at 
what the administrations were saying through a 30-year period, and at 
each one of these deficit levels, people were talking about their great 
determination to change trade policy, but that is all. Our mistaken 
trade policies are going to ruin our country, wreck our economy.
  Yet nothing was done, except the public lamenting about the 
circumstance. There was no real change in public policy.
  For 30 years, we had a parade of administrations concerned about 
trade policy with Japan. In fact, as this chart shows, the problem has 
gotten much worse rather than better. We have the same circumstance 
with China, except in the more recent years. Exploding trade deficit, 
but no decisive action by the United States.
  The Clinton administration says let us take some action. President 
Clinton announced he will revive our use of the so-called Super 301 
law. Super 301 provides that if a country is guilty of unfair trade 
practices and exhibits enormous trade surplus with us, then we should 
take some action.
  Lord, you would think that President Clinton, in that decision, had 
taken a wrecking ball to our economy. All the institutional thinkers, 
the muscle-bound thinkers of trade, wring their hands and almost cut 
their throats over this. They say: This is just awful. The 
administration is going to start a trade war. These people are not 
thinking. This is irresponsible, they say.
  It is not irresponsible. It is the first sober thought on trade for a 
long, long time in which people in this country in charge of trade 
policy see what is hurting our country. We should not be victims of 
unfair trade, and we should not find closed markets to our goods, and 
we should not have these kinds of trade deficits with countries like 
Japan.
  (Mr. CAMPBELL assumed the chair.)
  Mr. METZENBAUM. Mr. President, will the Senator yield?
  Mr. DORGAN. I am happy to yield to the Senator from Ohio.
  Mr. METZENBAUM. I would just inquire. Though there was not a 
formalized agreement we vote at 10 a.m., there was a full 
understanding.
  I was very pleased to yield my time to the Senator from North Dakota.
  Could the Senator from North Dakota summarize promptly so we could 
proceed on to the vote?
  Mr. DORGAN. I am happy to.
  Mr. METZENBAUM. I thank the Senator.
  Mr. DORGAN. Mr. President, let me finally say that the trade problem 
we have with Japan, China, and other countries is a merchandise trade 
balance that, on this chart, is a frightening picture in red. But the 
trade disaster in our overall trade that you see scored on this chart 
is offset, at least with respect to some good news in the agricultural 
sector of trade, which is shown in green. Agriculture records a net 
trade surplus for the United States.
  We have serious problems with Canada, which I have discussed on the 
floor before and which I will discuss again. We have serious problems 
in other areas, as well. But I just wanted to come to the floor to say, 
at a time when the White House is under siege, criticized by virtually 
everyone, we ought to take a look at some of these policies that are 
fresh, new, and exciting and that represent economic policies this 
country has needed for a long, long time.
  The trade policy pursued by the President and the Trade Ambassador 
with respect to Japan and others is not a policy designed to hurt our 
country. It is designed to help our country. It is not designed to 
confront Japan in an unfair way. It is designed to say to Japan and 
others that we expect from you reciprocal trade; we expect from you 
fair trade. When we have that kind of trade relationship with you, we 
will be satisfied. Until we have that kind of trade relationship with 
you, it drains jobs and economic strength from our country in an unfair 
way, and we will not be satisfied.
  That is the message. Those of us who support this kind of change in 
trade policy should continue to support this administration vocally and 
as strongly as possible until we straighten out a problem that has 
languished now for three decades.
  I again say to this President and to this Trade Ambassador, ``Good 
job, and many of us in Congress support you and want to work with you 
as we pursue these trade goals.''
  Mr. President, I wish to speak about the need for an aggressive U.S. 
trade policy, especially in the area of agricultural trade. Also, I 
want to urge an appointment in the administration to help make our 
agricultural trade policy more aggressive.
  First of all, I want to recognize the long-needed and refreshing 
change in course that our U.S. Trade Representative Mickey Kantor is 
trying to chart for U.S. trade policy. In his first year in office, Mr. 
Kantor has demonstrated he is willing to fight for American producers 
and workers. He appears to be a trade ambassador who puts American 
interests ahead of ``free trade'' chants; who puts opportunities for 
American businesses and farmers first; and who puts jobs for American 
workers first.
  Our trade policies have been sorely in need of leaders like President 
Clinton and Mr. Kantor for a long time, and I want to give him a vote 
of confidence.
  Mr. Kantor is fighting to correct a worsening trade problem that is 
bleeding U.S. economic strength by the buckets. That problem is our 
spiraling bilateral trade deficits with two big economic powers--Japan 
and China.


