[Congressional Record Volume 140, Number 140 (Friday, September 30, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                            THE GATT DEBATE

  Mr. MOYNIHAN. Mr. President, I rise briefly but with great 
satisfaction to note that the majority leader has worked out with the 
Republican leader an agreement under which we will return on Wednesday, 
November 30, to take up the implementing legislation of the Uruguay 
round of the General Agreement on Tariffs and Trade. The next day, 
December 1, will conclude the 20 hours the statute provides. This will 
be a moment deserving of some notice by the American people.
  Fifty years ago at the Bretton Woods conference the allied nations 
gathered, recognizing that the economic failures of the peace treaty 
negotiated at the end of the First World War led directly to the Second 
World War, and thought to put in place three major institutions that 
would serve the purposes that had gone unserved with such disastrous 
consequences.
  The first was the International Bank for Reconstruction and 
Development, which we know as the World Bank; the second was the 
International Monetary Fund--both headquartered here in Washington; and 
the third was to be the International Trade Organization. It was 
supposed to have its headquarters in Havana, as a matter of fact.
  The first two institutions came into being. The third, the ITO, as it 
had come to be known, went down to defeat in no small part because of 
opposition in the Senate Finance Committee, and an informal arrangement 
was put together, the General Agreement on Tariffs and Trade, which 
refers not to an organization but just to a meeting that took place. 
And a British civil servant, Eric Wyndham-White, was recruited to be a 
kind of informal convener of these GATT conferences. And from time to 
time they have taken place, and some institutional structure has 
evolved.
  Now, however, yesterday morning in the Finance Committee, by 
unanimous vote, we approved the implementing bill, including the 
proposal to establish a World Trade Organization, to be a real dispute 
settlement mechanism in trade matters. The disputes in trade matters of 
the 1930's were settled in the Second World War. There are better ways 
for doing this, and also to facilitate the gradual opening of the world 
trading system, of which the largest event in history to date will be 
the Uruguay round.
  The numbers are startling, Mr. President. We will see tariff cuts on 
U.S. exports of 40 percent worldwide, and in the European Union, 
Europe, 50 percent. That is a cut in the cost of American goods sold 
abroad.
  It will be the largest tax cut, if you like, in the history of the 
world, $750 billion worldwide over a decade for American exports. It 
will be a $35 billion U.S. tax cut over the next 10 years. We buy 
imported goods, and why ought we not? You cannot trade if you do not 
trade back and forth.
  It is not always remembered because we are so used to the income tax, 
but a tariff is a tax. Up until the income tax came into effect, under 
President Wilson in 1913, the majority of the revenues of the Federal 
Government came from tariffs.
  The first bill enacted by the new Congress in 1789 and signed by the 
President, concerned the oath of office for the new Republic in a world 
where monarchy was the norm. And the second bill, among other things, 
imposed a 10-cent-a-gallon tariff on Jamaican rum. There was a whole 
list of tariffs by which revenue would be raised to manage our affairs.
  We are going to cut those tariffs. It is a tax cut well deserved and 
welcomed because there is going to be an enormous increase in American 
exports.
  The comment was made this morning that after the Tokyo round, signed 
in 1979, passed the U.S. Senate 90 to 4, the comment was made that U.S. 
jobs disappeared.
  Jobs did not disappear. We have had the most extraordinary increase 
in jobs in the 15-year period since that I can recall. I do not want to 
be held to memory. But in 1979 there were 98.8 million persons in 
civilian employment. In 1993 that had grown nearly 21 million to 119.3 
million. That is a solid 20 percent increase in a 15-year period.
  I do not know where there has been such an increase at any other 
time. Possibly World War II would represent that. But that is a 
formidable growth in employment, not always at the wage levels we would 
like, but even so, I think we can look forward to more.
  The Council of Economic Advisers does very much expect that we will 
see a $100-billion to $200-billion growth in the U.S. gross domestic 
product over the next 10 years as a consequence of the Uruguay round. 
There will be exports of manufactured goods sent overseas. There will 
be some losses as well.
  But I would like to say, if I can, to the Senate and to you, Mr. 
President, that we need not be fearful of these things. It would be, 
oh, 30 years ago that the very distinguished economist, Ray Vernon, now 
at the Massachusetts Institute of Technology, described what he called 
the ``trade cycle.'' It meant to apply to an advanced economy, but he 
had the most advanced economy then, as now, in mind, the American. He 
was talking about how when an invention takes place, a new product 
appears.

