[Congressional Record Volume 140, Number 148 (Wednesday, November 30, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: November 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
URUGUAY ROUND AGREEMENTS ACT
The PRESIDENT pro tempore. Under the previous order, the Senate will
now proceed to the consideration of H.R. 5110, which the clerk will
report.
The legislative clerk read as follows:
A bill (H.R. 5110) to approve and implement the trade
agreements concluded in the Uruguay round of multilateral
trade negotiations.
The Senate proceeded to consider the bill.
The PRESIDENT pro tempore. The Chair recognizes the majority leader.
Mr. MITCHELL. Mr. President, and Members of the Senate, under the
Senate rules there will now be 20 hours for debate on this agreement. I
announced in October that I expect that we will complete 12 hours of
debate today and the remainder tomorrow. I hope that any votes which
occur with respect to this agreement will occur at the conclusion of
those 20 hours of debate or at approximately 6 p.m. tomorrow.
Under the rules, the majority leader has control of 10 hours of time
and the minority leader 10 hours of time.
Mr. President, I designate to control the 10 hours of the majority's
time Senator Moynihan 5 hours in behalf of proponents of the
legislation and Senator Hollings 5 hours in behalf of opponents of the
legislation.
Mr. President, I now would like to address the Senate on the subject
and I ask unanimous consent to use such portion of my leader time as is
necessary for that purpose.
The PRESIDENT pro tempore. Without objection, it is so ordered. The
Senate will be in order.
Mr. MITCHELL. Mr. President, I will make a detailed statement
tomorrow just prior to the vote, but I wanted to begin this discussion
by stating my strong support for the implementing legislation for the
Uruguay round trade agreement. I urge the Senate to pass it.
This historic agreement is essential to our economic future. It will
open foreign markets to American goods and services. It will reduce
protectionist foreign trade barriers. It will protect the intellectual
property rights of American individuals and enterprises. It will expand
export opportunities for our agricultural products.
It will create new opportunities for American businesses and farmers
to compete and sell more in foreign markets. It will benefit consumers
by lowering tariffs that increase the purchase price of consumer goods.
A prosperous international community is in the best national interest
of the United States.
That has been the goal of American policy throughout much of this
century. Since the end of the Second World War, we have pursued that
policy goal by working for a free, open, and fair international trading
environment.
Beginning in 1947, our Nation, together with 22 others, negotiated
the General Agreement on Tariffs and Trade. Its purpose was to reduce
tariff barriers and establish international trading rules. The General
Agreement first entered into force in January 1948. It remains the only
multilateral agreement governing international trade.
Six subsequent rounds of trade negotiations have occurred since 1948,
the last in 1979. These agreements lowered both tariffs and nontariff
barriers, eliminated quotas and refined trade rules to respond to new
products and trading patterns.
Since 1948, the world trading nations have worked to further reduce
tariff and nontariff barriers and to further refine the world trading
rules. The Uruguay round agreement is simply a comprehensive
improvement of the previous seven rounds of multilateral trade
negotiations.
Eight years ago, the negotiations on this agreement began in Punta
del Este, Uruguay. For 7 years, three successive American Presidents,
Presidents Reagan, Bush and Clinton have negotiated this trade
agreement.
Congress has repeatedly supported these efforts by renewing fast
track negotiating authority in 1988, 1991, and 1993 to allow our trade
negotiators to conclude the agreement.
Last December 15--almost 1 year ago--the negotiators concluded the
agreement, and President Clinton notified Congress that he intended to
enter into the Uruguay round agreement.
There is no basis for a further delay in approving the implementing
legislation until next year. The international trading system under the
General Agreement on Tariffs and Trade took effect more than 46 years
ago. A global trading system is not a new and untested concept: It has
been an integral factor of our economic policy, working for our
producers and exporters for almost five decades.
Congress has reviewed the Uruguay round agreement thoroughly. There
have been numerous congressional hearings and extensive reports on the
meaning and impact of this agreement on the United States. Almost every
aspect of this agreement has been carefully examined and debated.
It is important that Congress approve this trade agreement this year
so that American businesses can take advantage of the expanding
opportunities in the international marketplace and American workers can
enjoy the new jobs to be generated by expanded trade.
A delay would undermine our economic self-interest.
Economists estimate that when the Uruguay round agreement is fully
implemented, the American gross domestic product will increase between
$100 and $200 billion every year. That growth will produce hundreds of
thousands of new jobs for American workers.
But delaying the implementation of this trade agreement will, in the
best case, cost both U.S. businesses and consumers billions of dollars
in increased sales to foreign markets and higher prices on consumer
goods. In the worst case, a delay in implementing this agreement will
kill the agreement itself and undermine the future of the world trading
system.
It is an agreement which our American self-interest dictates that we
approve, and that we approve now. I urge my colleagues to vote for it.
I thank my colleagues for their attention and, Mr. President, I would
like now to yield to the distinguished chairman of the Senate Foreign
Relations Committee, Senator Moynihan, who has so skillfully guided
this legislation to this point.
Mr. EXON. Will the majority leader yield for a question?
Mr. MITCHELL. Yes, certainly.
Mr. EXON. Mr. President, I ask this question. I think the answer will
be that I will have to rely on the good offices of my colleague.
Debate in the U.S. Senate is supposed to have something to do with
the outcome of the final vote. That is not always the case, but we
continue to think that debate is important in the Senate.
Mr. MOYNIHAN. Frequently.
Mr. EXON. What do we have to do, those of us who have not made up our
minds whether we are opponents or proponents? Do we just have to rely
on the good offices of the body to yield us whatever time we need
before we make a commitment as to which way we are going to vote?
Mr. MITCHELL. The answer is yes. But I will also say that I will be
pleased to work with my colleague and with the distinguished managers--
who I am certain will be helpful and cooperative in that regard.
Mr. HOLLINGS. Will the majority leader yield so I can announce?
Mr. MITCHELL. Yes.
Mr. HOLLINGS. Mr. President, in that we have been assigned 5 hours in
the opposition on this side of the aisle, after talking with the
different colleagues, the consensus, the thought was, that we would
consume 3 hours today during the 12-hour period and 2 hours tomorrow.
So, restricting us just to 3 hours, we have assigned momentarily--and I
hope to keep to this but I do not have much time left: Senator Byrd, 25
minutes; Senator Metzenbaum, 20; Senator Dorgan, 20; Senator Baucus,
20; Senator Wellstone, 15; Senator Bryan, 15, Senator Heflin, 15;
Senator Harry Reid, 15; and 25 minutes to myself to manage it. That
consumes the time.
If some come now and want some time today, we might have to pare back
a few minutes or otherwise put them over to tomorrow.
I thank the majority leader and distinguished chairman and ranking
members on both sides for allowing me this moment. We are trying to
give everybody time and deal it out equally.
For those who have not made up their minds, they can listen. Thank
you.
Mr. MITCHELL. I yield to my colleague from my time.
Mr. EXON. I further inquire--I do not appreciate the last remarks,
probably said in jest, by my friend and colleague from South Carolina,
with whom I worked long and hard, and put in a lot of time on this. I
would simply say that I recognize the pressures that are brought to
bear on someone who controls time. That is why I brought up the
suggestion. And, despite the feelings of the Senator from South
Carolina, my distinguished friend, there are those of us who reserve
the right to make up our minds during the debate.
I know that is a revolutionary idea to place in the U.S. Senate, when
generally we choose up sides and we have to come in here and beg for
time unless we have committed to one side or the other.
I would hope, Mr. President, that maybe some time could be yielded to
the relatively few of us who reserve the right to make up our minds
after debate. I think that the Senate is intended to run that way. But
as we all know, it does not.
I simply say that the rights of the minority have to be protected,
the rights of those of us who have not yet made up our minds have to be
protected, notwithstanding some of the arrogant views of those who have
already made up their minds.
Mr. MITCHELL. Mr. President, I will see that the Senator is
accommodated.
Mr. EXON. I thank the majority leader.
The PRESIDENT pro tempore. Without objection the time will now begin
running.
Who yields time? The Senator from New York [Mr. Moynihan].
Mr. MOYNIHAN. Mr. President, I will yield myself 10 minutes to get
our debate going and take the occasion to assure my friend from
Nebraska that he will have time to speak and time to listen and
participate. This is a deliberative process and it would please him to
hear, I think--and I shall speak of it in just a moment--that one of
the most distinguished and respected constitutional lawyers, professors
of constitutional law in the United States, Laurence Tribe, who
presented a brief basically in opposition to this legislation on the
grounds that it should be a treaty, has now written to us to say he has
thought it over and changed his mind.
This is a deliberative process and new information, new argument
brings new perspective. That is what we would hope to do.
Mr. President, I ask unanimous consent that the letter by Professor
Tribe concerning the present legislation before us be printed in the
Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Harvard University Law School,
Cambridge, MA, November 28, 1994.
To Hon. George J. Mitchell; Hon. Robert Dole; Hon. Ernest F.
Hollings; Hon. Larry Pressler; Hon. Thomas S. Foley; Hon.
Newt Gingrich; Hon. Richard A. Gephardt; Ambassador
Michael Kantor; Assistant Attorney General Walter
Dellinger.
From Laurence H. Tribe.
Re treaty ratification of the GATT Uruguay round.
I have read with care the thorough and thoughtful
memorandum of November 22, 1994, from Assistant Attorney
General Walter Dellinger to Ambassador Michael Kantor on the
question whether the Uruguay Round Agreements concluded under
the auspices of the General Agreement on Tariffs and Trade
(the ``GATT'') must be ratified as a treaty. A number of the
arguments advanced in this most recent memorandum require me
to give further consideration to the conclusions I have
previously expressed on the subject of the Uruguay Round
Agreements in letters and memoranda to President Clinton;
Assistant Attorney General Dellinger; Abner J. Mikva, Counsel
to the President; and Senators George J. Mitchell, Robert
Dole, and Robert C. Byrd; and in my testimony before the
Senate Commerce Committee on October 18, 1994. The newest
memorandum from Assistant Attorney General Dellinger offers a
level of analysis far superior to that previously set forth
by the Administration and is thus testimony to the
Administration's serious consideration of the constitutional
questions raised by the Uruguay Round Agreements and by the
manner of their approval. At the moment, candor compels me to
concede that reasonable minds may differ on the proper
resolution of the constitutional questions posed by the GATT.
In short, the issue is a close one. Although I continue to
believe that the constitutional concerns that I have
previously raised are deeply important, I cannot say with
certainty that my prior conclusions should necessarily be
adopted by others or are ones to which I will adhere in the
end after giving the matter the further thought that it
deserves.
I do not mean to give my own views undue importance, but
the prospect that my earlier statements might have some
effect, however slight, in the debates in the House of
Representatives on November 29, 1994, and in the Senate on
December 1, 1994, would make it inappropriate for me not to
express this substantial caveat. Although I will be writing
again on the subject in a forthcoming article scheduled to
appear in the Harvard Law Review in the spring of 1995, that
analysis obviously will not come in time to be of any use in
the impending debate.
I should perhaps explain that the strength with which I
previously expressed my negative conclusions on this subject
were in part a reaction to the weaknesses (as I continue to
perceive them) of the arguments previously marshaled on the
other side, both by the Administration and by scholars who
have come to its defense with constitutional arguments that
have struck me as both shallow and contrived. In my future
writing on the subject, I will be interested in exploring
what I regard to be the troublesome character of these
constitutional analyses, itself symptomatic of problems in
contemporary constitutional discourse. For now, however,
although it might be less embarrassing for me simply to say
nothing, I regard it as my responsibility, in light of
Assistant Attorney General Dellinger's recent forceful
analysis, to say that I believe the Clinton Administration
has based its position on the Uruguay Round Agreements on
constitutional arguments that are both powerful and
plausible. It would therefore be incorrect to quote or to
rely upon my earlier contrary views without adding this
important qualification.
In closing, I reiterate the suggestion that I made to the
Senate Commerce Committee that the Senate give serious
thought to the constitutional role delegated to it by the
Treaty Clause of Article II. Although the GATT will likely be
approved on a ``fast track,'' the Senate constitutional role
in treaty ratification deserves further, sustained
consideration.