              bilateral trade deficits bleed u.s. economy

  Our 1993 merchandize trade deficit with Japan was $59 billion; with 
China, $24 billion. The total of those two deficits, $84 billion, 
represents two-thirds of the entire U.S. trade deficit with the world--
$125 billion. Our imbalance with just two nations is most of the 
problem.
  Why are these trade deficits a problem? Why does it matter?
  It matters because large trade deficits are scorecards marking the 
strangulation of our economy. Here is why.
  A trade deficit means we in the United States are importing more than 
we are exporting. When U.S. dollars are spent on imports, the profits 
go to foreign companies in other nations. There, the dollars go to the 
producers and workers of those nations.
  When we import more than we export, it means more U.S. dollars go to 
produce food, or cars, or computer chips, or other products in other 
nations, and fewer are used to buy what we produce in the United 
States. That means less production in America, less work, and fewer 
jobs.
  Trade deficits represent a withering of U.S. productive capacity. 
They mean we are exporting our production to other nations--exporting 
the very base of our economy, our jobs, our wealth.
  That is why we cannot afford the $59 billion trade deficit we just 
recorded with Japan for 1993. That $59 billion was $59 billion fewer 
dollars in sales our own producers did not make in 1993.
  The trade deficit was $59 billion more dollars that Japan got to 
either invest in new production at home, or to invest in production in 
the United States and other nations, and then pull the profits back to 
Japan. Inasmuch as this occurs, the United States serves as an economic 
colony.


               united states-japan trade: what went awry?

  What has brought our trade relationship with Japan so far astray that 
we would record a $59 billion deficit in 1 year? What went awry?
  The problem did not arrive full-blown in 1994. It has a history.
  In 1965, nearly 30 years ago, we began recording trade deficits with 
Japan. Japan rebuilt its economy after World War II, using economic 
policies directed at high production and exports, but freezing out 
virtually all imports not needed for its own factories. After some 
years those policies started to take their toll in United States-Japan 
trade, and in 1965 we saw the balance tip against the United States: a 
$359 million deficit.
  It was a great concern at the time. A recent Los Angeles Times 
article quotes then--Commerce Secretary John Connor: ``We are 
determined to uphold the principles of equity and reciprocity--
positively or negatively--whichever is called for.'' Our Government 
leaders were talking tough.
  President Nixon was alarmed, too, when the deficit with Japan climbed 
to $4.1 billion in 1972. So alarmed that he said our disputes on trade 
access and so forth could ``tear the fabric of our alliance.''
  We have watched a 30-year parade of Presidents and administration 
official disturbed about our unequal trade relationship with Japan. 
Leaders wrung their hands about the problem, and even talked tough at 
times, but didn't make serious changes in the way we buy Japan's 
products while Japan blocks ours from its market.
  The merchandise trade deficit was $1.1 billion in the final year of 
the Johnson administration. It was $4.1 billion at the end of President 
Nixon's first term, and $5.5 billion when President Ford left the White 
House. It was $10.1 billion in the last year of the Carter 
administration.
  By the 1980's, the disparity between an accessible United States 
market, on the one hand, and a trade sanctuary in Japan on the other, 
had become economically intolerable. President Reagan responded to 
Japan's violation of a trade agreement on semiconductors, and he 
imposed some sanctions. But, the deficit in President Reagan's last 
year had climbed to $52 billion. It's worth noting that this deficit 
shot past $50 billion despite the efforts by the U.S. Federal Reserve 
Board to cut the exchange value to the dollar, a means of boosting U.S. 
exports and discouraging imports.
  For the past 5 years our trade negotiators have been negotiating with 
Japan, and the United States has been recording $40-50 billion deficits 
each year. And, for 1993, the trade deficit with Japan was $59.3 
billion.


         the solution: ``reciprocal trade,'' not ``free trade''