  An automobile, for example. The internal combustion engine was 
developed in Europe, as well as here. But the first vast manufacture of 
automobiles was in the United States.
  And following the appearance of a new product here, gradually that 
product begins to be exported abroad. Then you will find that it begins 
to be manufactured abroad. And then, in the last phase of the cycle, it 
will be exported from abroad and imported into the United States. That 
is fine, as long as in the meantime we are thinking up new things, as 
indeed we incredibly always are.
  Just think of the phenomenon that now seems familiar to any of us, 
the fax machine, which is sort of replacing the telephone and the mail; 
just instant communications anywhere in the world, written documents. 
It did not exist 10 years ago, except in an experimental mode.
  Think of the cellular telephone. We spend half our time in 
automobiles or walking around the parks on the telephone.
  On the subject of trade, I spoke the other day with the chairman of 
the Kodak Co., George Fisher. I called him in his office in Rochester. 
He called me back from a parking lot in Cologne on a cellular phone. 
Again, a product that did not exist 10 years ago.
  That trade cycle is normal, not to be feared; in fact, to be 
encouraged.
  I do not think we could thank the majority leader nor the Republican 
leader too much for making it certain that we will have the GATT 
agreement approved by December 1. The President has our commitment on 
this. We have the votes. I repeat, the measure was reported out 
yesterday morning in the Finance Committee unanimously.
  And as the President goes to the economic summit in Asia and then to 
the Americas summit in Miami in the next few months, he will go with 
the confident knowledge that the United States not only maintains its 
leadership in world trade but brings it to an ever greater culmination. 
The culmination of 60 years. I mentioned Bretton Woods 50 years ago. 
You can go back 10 years earlier to the reciprocal trade agreement 
program that Cordell Hull began under Franklin D. Roosevelt, and we 
learned a great lesson, a bitter lesson.
  Mr. President, if you were to list five, say, arbitrarily, five 
events that led to the Second World War, that catastrophic war, well, 
the first would be the Versailles Treaty and what Lord Keynes called, 
in his pamphlet, the ``economic consequences of the peace.'' They did 
not see that an economy the size of Germany needed to be allowed to 
expand and grow and be integrated into the existing economic system.
  But after No. 1, the treaty at the end of World War I, the second 
event would be the Smoot-Hawley tariff. It took place on this floor in 
1930. We raised tariffs to an average level of 60 percent. And, indeed, 
just as predicted by its advocates, we saw imports strapped by one-
third in 2 years' time. But so were exports.
  I had occasion to say in the caucus the other day, that if you like 
50-cent wheat, you can get it again. Just go that route. That is what 
the Great Depression did to the farmers, much less to the merchant 
marine, to the manufacturers.
  We do not have to have that now. We are turning away from that. Had 
we not gotten this agreement, the possibility of a European union 
building walls, the possibility of an Asian system of building walls, 
and us doing the same, following the practices of the 1930's.
  But after Smoot-Hawley, the British went off free trade to 
Commonwealth Preference, the Japanese began the Asia Coprosperity 
Sphere, unemployment reached 30 percent in Germany, and Adolph Hitler 
came to power in a free election.
  We have said no to all that. We have learned that lesson. And now we 
go forward.
  I want to thank the majority leader for his persistence and his 
ingenuity in working this out. And I would like also to thank my friend 
Senator Hollings for accommodating the Senate, exercising his rights 
under the law, but seeing, even so, that this matter will come to a 
final conclusion.
  He and I go back a long way in these matters. I was one of the 
negotiators under President Kennedy of the Long-term Cotton Textile 
Agreement, which enabled us to pass the Trade Expansion Act of 1962, 
which in turn resulted in the Kennedy round. We have not always agreed, 
but we have not always disagreed, either. He makes powerful points and 
he will make them in the coming debate.
  But in the end, I would say there are 80 votes on this floor--for 
that matter, it might be 90. A great age of world trade is before us in 
which we move out of the simple tariff arrangement for goods and move 
into services, where the great majority of Americans are now employed, 
because we are at the advance, we are at the edge of the economies of 
the world. And now these services will be sold all over the world, just 
as intellectual property--trademarks, patents--will be protected.
  I think we can look forward to a much better future for the whole of 
the world--a stable society, international economy. We can now begin 
serious discussion of the admission to the world trading system, done 
under the General Agreement, of Russia and other members of the former 
Soviet Union, and of the People's Republic of China, as well.
  Good news, and a good time to conclude our work here and get on with 
the other affairs of the Nation.
  I thank the Chair. I yield the floor.
  Mr. MITCHELL addressed the Chair.
  The PRESIDING OFFICER (Mr. Kerrey). The majority leader is 
recognized.

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