Mr. PACKWOOD. Mr. President, may I just make a brief announcement?
Mr. MOYNIHAN. Do, sir. I yield to my colleague.
Mr. PACKWOOD. Mr. President, I will be managing the time on the
Republican side, and we will be dividing the time evenly between those
who support and those in opposition, so I will be allocating the time
to both proponents and opponents on our side. I will do the best I can
to allocate it fairly. But I would suggest this--and we have all seen
this. But my hunch is that at about 3:30 or 4 o'clock tomorrow----
Mr. MOYNIHAN. Tomorrow----
Mr. PACKWOOD. All kinds of people are going to come and want time.
The majority leader--or minority leader now, soon to be majority
leader--Senator Dole, wants some time. I will want some time, closing
time. For all of those who wish to speak, we would rather have them
speak today rather than tomorrow, and as we get close to the end of
time tomorrow it may be difficult to work everybody in.
The PRESIDENT pro tempore. The Senator from New York has the floor.
Mr. MOYNIHAN. I thank my friend, as I have frequently said, the once
and future chairman. I did not think he would be future chairman in
that early a future. And I expect around 11 o'clock we will be looking
for colleagues who wish to comment and there you are.
Privilege of the Floor
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that Eileen
Hill, from the staff of the Committee on Finance, have privilege of the
floor during the consideration of this legislation. Miss Hill is a
legislation fellow with the committee.
The PRESIDENT pro tempore. Without objection, it is so ordered.
Mr. MOYNIHAN. Mr. President, on July 8, 1916, in a speech on the
House floor, Cordell Hull, then a young Congressman from Carthage, TN--
the same town from which our distinguished Vice President, presiding
officer in exceptional circumstances comes--called for a permanent
international trade congress.
It was a hugely prescient idea. He understood that the inability of
the European powers--the established ones--to accommodate the
enormously increased economic importance of Germany had, in
considerable measure, led to the First World War.
He saw that trade was a source of conflict as far back as conflict is
recorded and that it should be subject to the same kinds of rules and
procedures internationally that we had established in our internal
arrangements.
Our Constitution is very careful to see that trade disputes, which
are really the bulk of the litigation that takes place in our courts,
are given validity across State boundaries and that the trading
partners, knowing that whenever disputes arise, if litigated, the
decisions will be held valid everywhere in the Union, are all the more
disposed to entering such contracts. This is a point which Alexander
Hamilton made in his Report on Manufacturers given to the Congress in
1791.
Hull saw the extension of this great understanding to a world market.
That was the beginning of the century. Two vast wars and much turmoil
in between bring us to the end of the century and to the completion of
that vision. It reached its nadir in 1930 when, in the Smoot-Hawley
Tariff Act of that year, we raised tariffs to an average of 60 percent
in our country. Imports dropped by two-thirds; exports dropped by two-
thirds; the British went off free trade, establishing a colonial
empire's imperial preference; the prosperity feared in Japan began. In
1933, in a parliamentarily correct election, Adolf Hitler became
chancellor. War was 6 years away--5. Not even that, Mr. President.
(Mrs. FEINSTEIN assumed the chair.)
Mr. MOYNIHAN. Madam President, in 1934, Cordell Hull began the
reciprocal trade agreements program, an arrangement whereby the
Executive could enter trade agreements and Congress would approve. It
was a brilliantly innovative device, and every President, Madam
President--whom we welcome back in glory--every President since has
held to this proposal, this basic construct.
It cannot be too much stated or stressed that the agreement before us
today was proposed under President Ronald Reagan, to whom we send the
great good wishes of the Senate on this first occasion that we have met
since his announcement of his illness. It was largely negotiated by
President Bush's representatives, notably Carla Hill, who has been
indomitable in support of this measure, and it was concluded, as the
majority leader observed, a year ago in Geneva. The formal signing took
place in Marrakesh in Morocco this spring, but the work was done a year
ago. It took a long time to do it, 3 years longer than expected,
because more was done than in past trade agreements.
Most important, we have brought agricultural interests into the GATT.
I hope the Senator from Nebraska will take note of that, that
agricultural products are now under the GATT. They have never been
previously; it has been a manufactured goods affair. And the export
subsidies which have so bedeviled our exports of agricultural goods are
to be severely cut back, a concession finally made from the European
Union, which is one of the reasons this bill comes to us 3 years later
than originally expected.
The bill provides protection for intellectual properties, our largest
growth industries in this country, which have been bedeviled by
widespread piracy, and it creates a WTO. This World Trade Organization
is no more than a rather pale image of the International Trade
Organization which was contemplated at the end of World War II. The
Bretton Woods agreements of 1944 proposed the International Bank for
Reconstruction and Development, which we know as the World Bank and the
International Monetary Fund; they did not get to the details of an
international trade organization, but they clearly anticipated that one
would be proposed and adopted.
President Truman did, indeed, propose that there be such an
organization with many more powers than the WTO will have. It failed of
adoption in the Congress. The House Foreign Affairs Committee never
acted, principally due to opposition in the Senate Finance Committee,
as the distinguished former chairman, future chairman knows.
Madam President, there has been a great deal of talk about this new
organization as if it is something very new and very large and
threatening. May I make the simple point that the GATT, which began, in
the absence of an ITO, as simply an informal arrangement--a British
Treasury official, Eric Wyndham-White, whom I had the privilege to
know, with just a small secretarial staff, ran it on a very informal
basis--over 40 years, the staff of the General Agreement on Tariffs and
Trade has reached 450 persons. The staff estimates that, with the new
responsibilities that the World Trade Organization will devolve onto
the GATT in consequence, the 450 would acquire 15 additional employees.
Four hundred sixty-five persons in the WTO. Madam President, that is
one-third the size of the Capitol Police force, scarcely a daunting
prospect of world government. The dispute settlement decisions that
were made in the GATT were arbitration decisions really, given
agreements, given the rules. Over the last 40 years, there have been
about four such cases a year that have come to be completed.
Under the GATT arrangement, there was a veto, and, for example,
Europeans on agricultural products were repeatedly saying, ``Well, yes,
the panel decided the American exports were being unfairly
discriminated against, but we even so will not accept it.''
Madam President, I yield myself 5 additional minutes which I may not
need.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MOYNIHAN. Madam President, I simply make the point that we are
not creating anything new in this World Trade Organization. We are
simply codifying the practice of consensus, which has been the practice
of the GATT.
May I make the point that I wonder if my friend from Oregon knows:
That there has not been a vote in the GATT for 35 years. Yes, this is
not a litigious organization in that sense. When there is a dispute--
and contract disputes are the bread and butter of the American judicial
system, and properly so--the parties concerned pick nonpartisan
arbiters from other countries. They make their case and may live with
the results. That is what a system of law is about.
Finally, Madam President, it was the view earlier in a brief by
Laurence Tribe, who is a professor of constitutional law at Harvard
University Law School, that the WTO needed to be a treaty. That it
should be a treaty sent to us by the President and decided here in the
Senate, not at all in the House, even though the WTO is an article I
issue. Commerce and revenue are its principal features. Until the
income tax, our principal source of revenue was tariffs. They are
taxes.
This is a tax cut before us. Treating this matter as a treaty would
keep the House out of this and confine it to the Senate, contrary to
the practice since 1934. Contrary to the repeated times, this Senate
has confirmed and reconfirmed the propriety of reciprocal trade
agreements and the approval of trade tariff schedules by legislation.
Professor Tribe thought otherwise.
Just yesterday, in a memorandum sent to the majority and minority
leaders and the honorable chairman of the Commerce Committee, Senator
Hollings, and others, Professor Tribe observed that he had read the
memorandum from the Assistant Attorney General, Walter Dellinger, also
a professor of constitutional law, and had been thinking about it. And
on reflection, he writes, that the memorandum from Assistant Attorney
General Dellinger offers a level of analysis far superior to that
previously set forth, and thus is testimony to the administration's
serious consideration of the constitutional questions raised. And then
I quote:
At the moment, candor compels me to concede that reasonable
minds may differ on the proper relation of constitutional
questions posed by the GATT. In short, the issue is a close
one although I continue to believe that the constitutional
concerns that I have previously raised are deeply important.
I cannot say with certainty that my prior conclusions should
necessarily be adopted by others, or that I will adhere to
them at the end after giving the matter further thought that
it deserves.
In a word, Madam President, the brief in opposition has been
withdrawn. I think that is a good spirit of open inquiry with which to
begin this debate. The legality and constitutionality of our
procedures, in place for two-thirds, or more than half a century, 60
years, is not in question. The wisdom of our action is scarcely in
doubt. Yesterday, by a 2-to-1 majority, the House approved this
agreement. It now comes to us. It has been reported from the Committee
on Finance 19 to 0. It is in the tradition of bipartisan trade policy.
It is the largest trade agreement in history. It sets in place the
institutional arrangements that will keep the peace after the long cold
war, after the tormented 20th century.
Madam President, I urge the adoption of this legislation.
Mr. President, on July 8, 1916, in a speech on the House floor,
Cordell Hull, then a Democratic Congressman from Tennessee, called for
a ``permanent international trade congress'' to formulate agreements to
dismantle destructive trade practices. Today, over 78 years later, it
is with great honor that I, as chairman of the Committee on Finance,
bring to the floor of the Senate legislation that will finally realize
that vision.
Mr. President, over the past several weeks, a number of persons have
observed, quite accurately, I believe, that we are about to cast a vote
of monumental importance--on a par with the historic and defining votes
on the League of Nations and the Marshall plan. The legislation that we
take up this morning will approve and implement the largest, most
comprehensive trade agreement the international community has yet
witnessed. If this Senate approves the Uruguay Round Agreements Act, as
I fully expect it shall, that action will represent nothing less than
the culmination of 60 years of American trade policymaking--
policymaking that began with Cordell Hull's Reciprocal Trade Agreements
Program in 1934 and that has, ever since, been carried out in the best
bipartisan traditions of this body.
Mr. President, it was only 8 years ago, September 1986, in Punta del
Este, Uruguay, that trade ministers from around the world gathered to
launch the eighth round of multilateral trade negotiations under the
auspices of the General Agreement on Tariffs and Trade--the GATT, a
provisional arrangement that has served as a forum for trade agreements
since 1948.
The ministers' goals were ambitious--indeed, too ambitious for the
timetable they contemplated. They sought to strengthen the rules
governing international trade, to bring trade in agriculture, services,
and textiles under the rules, to protect intellectual property and
trade-related investment. Such far-reaching objectives could not be
reached in 4 years, as they had planned. Not until December 1993,
rather than 1990, was final agreement struck. But that agreement was
one that largely achieved their objectives.
Objectives, I must point out, that were both shared and guided by the
Congress of the United States. The Congress laid down the United States
objectives for the Uruguay round in the Omnibus Trade and
Competitiveness Act of 1988, goals shared by the executive branch and
sought by negotiators under three American Presidents, Republican and
Democrat alike. I am pleased to report that, as a result of the
endeavors of the administrations of Presidents Reagan, Bush, and
Clinton, in close consultation with the Congress, the agreement before
us today largely meets the standards set forth by the Congress 6 years
ago. Not in total, we must acknowledge, as I suppose the objectives of
other countries were likewise qualified in the give-and-take of
negotiation. But met in large part.
Optimistic reports on the economic impact of the Uruguay round
abound. The GATT organization itself estimates that, in 10 years' time,
U.S. gross domestic product [GDP] will increase by $122 billion
annually as a result of this agreement. Our own Council of Economic
Advisors estimates an annual increase in U.S. GDP of $100 to $200
billion. Other studies suggest smaller increases, but it is notable
that all economic analyses are positive--a singular event in the world
of economists.
The economic benefit of many aspects of the Uruguay round, such as
improved intellectual property protection and rules for services trade,
are difficult to quantify here and now. But its simplest aspect alone
presents a compelling case--that is, the nearly $750 billion in tariff,
meaning tax, cuts to be made worldwide. The largest tax cut in world
history. A tax cut of $32 billion over 10 years on products imported
into this country alone. And an average tax cut of 40 percent on the
products we export to the rest of the world. I would ask my colleagues:
What other economic measure could we consider with such far-reaching
effect?