  The United States has drifted into a deeper and deeper deficit with 
Japan because our trade negotiators have not understood the meaning of 
``reciprocal.'' In the trade arena, it simply means that we will treat 
other nations as they treat us. Period.
  Let me give you an example of our failure to demand reciprocity. In 
1988 our trade negotiators secured a trade agreement with Japan on 
beef. U.S. negotiators and our meat exporters celebrated the great 
victory. You would have thought they won the Olympic gold medal for 
trade negotiations.
  In the beef agreement, Japan agreed, basically, to discontinue 
requirements for import licenses on beef, and to about 75 percent of 
the product value to 50 percent. A 50 percent tariff and we thought we 
had pulled off a coup.
  Certainly, we are now exporting more beef to Japan than we did before 
1988. That is wonderful for our ranchers and our meat processors, and I 
certainly support the progress we achieved.
  However, the point is this: we settled for grossly unequal trade.
  Fortunately, Mr. Kantor seems to know the meaning of the word 
``reciprocal.'' For example, our Trade Representative will renew our 
use of the so-called ``Super 301'' procedures to deal with nations that 
do not open their markets to our products as we open our market to 
them. He has been criticized from some quarters for being too narrow in 
fighting for American interests. In fact, it is his job to represent 
the industries and businesses and farmers of America, and I applaud 
him.

  After nearly 5 years of fighting with administration officials to 
correct the very unfair trade agreement with Canada concerning Canadian 
grain exports, we from grain-producing States finally found in Mr. 
Kantor someone who is willing to stand up for American farmers. He and 
Secretary of Agriculture Mike Espy are working to correct the problem, 
and are trying to gain the support of the rest of the administration in 
their efforts.
  So, as a Senator from an agricultural State, I have to say that Mr. 
Kantor's record so far has been encouraging.


                    an advocate for farmers at ustr

  I did, however, send our Trade Ambassador a letter this week asking 
that he appoint an advocate for American farmers and ranchers to a very 
high position in his office. Eighteen other Members of Congress signed 
this letter with me, asking that Mr. Kantor find an adviser who is very 
knowledgeable in agriculture, and who will stand up for our farm 
producers in the trade arena.
  I made this request because of the great importance of agricultural 
trade to the economic success of family farmers and our rural 
communities, but also to the success of our entire national trade 
performance.
  Unlike our unfortunate performance in trade across many economic 
sectors, agricultural trade has been a consistent success, recording a 
huge trade surplus each year. For example, while the United States 
recorded an overall merchandise trade deficit of $126 billion for 1993, 
this Nation will enjoy an $18 billion surplus in trade of farm and 
ranch products.
  If you look at the chart I brought here today, you can see that since 
the 1970's the United States has drifted from a near-balance of trade 
with the world to a staggering deficit. Meanwhile, our agriculture 
exports total about $42 billion annually, scoring a positive balance of 
about $18 billion annually in that sector.
  The United States remains very competitive in the agricultural trade 
sector, and we must build on that strength. That is why I have called 
for a trade tiger at USTR to speak for farmers.
  We will face many critical junctures in agriculture trade in the 
years ahead. Here are a few examples of immediate concern:
  We are trying to resolve some extremely difficult trade conflicts 
with Canada on trade of wheat, barley, sugar, dairy products, potatoes, 
peanuts and other products. The results of negotiations will be 
critical to thousands of American farmers.
  We will submit our tariff schedules to the proposed new World Trade 
Organization later this month, and the way those tariffs are 
constructed will affect U.S. farmers for generations.
  We have begun the implementation of the North American Free Trade 
Agreement, and it will be the responsibility of USTR to represent 
American farmers, to ensure they can, in fact, pursue the trade 
opportunities in Mexico and Canada that the trade agreement allows.
  The U.S. Department of Agriculture will send a trade delegation in 2 
weeks to China, Thailand, Indonesia and Singapore, to seek new trade 
opportunities and to reduce barriers to those Far East markets.
  In all these cases, and in dozens more, we, as a Nation, must assume 
an attitude about trade that is better for our economic interests. We 
have to believe that we deserve reciprocity--that we deserve to be 
treated as well as we treat others. And, then we must solidly reflect 
that belief in our foreign trade dealings. It appears President Clinton 
and Mr. Kantor are trying to move toward a policy of trade reciprocity, 
and I hope the Members of this body will support them.
  In the area of agricultural trade, however, I have asked for a 
special help for Mr. Kantor to pursue a more aggressive trade policy. I 
want to see a top-level official at USTR who understands agriculture 
and can weigh in with authority on behalf of American farm producers. I 
hope that others in this body will also join me in my request to 
Ambassador Kantor.
  Mr. President, I yield the floor.

                          ____________________