Most importantly, the Uruguay round means jobs--300,000 to 700,000
more American jobs once fully implemented. And these will be good jobs,
for jobs engaged in producing exported goods typically pay 13 percent
more than the average.
Much will be made during this debate, I expect, of the decline in
manufacturing jobs over the last decade, attributing such in large part
to the failings of American trade policies. Indeed, employment in
manufacturing has declined between 1979 and 1993--falling from 21 to 18
million--even though employment in the nonagricultural sector of the
economy has increased by almost 25 percent. But why, we must ask?
In significant part because American companies have succeeded in
becoming the most productive in the world. From 1979 to 1993, while
manufacturing employment declined by 14 percent, productivity increased
substantially so that industrial production in the manufacturing sector
increased by 38 percent. The result--more output, fewer workers.
Repeating our experience in agriculture, where the mechanization of
production released thousands of workers from the field: in 1930, over
21 percent of America's workers were engaged in agricultural
production, but by 1993, less than 3 percent of the work force was
employed in the farm, forest, or fishery sectors--and less than 1
percent of the work force was employed as farmhands.
In these circumstances, difficult as they may be for the workers
affected, we should look upon trade not as the villain, but as an
opportunity. Trade among countries should not be avoided; indeed, it
cannot be avoided in an open society, any more than can be the effect
of advancing communications or innovative technologies. If we approach
trade as friend, rather than foe, we will find ways to sell more of our
goods abroad, employing more rather than fewer Americans.
In fact, the United States is in the best position among trading
nations to take great advantage of the more open markets that come with
the Uruguay round. For the United States today is at the height of its
global competitiveness. Americans should note with some degree of
satisfaction the recent report of the World Economic Forum which rates
the United States as the world's most competitive nation. We have
returned to the top ranking for the first time since 1985, Japan now a
distant second.
Of this fact I would remind those who have voiced concerns about the
impact of this agreement on U.S. sovereignty. There are legitimate
concerns here, which have been legitimately addressed. Again in a
bipartisan fashion. But others who speak of a loss of sovereignty prey
on the fears of American workers, uncertain about their future in a
global economy. Let us remind American workers of their ability to
think, create and innovate, not to fail or fall prey to outside forces
beyond their control. That is not the kind of thinking by which
American workers built the most competitive economy in the world. Nor
is there reason to succumb to such thinking now.
Rather, we must remember that our economy is the largest single
market in the world, a market which others seek, recognizing its value.
To those who fear that we will constantly be out-voted in the new World
Trade Organization, established in the Uruguay round, I would say that
there is little reason for concern. The WTO simply codifies the
practice of consensus in the GATT and there has not been a vote in the
GATT on a trade policy matter for 35 years. To those who suggest that
the WTO will have the power to override our own governing of our
market, I would say but one thing--look to the Constitution. We yet
govern ourselves, with the authority to regulate commerce with foreign
nations given to the Congress. And with the Congress also rests the
authority to take the necessary and proper steps to carry out
international agreements, as recognized by the Supreme Court in the
seminal Missouri versus Holland decision--on a migratory bird
convention, of all matters--in 1920.
It is the Congress which, since the disaster of the Smoot-Hawley Act
of 1930, has chosen with care the arrangements whereby U.S. trade
policy is made. Having learned the lessons of Smoot-Hawley--the two-
thirds drop in trade that followed, worldwide depression, the rise of
totalitarian regimes, and in the wake of such events, the Second World
War.
In the aftermath of such, the Congress sought a better arrangement
for trade policymaking in this country. Beginning with the Reciprocal
Trade Agreements Program of 1934, the Congress has determined that the
President should negotiate liberalizing trade agreements and the
Congress should embody those agreements in legislation which it
considers, debates, and votes on. In 1974, the Congress chose to create
special procedural rules--we know them today as the fast track--to
ensure that these trade liberalizing policies would continue.
But these arrangements do not preclude the Congress from performing
its constitutional duties of regulating foreign commerce. Indeed, the
Congress has chosen these arrangements in the belief that they best
serve our commercial interests. Likewise, mechanisms have been created
with this implementing bill to ensure that the congressional voice is
heard should the World Trade Organization not serve American interests.
Congress will have the opportunity to demand withdrawal from this
organization on 6 months' notice as permitted under the agreement
itself.
Indeed we should withdraw if the worst fears of the opponents are
realized. If foreign governments pursue repeated, and unfounded,
challenges to U.S. law. But that is not the likely scenario. The United
States is not a protectionist country. And it is those countries which
are so that must be concerned about the WTO, not the United States.
We seem to forget that it was the United States, and the Congress in
the 1988 Trade Act, that sought the strengthened rules that come with
the World Trade Organization. Why? Because although we consistently
have been more successful than the average in GATT litigation, we have
too often been frustrated in our successes. During the period leading
to the passage of the 1988 Trade Act, we won three GATT cases against
the Europeans--on pasta, citrus, and canned fruit--only to be
frustrated by their stalling tactics. The European Community blocked
the adoption of those three panel reports, preventing formal GATT
approval of the panel's decisions. And throughout 1988, the Europeans
first blocked and then further delayed the establishment of a dispute
settlement panel to hear a U.S. challenge to EC production subsidies on
oilseeds. Four cases, all of great consequence to our agricultural
community. Is it any wonder that the Congress, in 1988, urged our
negotiators to achieve a more effective and expeditious dispute
settlement system?
Under the new WTO rules, these stalling tactics will not be allowed.
And the United States, I might note, has nothing to fear from a tougher
dispute settlement system. We have been victorious more often than most
under the GATT, and there is every reason to expect that trend to
continue. Under the GATT, we have prevailed in 70 of the 87 cases that
we have brought. That is a remarkable success rate of roughly 80
percent. When challenged, we have also prevailed more than most--in 55
of the 75 cases brought against us, or nearly 75 percent of the time.
Most important, we should keep in mind that, in the first 43 years of
the GATT, there have only been 88 panel decisions. If we include the
cases that did not culminate in panel decisions, that number grows to
207. That averages to less than five cases a year. There is thus no
grounds for fearing that hundreds of our laws will be challenged in the
WTO.
Thus, the crucial fact to be remembered: It is the United States that
stands to benefit most from the World Trade Organization's improved,
and more effective, rules for settling disputes among trading partners.
We are on the brink of realizing these benefits. This is not the
International Trade Organization [ITO], established in the Habana
Charter of March 1948, that the Congress turned its back on. The ITO
was a more ambitious arrangement. It included, as the WTO does not,
provisions on full employment and economic reconstruction, on
technology transfer and access to capital, on private cartels and
international commodity agreements.
The ITO died at the hands of the Congress, due in no small part to
the intense opposition of the Committee on Finance of that day. The
business community joined in that opposition, ironically because of
concerns that the ITO Charter fell too far short of their ideals of
free trade. In the end, only one committee of Congress, the House
Committee on Foreign Affairs, even held hearings on the Habana Charter.
There were no votes. The ITO Charter simply withered in the face of
intractable opposition.
In contrast, the World Trade Organization of 1994 is a more modest
arrangement than that envisioned by the Habana Charter. But its
principal purpose is the same--to provide a sound institutional
framework for the conduct of trade among nations. To provide a forum
for resolving disputes that inevitably arise among people who trade
together. In recognition that the prosperity of all depends upon the
peaceful resolution of such conflicts and the continuing conduct of
international trade. And in 1994, unlike in 1948, the Finance Committee
and the business community join together in support of the World Trade
Organization.
Let us not replicate our unfortunate experience with the
International Trade Organization, over 40 years ago. Instead, let us
emulate the bipartisan spirit that has developed over the past decade
as we have ratified, with little or no dissent, four important
conventions negotiated under the auspices of the International Labor
Organization [ILO].
Mr. President, I look forward to the coming debate, and I urge the
Senate, once the debate is over, to act in that bipartisan spirit and
approve the Uruguay Round Agreements Act.
I see that my distinguished friend and chairman is on the floor. I
see that he has teaching aides and other matters to bring before us. I
look forward to them, and with great pleasure I yield the floor.
The PRESIDING OFFICER. The Senator from Oregon [Mr. Packwood] is
recognized.
Mr. PACKWOOD. Madam President, I thank the Chair.
Madam President, during the next 2 days, I expect to speak often on
this subject and I am not going to try to cover the entire gambit of
the arguments for or to rebut all the arguments against the GATT
agreement right now.
I want to lay at rest, if I might, in my opening comments the
particular issue of whether or not the United States can compete in the
world, because the principal argument against the World Trade
Organization really is that we cannot compete. We heard it in NAFTA.
How can we compete against 50 cents an hour wages in Mexico? That is
neither here nor there. If wages were the key, Bangladesh would be the
industrial behemoth of the world, and we all would manufacture in
Bangladesh and ship all over the world. There would be no industry in
Japan, Britain, or the United States. It would all be in Bangladesh at
5, 10, or 15 cents an hour, or at whatever their wages are. That is not
true. It has not happened and will not happen.
I think in retrospect, we may have made a terrible mistake in calling
the successor to the GATT the World Trade Organization. GATT was a term
no one understood, the General Agreement on Trade and Tariffs. The
World Trade Organization sounds like something created by the
Trilateral Commission to Subsume our Sovereignty. Indeed, it does not,
and I am not going to address the issue of sovereignty in this opening
comment. I want to address the issue of can America compete?
So let us take a look at what is called the balance of trade, because
the worst of the statistics are cited as an example of how we cannot
compete.
You have two major sectors in trade. One is called merchandise--cars,
refrigerators, jet engines, VCR's, televisions, hard goods. It is
called merchandise. The other is services--Visa, American Express,
Master Card. They license the use of their cards around the world. The
licensee pays to use the card and the money comes to the companies of
the United States. That is dollars. That is dollars, just like if we
sell a jet engine. That is services.
In merchandise in 1993--we do not have the complete statistics yet in
1994--we had a $116 billion deficit. In services in the same year, we
had a $57 billion surplus. Net is a $59 billion deficit.
I want to emphasize something. It is the services sector that is
growing the fastest. This is a sector that is intensely dependent on
rapid communication, computers, highly paid workers, educated workers.
It is an area in which we dominate the world. So I want to round off
the $59 billion to $60 billion. We have a $60 billion deficit which
will be closing as the services begin to dominate more and more.
But I want to comment on something on the merchandise deficit that we
overlook. Again, there are the goods. As I said, we have a $116 billion
deficit. $44 billion of that deficit is oil; oil that every time we
hope we can find in the United States or in the Outer Continental Shelf
or in Alaska, we have to fight tooth and nail to even look for, let
alone take it out of the ground, because we run against environmental
objections and others.
Is the oil there? We do not know if the oil is there. Do we think it
is? Yes. But if we want to avoid oil--and I checked with the South
African Embassy this morning to see if they have changed since the new
Government came in and most of the trade restrictions have been lifted.
South Africa makes a significant amount of its own gasoline from coal.
They have an abundant coal supply, and during the trade embargo when
they could not get oil, they wanted to be self-dependent and they
turned to their coal reserves and make almost all of the gasoline and
oil that they use. So could we do the same thing? You bet. We have a
400-year supply of coal in this country. We have a 200-year supply of
oil shale. We can make all the oil we want in this country from coal or
extract it from oil shale. There is a problem in that it is infinitely
more expensive than imported oil.
So if you are not worried about a cartel that can squeeze you--and
twice they have squeezed America in 25 years. But cartels usually do
not work over a long period of time. Producers cheat. If we wanted to
eliminate $44 billion worth of trade deficit, we could do it. It would
take an immense capital investment, and I am guessing that it would
take 5 to 10 years to develop the plants. So we could eliminate $44
billion of the deficit and produce all of the oil and petroleum in this
country at an expense greater than importing it, but it would eliminate
$44 billion of deficit.
Second, cars. Oil is $44 billion of the deficit; cars are $43
billion. I have been in this body long enough to remember when cars
were not a problem. In the fifties, and even into the almost early
1970's--1970, 1971--the only cars of any consequence that were imported
in this country were big cars, such as Rolls Royces, or itsy-bitsy
cars, like the Volkswagen Beetle. The Volkswagen Beetle had a very
small, but loyal, segment of the market, but we always thought that
people that drove Volkswagens were funny looking and they had beards
and certainly real Americans would not want a car like that.
Then a funny thing happened in the 1970's, maybe coincidental. The
Japanese, in 1971, 1972, 1973, were producing good little cars at the
small end of the market. And they were producing them at the same time
the first Arab oil boycott hit. I remember the debate we had in the
Senate on whether or not we should adopt mileage standards for cars. I
remember the argument against it from the auto companies, which was
twofold. One, they could not possibly produce the cars in less than 5
or 7 years. It would take that long to retool. This is from an industry
that went from cars to tanks in 6 months in World War II. They could
not do it that soon. They said America did not want cars like that
anyway.
Well, it turns out that America did want cars like that. It is
amazing that America really liked cars that were well made, when given
an option. In the 1970's, Japanese cars were better made and they got
20 or 25 miles to the gallon. They get much more than that now. We
bought them in droves. The Japanese were very smart. They initially
concentrated on the low end of the market, inexpensive cars, not the
high-end imports that you see now, but low end. They captured a
significant segment of the automobile market in an area in which
American manufacturers were not making cars, good high-mileage cars.
Having captured that portion of the market--Lord, anybody knows it--in
terms of product loyalty--they began to move up the scale to more
expensive cars. People that have driven an inexpensive Toyota liked it,
and now they buy a Lexus, which is an expensive car.
To American manufacturer's credit, they are now starting to gain it
back. It has taken 20 years to learn. We have learned now that it does
not take 5 to 7 years to go into this development. We have now learned
about our market, and we are succeeding in taking the market back. But
those two items--cars, which we threw away, and oil, which we can
eliminate if we wanted to--are the overwhelming part of our trade
deficit.
So let us not get into the argument that America simply cannot
compete. We are competing in cars, and we could compete in oil if we
wanted, although it is expensive.
I want to take some examples from my State, and I am going to take a
low-wage example and a high-wage example and a medium-cost example.
First, I have a chart behind me. Sabroso is in Medford, OR. Medford is
a fair-sized town in Oregon, but it is not on a major railway. It is a
company of about 150 employees. Sabroso makes fruit purees and
concentrates for use in juices and baby foods. They are the largest
supplier of the basic ingredient to the three principal baby food
manufacturers in the United States--Heinz, Gerber, and I cannot
remember the third one--in Medford, OR.
In this plant, lots of employees are first-generation immigrants, and
you find three or four different languages. The supervisors know the
languages. You find that some of the supervisors are first-generation
immigrants who speak two or three languages. Here is an example of a
peach puree. This is the label on it. It is designed for sale in Arabic
countries. Look at the next one. This is Spanish. Twenty-eight percent
of their gross is from overseas sales out of Medford, OR. This is an
industry that, in terms of its mass of employees, at the lower end of
the wage scale, although it is highly capital intensive in terms of its
equipment. Can they compete? You bet they can, from a mid-sized town in
Oregon all over this world. They were tremendous supporters of NAFTA,
and you can understand why. If you are making baby food and you are
looking at a market that is young and exploding, all of that, they
could not wait. They were strong supporters of NAFTA. Do not tell them
you cannot compete. Let me give a second example.
Another example is Intel, the largest manufacturer of computer chips
in the United States. This is an 8-inch chip wafer made in Oregon.
Intel is the largest private employer in Oregon. It was founded in
1969. They are expanding one of their present plants in Oregon--a $700
million expansion--and are putting in a new $1.2 billion plant not 20
miles away from it, to make things like this. Why is this not made in
Bangladesh? I will tell you why. The $1.2 billion plant is a high-end
technical plant. These are not minimum-wage jobs. Why are they doing it
in Oregon? I think they can do it in other States, but I am honored
that they chose Oregon. There is a good education system and a good
work ethic and people that understand mathematics on the production
level.
I went through the current Intel plant on my last trip to Oregon and
you can look at the clean room. Twenty years ago, it was just a white
coat. Now these people are smocked in devices that look like they are
from Star Wars. They are catching their breath in a pipe that runs
through an oxidizer on their back as they walk around so that nothing
gets in or out of this room. All it takes is a speck of dust on the
wafer and it is ruined. Do you have to ask any more than to say I
understand why they are not making it in Bangladesh? There is not a
nondusty place there 9 months of the year, and the other 3 months it is
under water. Tremendous employment, done here.
Third, Denton plastics. Denton plastics is a plastic recycling
company that is 11 years old. It only has a few score employees now.
The plant has doubled its employment. It takes plastic trash--here a
good example. They will take this--and I have been in their plant. It
is an immense warehouse full of boxes of junk like this that they take,
heat up, grind up and turn into little pellets like this.
They are different colored pellets, if necessary, black color or
white color, and sell them all over the world, which companies use all
over the world.
Here is the bag I was looking for which I want to use as an example.
See the green on here, it is just a plastic sack. But in order to sell
these, in order to make them into black or whatever color you want to
make them into you have to have a uniform color. That is no problem.
You kind of cut out the colored part and throw the rest in the hopper,
grind it up, heat it up, and out comes the little pellets.
It does not work that way. What you do is you got something like
this. There must be 15 colors on here. They have invented a process
that lets them take this, run it through their process, and somehow it
bleaches it and all the colors come out uniform.
Dennis Denton, the President of the company, sells in China. I have a
yo-yo here that he sells in China. He has been to China and seen China
try to duplicate it.
What? Are you trying to compete with China? What are you doing in
China, with cheap labor, tackling something like this; cutting out each
color and putting them in different pots. All the yellow in this pot,
all the green in that pot. No wonder they cannot beat him. He is paying
wages that start at $6.50 or $7 an hour, and $8 or $9 an hour for high-
production people, and higher than that. These are not high-wage jobs,
but they are not minimum-wage jobs. He says he will always stay one
step ahead of the Chinese one way or the other. He is selling overseas
tremendously.
My last example is Freightliner. Freightliner makes big trucks. We
have all seen them on the road. Thus, Freightliner is now the biggest
manufacturer of big trucks in the United States. They own International
Harvester, which they acquired a couple years ago. They have a plant in
Oregon with 2,200 employees, a plant in North Carolina with about 2,300
employees--Mount Holly.
Both of those plants are unionized. North Carolina is the automobile
workers. Oregon is the International Association of Machinists. The
wages in the Portland plant, counting fringe benefits, are at the high
end of production scale, about $25 an hour, $3 or $4 less for starting
wage. But by any measure this is a high-wage employer.
How can they compete, you ask? I will give you an example. At the
moment Freightliner ships these trucks to Mexico in kit form, and they
are assembled in Mexico. Part of it is the old domestic content law;
part of it is the tariff, 20 percent.
I talked to the president of the company yesterday. They are now
shipping 10 kits a day out of their North Carolina plant to Mexico. He
says as the tariffs come down, the line at which it is cheaper to do it
here than Mexico crosses in about 1998, and from that point onward they
are going to make all the trucks in final form here, send them down to
Mexico for sale. They cannot wait for the opportunity to be able to do
this all over the world. This is a company paying about the top of the
scale in wages and competing anyplace in the Western Hemisphere.
So can we do it? You bet we can. How on Earth, you say, can we stay
ahead? And what Mr. Denton said at Denton Plastics is ``We can.'' He
said ``I will invent something new when the Chinese have a bleaching
machine like I have. I will be a step ahead.''
This morning I was listening to WGMS. The announcer was saying, ``You
know, today is the birthday of Winston Churchill and Mark Twain.'' And,
he said, who was it that said, ``East is East and West is West and
never the twain shall meet,'' leading you to guess Mark Twain. Of
course, it was Rudyard Kipling.
I thought to myself Kipling said it better than anyone else when he
said it in a poem he called ``The Mary Gloster''--the name of a ship.
The poem basically centers on an old man now, who was a coal scuttle on
a ship as a boy of 14 and 15; worked his way up. By the time he was 16
and 17, he was a mate; by the time he was 20, captain; and he finally
had his own ship at 24. In his older age he was the shipping magnet of
the world. The poem is in the form of interview, of how did you get
there. Here are the lines.
I didn't begin with askings,
I took my job and I stuck;
And I took the chances they wouldn't
an' now they're calling it luck.
And they ask me how I did it
and I gave them the scripture text,
``You keep your light so shining
a little in front 'o the next!''
They copied all they could follow
but they couldn't copy my mind,
And I left 'em sweating and stealing
a year and a half behind.
(From the ``Mary Gloster''--Rudyard Kipling)
We can compete. I thank the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Madam President, might I yield myself 3 minutes just to
comment on the extraordinarily able presentation by my friend and
colleague, the Senator from Oregon, and to make two points, if I may,
with respect to issues that have been raised in this matter.
In the course of the crisis in the 1970's when American automobiles
might not have been as high or the right size, and oil prices were
going up, we enacted in 1978 the so-called gas-guzzler tax, the
corporate average fuel economy [CAFE] registration. The European union
took us to arbitration, to the GATT panel, on that issue, saying it was
designed to keep European imports out; it was nominally environmental,
in fact, protectionist.
On September 30, Mr. President, this year, a GATT panel said no, it
was not; it was a legitimate environmental concern. We prevailed. And
we will. Where the purpose is legitimate it will be so found. That has
been our experience.
Finally, sir, the most elemental of all products in the industrial
age is steel. American steel fell behind. The Japanese, who were
getting their technology from Austria, the coal from West Virginia, and
iron ore from Australia, were underselling us. No more. We are the low-
cost producer in the world.
This morning in the New York Times there is a story, ``Steelmakers'
Quest for a Better Way,'' if I can just read the opening paragraph and
one other.
Even as it enjoys one of its biggest booms in decades, the
American steel industry is investing big money in
technologies to carry it through the inevitable next
downturn.
And then this, sir.
The price of steel today in real terms is the same as it
was in 1985, . . .
That is what productivity is all about. That is what your plastics
man in Denton, did the Senator say?
Mr. PACKWOOD. Denton Plastics.
Mr. MOYNIHAN. He is just going to keep productivity ahead and prices,
relatively speaking, down.
Our automobiles are back. Steel is back. Plastics are ahead. Intel is
ahead of everything you ever heard of. We are the world's lowest cost
producers. We are asking the Senate to let us trade worldwide.
That is all, Madam President. I believe the facts are overwhelming.
Mr. PACKWOOD. Mr. President, if the chairman will yield, perhaps the
greatest example of all is agriculture.
At the turn of the century we used to be able to feed seven people
with one farmer. By the turn of the next century we will feed at least
100 people with 1 farmer.
You say how could a farmer possibly pay several hundred thousand
dollars for a combine, thousands of dollars for a tractor beat someone
with an ox and a plow. And we beat them in productivity. Agriculture is
one of our largest successful balance of trade merchandise exports and
we will get better and better and better as the markets and barriers
are more open to us.
I thank the Chair.
The PRESIDING OFFICER. Who yields time?
The Senator from South Carolina is recognized.
Mr. HOLLINGS. Madam President, let me congratulate the distinguished
Presiding Officer.
The PRESIDING OFFICER. Thank you very much.
Mr. HOLLINGS. I am glad to see her back.
What happens, and let me put it to bed immediately, agriculture is
the most protected, subsidized of all of America's produce. We all know
it. We vote for the price support programs. We put in the Export-Import
Bank to finance it. We put in export promotion programs, and everything
else. I believe in those things, and they have been successful.
Right to the point, on Intel and steel, steel, as the Senator reads
from the New York Times, we use, coming out of the distinguished
Finance chairman's committee, Super 301 and being able to threaten
retaliation. We did not retaliate, but we threatened retaliation to
open up the market. Then we got in so-called agreements, voluntary
restraint agreements, on steel, on automobiles, yes, on semiconductors.
Intel benefits from the managed trade that they say they are all
against.
But under GATT, Madam President, I can tell you the European
commission and the booklet on Japan in their particular findings
already have found our voluntary restraint agreements are GATT illegal,
our Super 301 is GATT illegal. And that, in and of itself, is enough to
kill this particular agreement--should kill it.
What disturbs this particular Senator is the attitude that somehow
when they bring in trucks and those kinds of things, and technology,
they assume the lack of intellect or experience on the other side. We
know about exports. I can list down from Bosch and all the fuel
injectors for the Toyotas and Mercedes. I can list our General Electric
friends. I brought them in 35 years ago to make bulbs, light bulbs.
Then they made cellular radios. And now they make what? Magnetic
resonance images, health care, the most sophisticated instrumentality
there is. And do you know what? We took the market. Florence, SC, took
the market from Tokyo. We ship over half of what we produce in
Florence, SC, to Tokyo. We know about exports and we know about
automobiles.
The Japanese have been dumping, dumping automobiles at less than
cost.
I had, as chairman of the Commerce Committee, lined up a couple years
ago on the 1989 figure of a loss of $3.2 billion that the Japanese lost
in selling cars in the United States of America, I had Ford and
Chrysler ready to testify to start into dumping. General Motors
chickened out. That is why we do not do it. The business leadership
said, rather than spending for lawyers on dumping cases, we are just
going to move on out. That is our problem.
If you do not believe it continues about liking cars or not liking
cars, here is Fortune Magazine, December 12. Read it. I cannot get the
exact page on this one, but you can see.
Japan Car Crash in North America.
Bruised by the strong yen and the recession at home, the
Japanese have made a valiant effort to boost their car sales
in the United States this year. Valiant but expensive. While
sales are up 5.8 percent, Japanese auto makers will lose
$20.5 billion, up from $1.5 billion in 1993.
They have been losing it. Theirs is market share. And that brings me
right to the point. There are two different trading systems in this
global competition. Do not say, ``We are competent. We can compete. We
can compete.''
We know that the American industrial worker is the most productive,
our research is the best, our technology is the best. What is
inadequate, downright dumb, is us, the Government, right here. That is
what is not competing. Do not sell me off about we are against the
American workers and all that and give me the patriotism.
What happens is, there are two different systems entirely. We follow
Adam Smith, David Ricardo, competitive advantage, free markets, open
markets, open competition. The Japanese and all the countries in the
Pacific rim follow the federalist Alexander Hamilton of closed markets.
They measure the wealth of a country not by what it can buy, but by
what it can produce. And their decisions are made as to whether or not
it weakens the economy or strengthens the economy.
And all of these Senators run around moaning and groaning about fair
play and quit cheating and we want a fair trade and all those kinds of
things.
There is no moral question of fairness or unfairness. It is a
calculated, definitely successful method of trade.
And not only are all the Pacific Rim countries following it, read the
most recent issue of Business Week and you will find, Madam President,
that Business Week says Eastern Europeans coming in from communism into
capitalism are following not the American system but the Pacific rim
system of design for market share. That is what it is--the strength of
a country.
And we are running around talking about the price of consumers. When
the poor Senator says we have got 200 jobs for trucks in Oregon, we
have got 300 jobs for trucks in North Carolina, he does not understand
what he says, because he says we are the largest manufacture of that
particular equipment. Well, it is the largest, 500 jobs. We are talking
about jobs. Transportation equipment in the United States in the last 5
years has lost 278,000 jobs. And that is why the Senator can stand on
the floor and say the largest we have got has only got 300 jobs in
North Carolina and 200 jobs in Oregon.
Going to those particular two systems, what happens over the years.
We failed to compete as a government intentionally. We sacrificed, if
you please, our economy to keep the alliance together under the cold
war.
And let us go immediately now to the Tokyo round and where we are at
this particular time, because we heard all of these arguments under
Ambassador Strauss in the previous administration in 1979, under
President Carter.
What is particularly annoying is that the leadership in this town,
Republican and Democrat, fail to recognize reality and the real
competition that they are in. That is the frustration of the American
voter that you faced here just a couple of weeks ago and it continues.
It is not over now.
Oh, they can run around and take away from committees and they can
run around and cut this and say we all are going to be subject to the
same rules, but if we do not get this Government competitive on jobs,
on creating an industrial backbone that we are fast draining off, we
all should go down the tube. We do not have to pass term limits. They
will limit you. You go in to bat in 2 years, 4 years from now, we all
will see the result. They promised me the jobs.
The actual figure, undisputed--and we had eight separate hearings in
the Committee of Commerce, very few people were around, but they were
covered by C-SPAN--we have lost 3.2 million jobs under what we got. Now
here, instead of creating jobs, they talk about what is going to happen
in the future.
We heard that in 1979, that we were going to all burst out with all
of these jobs. We have lost jobs. The average worker who has really got
a job--a lot of people are back into part-time jobs and everything else
of that kind, those are the only ones created--are making 20 percent
less.
And what happens? This is a trade debate, the General Agreement on
Tariffs and Trade. And what happens on trade? An average of a $100
billion deficit. Not exports. Yes, exports might go up X percent, Y
percent, G percent, 50 percent, 300 percent, but never, never more than
imports. Imports are coming in faster.
Yes, exports create jobs, but imports lose the jobs, and we are
losing them at $100 billion a year. And, according to their own
measure, every billion dollars represents 20,000 jobs. So we are losing
2 million jobs a year. This year, 1994, that is a $150 to $160 billion
trade deficit. That is 3 million jobs lost. And they continue to think
they are leading. ``This is a wonderful moment in history. The allies
will wonder whether we continue to lead.'' Continue to lead. That is
nonsense.
We are losing. The poor President goes out to the Far East a couple
of weeks ago with a $150 billion hole in his pocket and a tin cup,
begging the Japanese to finance the debt. Where do you think you get
the debt? Right here. This is not competing, this particular Government
here, that we are all part of. We are losing.
The Japanese leaders--I have been in conferences with them. They are
aghast, over the years, at our lack of competing here and enforcing our
own dumping and trading laws. So after all those deficits in the
balance of trade, by 1985 we had, yes--former Secretary of State Baker,
he was Secretary of Treasury, and ran the White House--he devalued the
dollar in 1985 with the Plaza Agreement and put the United States of
America up for a half-price sale and the Japanese came running and
bought up the Metro Goldwyn Mayer, all the studios out there in your
back yard--the Plaza, Algonquin Hotel--bought up everything. They
bought up the farms. We did not have to worry about shipping beef to
the Japanese. They just bought up the farms and shipped back their own
beef at half price. Come on.
What has been going on is that we are in a disastrous decline --a
disastrous decline. The headline just before the election said ``Rising
Tide Fails to Lift.'' There is no rising tide. We are losing jobs. We
have 40 million hungry in America. I wrote a book on hunger. It used to
be 12 million. Now there are 40 million out there. How many homeless?
Millions are homeless. How many on, heavens above, half the take-home
pay?
So they are all for the family. What breaks up the family? When you
are only getting half, 20 percent, of what you were making, the wife
has to go out and you get the latchkey children. So they think it is a
moral thing, that we have to get the wives and the mothers to look
after children more. It is economic decline. They look after the
children trying to earn bread to put it on the table. Who is causing
latchkey children? We are.
In crime? They are all against crime--three strikes and you are out.
Build more prisons. There are 64,000 textile jobs in the Bowery in New
York, sewing jobs; there are 60,000 out there in Los Angeles, in Watts.
They get $6.30 an hour and get all the requirements. We burden our
system, business: Clean air, clean water, minimum wage, plant closing
notice, parental leave, Social Security, Medicare/Medicaid, safe
working place, safe machinery--on and on, up and up. Those jobs move to
Mexico and now to the Pacific rim, all gone. And you have a little
candidate running all around here with his blow-dry, hollering,
``Enterprise zone, enterprise zone.'' We are taking, today, the
enterprise out of the zone. That is what causes the crime, when we lose
the jobs that we have there in the inner city: Newark, New York, Los
Angeles, Chicago, Cleveland. Go around the country and find out what is
happening. That is what the American people say: Get off your duffs and
start competing here. Because this Tokyo round has been a disaster.
Madam President, what has been the change? One, they talk about
tariffs. Back in 1947, tariffs were nothing--absolutely nothing,
relatively speaking. The average tariff in Japan is 2 percent. The
average tariff here is 4 percent. Cut it 50 percent? That is not the
case. It is nontariff barriers. That is why Ambassador Kantor went
working all year long. He had this GATT agreement back in December. He
has been working all year long to get an agreement with the Japanese,
but he comes around and says, ``We will all work under the same
rules.'' We are not going to all work under the same rules. We are not
going to open up any markets.
If they thought so, they put him on notice out there in Malaysia and
Indonesia. The trade executive in Indonesia said we are not going along
with it.
Kuala Lumpur, Malaysia, today expressed its objection to
any efforts for enforcing trade liberalization. Minister of
International Trade and Industry, Ricardo Seed, said it is
mooting market liberalization. No OPEC member should push
another member to open its markets.
So what did they do? They came away and said open them by the year
2020, 25 years from now, and they hail that as, ``We have progress. We
are opening up markets. We are creating jobs,'' when we are going down
the tubes. We are killing every economic or job opportunity that you
could possibly think of. That is one particular change.
The other particular change is America's security is like on a three-
legged stool. We have the one leg, the values of the country--strong.
Feeding the hungry in Somalia, building democracy in Haiti.
The second leg, the military leg or power--unquestioned.
The third leg is our economic strength. And if one is fractured or
tips, the security tips, and that is the condition we are in. We are on
the way, as England. Years back, they told England, ``Don't worry;
instead of a nation of brawn, you will be a nation of brains. Instead
of producing products, you will produce services and be a service
economy. Instead of creating wealth, you will handle it and be a
financial center.'' And England has gone to hell in a hand basket,
economically. We can prove that. It came out in the hearings. We are on
the same road, and I am trying to get us off that road, and not listen
to these shibboleths about creating jobs and technology. We are losing
all of the technology jobs.
What we have now, with the fall of the wall, Madam President, the big
change is that we have an opportunity to quit sacrificing the economy
and refurbish that third leg of the stool, our economic strength. I
hope we can go after this in a deliberate way and understand that it is
not the rule of the jungle or anything else.
We have a virtual veto under the present GATT. We lose our veto under
this GATT. I have 50 witnesses and they cannot point to me where I have
a veto and they have to go to it.
I see now I am pretty well limited in my time. Let me yield to the
distinguished Senator from Ohio and reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Ohio is recognized.
Mr. METZENBAUM. Madam President, I rise in opposition to the passage
of GATT, The General Agreement on Tariffs and Trade. Before I discuss
my concerns with the agreement, let me frankly say I wish I could
support the President on this matter, especially in light of recent
events. I strongly believe the President has been misunderstood and
unfairly maligned. He has done much to improve the direction of this
country and deserves far more praise than he has received. But I am
frank to say that I have many deep concerns about this agreement and I
just cannot support it.
Today, I want to focus on the impact of this agreement on children.
Up to now, there has been virtually no discussion about this critical
issue. I recently held a hearing of the Labor Subcommittee on
International Child Labor Abuses and, frankly, I was deeply shocked by
what I heard. Around the world today, as many as 200 million children
are subjected--200 million children are subjected--to abusive labor
practices in sweat shops, in mines, in factories, and in the fields.
The more advanced and mobile our productive technology gets, the more
easily it can be run by children in impoverished countries.
Walk into a clothing store like the Gap, or The Limited. You will
have a very hard time finding any garments made in the United States. I
did that the other day, just to explore for myself. It is very
difficult to find anything made in the United States. But you do find
clothing made in low-wage countries such as Thailand, China, the
Philippines, Brazil, Honduras, Korea, and so many other countries. In
many of these countries, a substantial percentage of the apparel
industry is comprised of children, and working conditions are
horrendous. Child labor is also widely used in many other countries in
the production of toys, in carpets, in jewelry, and in numerous other
exports.
I ask unanimous consent, Madam President, that a list of these
countries be printed in the Record in full.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Countries With Documented Child Labor Violations
Bangladesh--Childen make up an estimated 40 percent of
garment industry workers there, despite national laws that
prohibit employment of children under the age of 14.
Brazil--1,300 children under the age of 14 work illegally
in the footwear industry, which exports $1.4 billion worth of
merchandise to the U.S.
China--Children between the ages of 10 and 16 spend 14
hours a day working for foreign-owned companies
Colombia--Children as young as 11 work in the fresh cut
flower industry where they are exposed to toxic substances
present during and after the spraying of pesticides.
Cote D'Ivoire--Children as young as three years old work in
the gold mining industry
Egypt--Children in the export-oriented leather industry
average 11.7 years of age and work an average of 12.8 hours a
day.
India--India has the largest number of child workers in the
world: an estimated 100 million, including some as young as
five in the silk and fireworks industries.
Indonesia--Children make up a portion of the export
industry workforce, for which they work an average of 7-13
hours a day, 7 days a week. They earn an average of $4 a week
for their work.
Lesotho--Children under the age of 14 work in at least ten
different foreign owned factories that assemble garments
exported to the United States.
Mexico--Many children under the age of 14 are found working
in the maquiladoras, which are affiliates of American-owned
companies that assemble goods for export.
Morocco--Children as young as eleven work in leather
workshops, where they are exposed to toxic chemicals and work
with hazardous machinery.
Nepal--Five year olds working 15 hours a day in Nepal's
carpet export industry earn approximately $25 for a carpet
that will retail in the U.S. for $4,000.
Pakistan--Millions of children suffer under a system of
``bonded labor'', a situation in which children pay off their
parents' debts through forced labor. It is estimated that
50,000 children in the bonded labor sector will die before
the age of 12 because of disease and malnutrition.
The Philippines--Children work long hours in unhealthy and
crowded conditions and are paid less than one-third of the
minimum wage.
Portugal--Children are paid 10 percent of an adult's wages
working in the garment industry that exports $60 million in
merchandise annually to the U.S.
Tanzania--Children make up 30 percent of the workforce in
the sisal (rope and yarn) industry, which exports $2 million
in merchandise to the U.S.
Thailand--Children working in the leather industry, which
exports products to the U.S., are given amphetamines to keep
up their strength during their 15 hour days.
Source: By the Sweat and Toil of Children: The Use of Child
Labor in American Imports. U.S. Department of Labor, 1994.
Mr. METZENBAUM. Global trade may bring great riches to multinational
corporations and even to some developed nations, but for millions of
children around the world it is an unmitigated disaster, bringing
oppressive working conditions, rampant illiteracy, unbroken cycles of
poverty, and an ever-widening gap between rich and poor.
Incredibly, the GATT Treaty not only ignores this problem, it will
encourage even more employers to exploit the children of the Third
World in the manufacture of goods for the U.S. and other developed
markets.
I am a cosponsor of Senator Harkin's bill to ban the importation of
goods made with child labor. But in a recent letter, U.S. Trade
Representative Mickey Kantor informed me that GATT would actually make
that bill illegal under the new World Trade Organization's rules. Now,
Mickey Kantor is a longtime friend, one who has done superb work as the
U.S. Trade Representative. But according to Mickey Kantor, under the
GATT Treaty, ``the United States could not block the importation of a
product made by child labor consistent with our obligations under the
GATT.''
How can we approve a treaty that not only ignores the problem of
international child labor, but actually prevents us from doing anything
about it in the future?
I suspect that the American people, as well as most of my colleagues,
have no idea of the scope or depth of this problem. So let me set forth
some basic facts.
We are talking about children--kids forced into slavery, subjected to
torture and physical abuse, all in the name of free trade, to produce
goods for U.S. markets. Instead of meeting this problem head on, GATT
will only make it worse.
Today, in many developing nations, millions of children are paid
pennies an hour for their labor.
Many of these children will die of disease, exhaustion, physical
abuse, or starvation.
Those who are lucky enough to survive the horrors of forced child
labor will never lead a normal adult life.
By working instead of going to school, child laborers are doomed to
perpetuate the cycle of poverty.
It is outrageous that these conditions exist, and we are talking
about passing the GATT Treaty and not doing a damned thing about it.
Even worse, they are doing nothing to address the problem. GATT will
not help--it will simply hurt, by limiting our ability to address this
problem in the future.
Mickey Kantor further tells me that ``there will undoubtedly be cases
where we will advise Congress that we oppose legislation because it is
inconsistent with our international obligations.''
I ask unanimous consent that the text of this letter be printed in
the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
U.S. Trade Representative,
Washington, DC, November 22, 1994.
Hon. Howard Metzenbaum,
Chairman, Subcommittee on Labor, U.S. Senate, Washington, DC.
Dear Chairman Metzenbaum: I am writing to respond to the
concerns you have expressed about trade and child labor, and
specifically to address the questions you have raised about
the impact of the Uruguay Round agreements on our ability to
ban imports made by child labor. I also want to take this
opportunity to explain the relationship between these
agreements and our laws on health, safety, and environmental
protection.
The Uruguay Round agreements, which will be administered by
the new World Trade Organization (WTO), reflect an
unprecedented degree of agreement by 128 nations about the
rules under which international trade should be conducted.
The Administration believes that they will benefit U.S.
companies, farmers, workers and consumers for years to come.
We did not, however, reach agreement on every issue of
importance to us, and the agreements do not establish any
international rules governing the importation of products
made by child labor.
There has been no decision under the GATT addressing
whether a ban on the import of products made with child labor
would be consistent with GATT rules. Under the general
analysis that has developed under the GATT, the question
whether a product was made using child labor is a question
relating to the processes or production methods (PPMs)
associated with that product. There is currently a great deal
of discussion in the GATT about the ability of countries to
distinguish between products based on PPMs that do not have
an impact on the physical characteristics of the product. For
example, this is one of the areas the United States will be
pursuing in the Committee on Trade and Environment, since
PPMs may have important implications for the environmental
impact associated with a product.
To date, several panel reports under the GATT have found in
general that, under the national treatment rules of Article
III, a nation cannot block importation of a product of GATT
contracting parties on the basis of an objection to the PPMs
involving that product that do not have an impact on the
physical characteristics of the product. Consequently, under
this line of reasoning the United States could not block the
importation of a product made by child labor consistent with
our obligations under the GATT, unless it fell within an
exception to the GATT rules. (For example, Article XX of the
GATT provides general exceptions to the GATT rules,
including exceptions for measures ``necessary to protect
human, animal, or plant life or health'' and for measures
``relating to the products of prison labour.'')
The Uruguay Round agreements changed neither Article III
nor Article XX of the current GATT, both of which are carried
over into the new GATT 1994. Accordingly, it should be
clearly stated that the rules for the treatment of products
made from child labor under the WTO are not different in this
sense from the rules under the existing GATT.
Furthermore, while our ability to block the adoption of
panel reports will be restricted under the new dispute
settlement procedures, this will not in any way diminish our
right to enforce U.S. legislation. This means that if
Congress enacted legislation banning the import of products
made by child labor, and a dispute settlement panel were to
find that legislation to be inconsistent with GATT or WTO
rules, we would still have the sovereign right to retain that
legislation.
At the same time, the Administration takes U.S.
international obligations seriously. Thus, there will
undoubtedly be cases where we will advise Congress that we
oppose legislation because it is inconsistent with our
international obligations. But there will certainly be
instances where Congress, in pursuit of a goal of overriding
importance, will legislate irrespective of our international
obligations. Under the WTO, Congress will remain free to do
so.
We believe that the real issue is how to begin dealing with
the scourge of child labor generally. Toward that end the
Clinton Administration has taken a number of steps.
First, we have launched a multilateral effort to
incorporate internationally recognized labor standards within
the rules of the global trading system. We are leading the
effort to build a consensus on enforcing standards that have
already been agreed to by a large number of countries. A
minimum age for the employment of children is one such
standard.
Recognizing the need for and desirability of such policies,
GATT Contracting Parties have agreed to discuss
intenrationally recognized labor standards in the Preparatory
Committee leading to the World Trade Organization. Despite
bipartisan support from three Presidents and the Congress,
this is the first time that we have achieved a breakthrough
of this kind in the GATT framework. In addition, the
Administration is contributing resources and expertise to the
International Labor Organization's program to eliminate child
labor around the world, thanks in large part to Congressional
leadership.
Second, our law on the Generalized System of Preferences
(GSP) requires that beneficiary countries must have taken or
be taking steps to afford internationally recognized worker
rights, including a minimum age for the employment of
children. This is an overarching issue that affects a
country's entire eligibility for GSP. Pursuant to this
authority, the Administration formally reviewed worker rights
practices in more than 30 countries; child labor practices
were a particular issue in our GSP reviews of Bangladesh,
Pakistan and Thailand. In seeking to renew GSP next year, we
intend to consult closely with the Congress on the
application of this authority.
Third, at Congressional urging, the Labor Department
recently completed the first-ever review of international
child labor practices. The report provides an overview of the
causes of child labor throughout the world and documents
child labor practices in 19 countries. It focuses
specifically on identifying any foreign industry and their
host countries that utilize child labor in the export of
manufactured products from industry or mining to the United
States. The Department will continue its investigation in the
coming year.
Let me now discuss the relationship between the Uruguay
Round Agreements and U.S. food safety and environmental laws.
A more detailed discussion of these issues is contained in
the Statement of Administrative Action (SAA) and in the
``Report on Environmental Issues'' that were submitted to the
Congress along with the Uruguay Round Agreements.
1. Food Safety Rules
Our negotiators had strong environmental and food safety
laws fully in mind in concluding the Uruguay Round agreements
with our trading partners. As a result, the agreements
recognize the right of each government to protect human,
animal, and plant life and health, the environment, and
consumers and to set the level of protection for health, the
environment, and consumers--as well as the level of safety--
that the government considers appropriate.
Under the WTO, most food safety laws will be covered by the
``Agreement on the Application of Sanitary and Phytosanitary
Measures'' (S&P Agreement). The Agreement will permit us to
continue to reject food imports that are not safe. Moreover,
it will not require the Federal Government or States to adopt
lower food safety standards.
The S&P Agreement calls for food safety rules to be based
on ``scientific principles.'' That is important because many
countries reject our agricultural exports on non-scientific
grounds.
As a general matter, the FDA and EPA (which participated
directly in the negotiations of the S&P Agreement), as well
as the States, base their food safety regulations on science.
Thus, meeting the basic requirement of the S&P Agreement
should pose no problem for U.S. food safety rules.
It is worth noting that the rule in the Agreement requiring
a scientific basis applies to S&P measures. It does not apply
to the level of food safety that those measures are designed
to achieve. Each country and--in the case of the United
States each State--is free to establish the level of
protection it deems appropriate. That means, for example,
that the ``zero tolerance'' level for carcinogens mandated by
the Federal ``Delaney clauses'' are entirely consistent with
the Uruguay Round agreements. Furthermore, a government may
establish its levels of protection by any means available
under its law, including by referendum.
While the S&P Agreement contains a general obligation to
use international standards, it produces the ability of
governments to use more stringent standards if they have a
``scientific justification.'' The S&P Agreement makes
explicit that there is a scientific justification if the
government determines that the relevant international
standard does not provide the level of food safety that the
government determines to be appropriate. Far from undermining
U.S. laws, this language serves to make clear that no
``downward harmonization'' is required for those laws.
Under the S&P Agreement, food safety rules imposed by the
States will be subject to the same rules as those for Federal
restrictions. But the Agreement does not require that States
use the same food safety standards as the Federal Government.
2. environmental and health rules
Most environmental and health-based product standards for
industrial and consumer goods will be covered by the
Agreement on Technical Barriers to Trade (TBT Agreement). The
new TBT Agreement carries forward, with some clarifying and
strengthening modifications, the provisions of the existing
GATT TBT Code, which entered into force for the United States
in 1980.
The TBT Agreement recognizes that countries may set
standards for products in order to protect human life,
health, or safety or the environment. U.S. regulations
prescribing safety standards for infant clothing, or banning
the presence of PCBs in consumer products, are the types of
product-oriented measures covered by the TBT agreement. The
Agreement makes clear that the level of protection the
Federal Government or a State seeks to achieve through
standards of this kind is not subject to challenge.
In general, our State and Federal clean air and clean water
laws and regulations are directed at controlling pollution
generated in industrial operations. Not only do these laws
generally not raise trade-related questions, they are
generally not even covered by the new TBT Agreement since
they do not set product standards. Where those laws do set
product standards, as for automobile emission controls, they
will be treated like the other product standards described
above. Both the S&P and TBT provisions of the Uruguay Round
agreements will allow each State to maintain stricter safety
standards than the Federal Government in order to achieve the
level of protection that the State considers appropriate.
On the question of environmental standards, let me point
out that the recent GATT panel report on the European
Community's challenge to three U.S. automobile laws lays to
rest fears that WTO panels will interpret the GATT in a way
that challenges our ability to safeguard our environment. The
panel report on our Corporate Average Fuel Economy (CAFE)
rules, gas guzzler tax and luxury tax explicitly upheld the
sovereign power of governments to regulate their markets and
their environments. The panel report confirms the broad
discretion of governments to distinguish among products in
order to achieve legitimate domestic policy objectives, such
as progressive taxation, fuel conservation, clean air and
water, and responsible energy use.
You have raised important questions concerning the Uruguay
Round agreements. I hope that you find these comments
informative and reassuring. Please let me know if you need
more information.
Sincerely,
Michael Kantor.
Mr. METZENBAUM. Mickey Kantor goes on to say Congress ``will remain
free'' to pass legislation ``irrespective of our international
obligations.'' What does that mean? Would such a law be valid? Would
the President be obligated to veto it, or would it be invalidated by
the WTO?
I do not know. I do not know the answer. But my guess is and it is
quite clear that we are not in a position to pass restrictive labor
with respect to the importation of products made with child labor.
I want to speak to my colleagues on a personal basis. How would you
feel if your children were forced to forego their childhood to perform
long hours of back-breaking work for little or no pay?
Do not your children--and all the children of the world--have a right
to be children, to be kids?
Many Senators may be skeptical as to whether child labor conditions
are really as bad as I have suggested. Do not take my word for it. Let
me give you some real life examples from the Labor Subcommittee hearing
I chaired this past September.
Kailash Satyarthi of India has rescued thousands of children from
forced labor. Today, India has the most child laborers in the world,
100 million of them. In the carpet industry, children work on looms in
damp, dark pits for less than a dollar a day. Kailash told us that many
children are lured by promises of learning a trade, only to find
themselves enslaved hundreds of miles from home. Some are sold by their
parents for as little as $50; still others are ``bonded'' laborers who
work to pay off a family debt. The backbreaking work causes spine
deformities, skin and respiratory diseases. Children who make mistakes
in their work are beaten and tortured. When children cut their fingers
during weaving, some employers scrape sulfur into the child's wounds,
and set the wounds on fire to prevent the child from bleeding on the
carpet fibers. Some employers have even branded their child workers to
indicate ownership.
I am not making this up--it is true. It is outrageous. Just look at
these pictures.
This girl, too small even to spin the spindle, spent 14 hours a day
spinning silk thread in Bangladesh. This child does not go to school,
but instead works 14 hours a day in a silk thread mill in Magati,
India. These bonded carpet workers are forced to work because of debts
owed by their parents in Mirzapur District in India.
What are we doing? How can we be indifferent? Does not the milk of
human kindness run somewhere through our bodies? Instead of doing
something about it, we are slamming the door and saying, ``We can't do
anything about it in the future.''
It is a travesty for us to pass GATT and not do anything about child
labor. Have we no heart? As parents and grandparents, can't we realize
that we have an obligation to exclude the products of child labor from
our markets? GATT won't accomplish this--it will actually prevent us
from taking such a step.
Nazma Akther, a young Bangladeshi woman, also testified before our
subcommittee. She went to work in a garment factory in Dhaka,
Bangladesh, at the age of 11. Nazma worked an average of 70 hours a
week, for about 3 cents an hour. That is right, 3 cents. According to
press reports, some Bangladeshi children are burned with hot irons,
scalded with boiling water or hung up by their hands if they work too
slowly. Sixty percent of the Bangladesh garment industry's production
is exported to the United States. There are other cases.
Roberto Juimaraes also testified. He went to work full-time in the
Brazilian shoe industry when he was 11. Roughly a third of the
industry's workers are under 18, and many are under 14. Roberto and his
coworkers earn as little as 35 cents an hour, and are exposed to toxic
chemicals which cause ulcers, vision impairment, and nervous disorders.
Most of the shoes from Brazil are exported, where? Of course, to the
United States.
The media and international human rights organizations have reported
countless other examples. They include children in Peru who are taken
deep into the jungle to pan for gold. Many die of malaria or other
diseases; many others are killed by their employers to avoid payment of
wages. True. Unbelievable, but true. They include children as young as
3 in mines, in the African Nation of Ivory Coast. They include children
in Thailand's leather industry who are fed amphetamines so they can
work long hours, sometimes even 2 or 3 days, without sleep.
These are appalling, tragic stories. But make no mistake about it,
GATT completely ignores the problem of child labor, and will only make
matters worse.
In good conscience, we should not lower these trade barriers unless
we first address these flagrant abuses of children's rights.
But as I have already stated, we will effectively be precluded from
addressing this problem if we adopt GATT.
Do we not, as a civilized nation, believe that children should have a
right to be children? That they should be free from exploitation?
If we will not stand up for our children, what will we stand up for?
Tragically, rather than making aggressive efforts to end child labor
around the world, U.S. policymakers have historically been indifferent
to the problem.
Every year, American consumers unknowingly purchase billions of
dollars' worth of goods manufactured by children. Let me show you an
example. This is a Liz Claiborne sweater, which my staff purchased at a
Hecht's department store here in Washington for $58. On the tag, Liz
Claiborne tells you this was ``made in Honduras,'' but there is much
more to the story.
At the subcommittee hearing, I heard testimony from one of the young
Honduran girls that made this sweater and thousands more like them.
Lesly Solorzano is a beautiful, intelligent, and poised young girl, but
she told a tragic story.
These sweaters are made by girls as young as 13, for a paltry 38
cents an hour, with no benefits. The girls work up to 80 hours a week.
According to Lesly's testimony, the girls are sexually and physically
abused on a regular basis by their superiors.
But the label just says ``Made in Honduras.'' But if it said, ``Made
in Honduras by young girls working long hours in terrible conditions
for pennies an hour, and subjected to physical and sexual abuse,'' I
doubt that many Americans would buy this sweater.
In fact, according to the National Consumers League, 74 percent of
its members would not buy a product if they knew it was manufactured by
children.
Certainly, the multinational corporations that are involved in these
production methods share some of the blame.
Liz Claiborne has taken significant steps to remedy the problem we
uncovered, and the company is to be applauded for its actions. But
there are thousands of other multinational firms that have allowed
these practices to continue.
Has the Gap, Hecht's or any other department store raised a question
as to how these products are being made and what kind of kids are being
exploited to make them? Those stores can and should move forward to
protect the children. But we have an obligation as legislators to do
more. Instead what we are doing is slamming the door down and saying
that we in Congress cannot do anything in the future about this.
This is our chance to do something about the problem. We should make
sure that American consumers can make informed decisions about the
products that they buy. But instead of addressing the problem we are
here debating how to bring even more products manufactured by children,
by kids, into the United States. Incredibly, that is just what the GATT
treaty would accomplish.
So as this chart shows, 175 nations have recognized the right of
children to be protected from economic exploitation--175 nations have
signed the U.N. convention on the rights of the child but the United
States is only one of a handful of nations that has not signed this
convention. What are we waiting for? Mozambique has signed it, Moroco
has signed it, Ghana has signed it, and Belgium has signed it. But not
the United States. Instead, we are here talking about a GATT treaty
which will make it even more difficult to protect the rights of
children.
It is equally unacceptable that 46 nations have signed the ILO
Convention which establishes a minimum employment age, but the United
States has not. Why not? Our silence has been deafening. Our inaction
is embarrassing.
As a world leader, the United States should attack the problem of
child labor aggressively, with a combination of sticks--such as trade
sanctions and import bans--and carrots, such as technical assistance
and aid for education.
Most importantly, we must link free trade privileges to child labor
protections.
But the GATT treaty not only fails to do so, it will actually prevent
us from addressing this problem in the future. It sends an unmistakable
message to U.S. and foreign manufacturers: Go right ahead and exploit
the world's children, and then bring the fruits of their labor to our
markets, and we will meet you with open arms.
GATT may be a boon for many of the world's multinational
corporations, but for the world's children, GATT spells disaster.
Madam President, I will have more to say about GATT during tomorrow's
debate. I have many additional concerns about this agreement.
But I am frank to say that GATT's impact on children or its failure
to do anything about the problem of child labor in the world is reason
enough to oppose it all by itself.
Madam President, I reserve the remainder of my time.
Mr. MOYNIHAN. Madam President, I ask unanimous consent that an
article by Prof. Kaushik Basu of Cornell University be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the New York Times, Nov. 29, 1994]
The Poor Need Child Labor
(By Kaushik Basu)
Something like 100 million children worldwide work as
laborers, 98 percent of them in poor countries. Many, if not
most, work for long hours and minuscule wages.
This tragic phenomenon is being used as a club with which
to beat the General Agreement on Tariffs and Trade, which
Congress is considering this week. In a separate measure,
some lawmakers have proposed banning the importing of goods
produced using the labor of children under 15. GATT includes
no such restrictions, although it might take up the issue in
the future.
But while the effort to ban child labor has the support of
many well-meaning people and groups, it is based on deeply
flawed premises.
First, its inspiration is clearly protectionist. An early
version of the bill reads, ``Adult workers in the United
States and other developed countries should not have their
jobs imperiled by imports produced by child labor in
developing countries.'' (The current version, which is far
more polished, omits that sentence.)
But even if the bill's sponsors are motivated solely by
concern for children, their logic does not stand up. To seek
the abolition of child labor is to claim that we are more
concerned about the well-being of the child than are the
child's parents. And while some parents in every country are
callous and abusive, it is patronizing in the extreme to
suppose that the cause of mass child labor is so many poor
countries is lack of parental concern.
Few parents would send their children to work unless they
were driven to it by poverty and hunger. While child labor
should be illegal where it is aberrant, as it is in rich
countries, it needs a different antidote where it is a mass
phenomenon.
In those countries, the right way to battle the problem is
to improve opportunities for the poor--to provide not just
free education, for example, but incentives (like free meals
in school) to make sure that the poor take advantage of it.
Such measures can be described as collaborative, since they
rely on choice--unlike a ban, which overrides individual
choice.
Of course, it can be argued that a U.S. ban on tainted
imports would compel third world governments to adopt
collaborative measures to minimize child labor. The current
version of the child labor bill does talk, if briefly, about
the need to support primary education, rehabilitation and
other efforts.
But this provision is clearly an afterthought; it did not
appear in the earlier version, and there is no indication how
it would be carried out. More important, it puts too much
faith in governments' capacity to do what is best for
children.
It is much more likely that a third world government with
chronic fiscal problems, when confronted by a ban on the
export of products made with child labor, will do exactly
what the U.S. bill proposes: ban child labor. And that would
be an unmitigated disaster for most families that send their
children to work.
Some time ago in New Delhi, we had a 13-year-old girl,
Lalita, who came to work in our house mornings and evenings.
After a couple of weeks, in an effort to banish child labor
from our household, we gave her notice and offered to pay her
a little not to work.
Lalita came back the next morning with her father. A
bedraggled man, he was a rickshaw puller. It was immediately
evident that he loved his child. He begged us to take her
back because the family would perish otherwise. We decided to
listen to him.
I cannot hope to change the minds of those who seek a ban
on child labor simply to protect their own profits. But for
the larger number who support the bill out of a genuine
concern for the welfare of children, common sense dictates
that an outright prohibition is the wrong way to go. While we
must make every effort to make child labor unnecessary, we
must not ban it.
Mr. MOYNIHAN. Madam President, I congratulate the Senator from Ohio,
and I call to his attention the ILO, the International Labour
Organisation convention concerning the minimum age for admission to
employment, Convention Number 138. It is a happy but not coincidental
circumstance that in 1934 when the reciprocal trade agreements program
began the United States joined the International Labour Organisation.
This was an undertaking which President Roosevelt felt he had an
obligation he had inherited from Woodrow Wilson. The first meeting of
the ILO took place just down Constitution Avenue in the Pan American
Building, and in which we did join. We have been a member now for 60
years, and we have finally begun ratifying ILO conventions, which are
treaties and have the force of law.
In the last 5 or 6 years we have ratified four. I have been the floor
leader generally speaking, for example, on the most recent concerning
the abolition of forced labor, in 1991. Senator Pell has been very
supportive in the Committee on Foreign Relations. Of these four labor
treaties, as they are interesting to call, with one exception all the
votes were unanimous. For the one that was not it was 81 to 2.
So I hope that we might take the vigorous statement of the Senator
from Ohio and his challenge to address the Convention No. 138.
I ask unanimous consent that the text of that Convention be placed in
the Record also.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Convention No. 138.--Convention Concerning Minimum Age for Admission to
Employment\1\
---------------------------------------------------------------------------
\1\Date of coming into force: 19 June 1976.
---------------------------------------------------------------------------
The General Conference of the International Labour
Organisation,
Having been convened at Geneva by the Governing Body of the
International Labour Office, and having met in its Fifty-
eighth Session on 6 June 1973, and
Having decided upon the adoption of certain proposals with
regard to minimum age for admission to employment, which is
the fourth item on the agenda of the session, and
Noting the terms of the Minimum Age (Industry) Convention,
1919, the Minimum Age (Sea) Convention, 1920, the Minimum Age
(Agriculture) Convention, 1921, the Minimum Age (Trimmers and
Stokers) Convention, 1921, the Minimum Age (Non-Industrial
Employment) Convention, 1932, the Minimum Age (Sea)
Convention (Revised), 1936, the Minimum Age (Industry)
Convention (Revised), 1937, the Minimum Age (Non-Industrial
Employment) Convention (Revised), 1937, the Minimum Age
(Fishermen Convention, 1959, and the Minimum Age (Underground
Work) Convention, 1965, and
Considering that the time has come to establish a general
instrument on the subject, which would gradually replace the
existing ones applicable to limited economic sectors, with a
view to achieving the total abolition of child labour, and
Having determined that these proposals shall take the form
of an international Convention,
adopts this twenty-sixth day of June of the year one thousand
nine hundred and seventy-three the following Convention,
which may be cited as the Minimum Age Convention, 1973:
article 1
Each Member for which this Convention is in force
undertakes to pursue a national policy designed to ensure the
effective abolition of child labour and to raise
progressively the minimum age for admission to employment or
work to a level consistent with the fullest physical and
mental development of young persons.
article 2
1. Each Member which ratifies this Convention shall
specify, in a declaration appended to its ratification, a
minimum age for admission to employment or work within its
territory and on means of transport registered in its
territory; subject to Articles 4 to 8 of this Convention, no
one under that age shall be admitted to employment or work in
any occupation.
2. Each Member which has ratified this Convention may
subsequently notify the Director-General of the International
Labour Office, by further declarations, that it specifies a
minimum age higher than that previously specified.
3. The minimum age specified in pursuance of paragraph 1 of
this Article shall not be less than the age of completion of
compulsory schooling and, in any case, shall not be less than
15 years.
4. Notwithstanding the provisions of paragraph 3 of this
Article, a Member whose economy and educational facilities
are insufficiently developed may, after consultation with the
organisations of employers and workers concerned, where such
exist, initially specify a minimum age of 14 years.
5. Each Member which has specified a minimum age of 14
years in pursuance of the provisions of the preceding
paragraph shall include in its reports on the application of
this Convention submitted under article 22 of the
Constitution of the International Labour Organisation a
statement--
(a) that its reason for doing so subsists; or
(b) that it renounces its right to avail itself of the
provisions in question as from a stated date.
Article 3
1. The minimum age for admission to any type of employment
or work which by its nature or the circumstances in which it
is carried out is likely to jeopardise the health, safety or
morals of young persons shall not be less than 18 years.
2. The types of employment or work to which paragraph 1 of
this Article applies shall be determined by national laws or
regulations or by the competent authority, after consultation
with the organisations of employers and workers concerned,
where such exist.
3. Notwithstanding the provisions of paragraph 1 of this
Article, national laws or regulations or the competent
authority may, after consultation with the organisations of
employers and workers concerned, where such exist, authorise
employment or work as from the age of 16 years on condition
that the health, safety and morals of the young persons
concerned are fully protected and that the young persons have
received adequate specific instruction or vocational training
in the relevant branch of activity.
Article 4
1. In so far as necessary, the competent authority, after
consultation with the organisations of employers and workers
concerned, where such exist, may exclude from the application
of this Convention limited categories of employment or work
in respect of which special and substantial problems of
application arise.
2. Each Member which ratifies this Convention shall list in
its first report on the application of the Convention
submitted under article 22 of the Constitution of the
International Labour Organisation any categories which may
have been excluded in pursuance of paragraph 1 of this
Article, giving the reasons for such exclusion, and shall
state in subsequent reports the position of its law and
practice in respect of the categories excluded and the extent
to which effect has been given or is proposed to be given to
the Convention in respect of such categories.
3. Employment or work covered by Article 3 of this
Convention shall not be excluded from the application of the
Convention in pursuance of this Article.
article 5
1. A Member whose economy and administrative facilities are
insufficiently developed may, after consultation with the
organizations of employers and workers concerned, where such
exist, initially limit the scope of application of this
Convention.
2. Each Member which avails itself of the provisions of
paragraph 1 of this Article shall specify, in a declaration
appended to its ratification, the branches of economic
activity or types of undertakings to which it will apply the
provisions of the Convention.
3. The provisions of the Convention shall be applicable as
a minimum to the following: mining and quarrying;
manufacturing; construction; electricity, gas and water;
sanitary services; transport, storage and communication; and
plantations and other agricultural undertakings mainly
producing for commercial purposes, but excluding family and
small-scale holdings producing for local consumption and not
regularly employing hired workers.
4. Any Member which has limited the scope of application of
this Convention in pursuance of this Article--
(a) shall indicate in its reports under article 22 of the
Constitution of the International Labour Organization the
general position as regards the employment or work of young
persons and children in the branches of activity which are
excluded from the scope of application of this Convention and
any progress which may have been made towards wider
application of the provisions of the Convention;
(b) may at any time formally extend the scope of
application by a declaration addressed to the Director-
General of the International Labour Office.
Article 6
This Convention does not apply to work done by children and
young persons in schools for general, vocational or technical
education or in other training institutions, or to work done
by persons at least 14 years of age in undertakings, where
such work is carried out in accordance with conditions
prescribed by the competent authority, after consultation
with the organizations of employers and workers concerned,
where such exist, and is an integral part of--
(a) a course of education or training for which a school or
training institution is primarily responsible;
(b) a programme of training mainly or entirely in an
undertaking, which programme has been approved by the
competent authority; or
(c) a programme of guidance or orientation designed to
facilitate the choice of an occupation or of a line of
training.
Article 7
1. National laws or regulations may permit the employment
or work of persons 13 to 15 years of age on light work which
is--
(a) not likely to be harmful to their health or
development; and
(b) not such as to prejudice their attendance at school,
their participation in vocational orientation or training
programmes approved by the competent authority or their
capacity to benefit from the instruction received.
2. National laws or regulations may also permit the
employment or work of persons who are at least 15 years of
age but have not yet completed their compulsory schooling on
work which meets the requirements set forth in sub-paragraphs
(a) and (b) of paragraph 1 of this Article.
3. The competent authority shall determine the activities
in which employment or work may be permitted under paragraphs
1 and 2 of this Article and shall prescribe the number of
hours during which and the conditions in which such
employment or work may be undertaken.
4. Notwithstanding the provisions of paragraphs 1 and 2 of
this Article, a Member which was availed itself of the
provisions of paragraph 4 of Article 2 may, for as long as it
continues to do so, substitute the ages 12 and 14 for the
ages 13 and 15 in paragraph 1 and the age 14 for the age 15
in paragraph 2 of this Article.
Article 8
1. After consultation with the organizations of employers
and workers concerned, where such exist, the competent
authority may, be permits granted in individual cases, allow
exceptions to the prohibition of employment or work provided
for in Article 2 of this Convention, for such purposes as
participation in artistic performances.
2. Permits so granted shall limit the number of hours
during which and prescribe the conditions in which employment
or work is allowed.
Article 9
1. All necessary measures, including the provisions of
appropriate penalties, shall be taken by the competent
authority to ensure the effective enforcement of the
provisions of this Convention.
2. National laws or regulations or the competent authority
shall define the persons responsible for compliance with the
provisions giving effect to the Convention.
3. National laws or regulations or the competent authority
shall prescribe the registers or other documents which shall
be kept and made available by the employer; such registers or
documents shall contain the names and ages or dates of birth,
duly certified whenever possible, of persons whom he employs
or who work for him and who are less then 18 years of age.
Article 10
1. This Convention revises, on the terms set forth in this
Article, the Minimum Age (Industry) Convention, 1919, the
Minimum Age (Sea) Convention, 1920, the Minimum Age
(Agriculture) Convention, 1921, the Minimum Age (Trimmers and
Stokers) Convention, 1921, the Minimum Age (Non-Industrial
Employment) Convention, 1932, the Minimum Age (Sea)
Convention (Revised), 1936, the Minimum Age (Industry)
Convention (Revised), 1937, the Minimum Age (Non-Industrial
Employment) Convention (Revised), 1937, the Minimum Age
(Fishermen) Convention, 1959, the Minimum Age (Underground
Work) Convention, 1965.
2. The coming into force of this Convention shall not close
the Minimum Age (Sea) Convention (Revised), 1936, the Minimum
Age (Industry) Convention (Revised), 1937, the Minimum Age
(Non-Industrial Employment) Convention (Revised), 1937, the
Minimum Age (Fishermen) Convention, 1959, or the Minimum
Age (Underground Work) Convention, 1965, to further
ratification.
3. The Minimum Age (Industry) Convention, 1919, the Minimum
Age (Sea) Convention, 1920, the Minimum Age (Agriculture)
Convention, 1921, and the Minimum Age (Trimmers and Stokers)
Convention, 1921, shall be closed to further ratification
when all the parties thereto have consented to such closing
by ratification of this Convention or by a declaration
communicated to the Director-General of the International
Labour Office.
4. When the obligations of this Convention are accepted--
(a) by a Member which is a party to the Minimum Age
(Industry) Convention (Revised), 1937, and a minimum age of
not less than 15 years is specified in pursuance of Article 2
of this Convention, this shall ipso jure involve the
immediate denunciation of that Convention,
(b) in respect of non-industrial employment as defined in
the Minimum Age (Non-Industrial Employment) Convention, 1932,
by a Member which is a party to that Convention, this shall
ipso jure involve the immediate denunciation of that
Convention,
(c) in respect of non-industrial employment as defined in
the Minimum Age (Non-Industrial Employment) Convention
(Revised), 1937, by a Member which is a party to that
Convention, and a minimum age of not less than 15 years is
specified in pursuance of Article 2 of this Convention, this
shall ipso jure involve the immediate denunciation of that
Convention,
(d) in respect of maritime employment, by a Member which is
a party to the Minimum Age (Sea) Convention (Revised), 1936,
and a minimum age of not less than 15 years is specified in
pursuance of Article 2 of this Convention or the Member
specifies that Article 3 of this Convention applies to
maritime employment, this shall ipso jure involve the
immediate denunciation of that Convention,
(e) in respect of employment in maritime fishing, by a
Member which is a party to the Minimum Age (Fishermen)
Convention, 1959, and a minimum age of not less than 15 years
is specified in pursuance of Article 2 of this Convention or
the Member specifies that Article 3 of this Convention
applies to employment in maritime fishing, this shall ipso
jure involve the immediate denunciation of that Convention,
(f) by a Member which is a party to the Minimum Age
(Underground Work) Convention, 1965, and a minimum age of not
less than the age specified in pursuance of that Convention
is specified in pursuance of Article 2 of this Convention or
the Member specifies that such an age applies to employment
underground in mines in virtue of Article 3 of this
Convention, this shall ipso jure involve the immediate
denunciation of that Convention,
if and when this Convention shall have come into force.
5. Acceptance of the obligations of this Convention--
(a) shall involve the denunciation of the Minimum Age
(Industry) Convention, 1919, in accordance with Article 12
thereof,
(b) in respect of agriculture shall involve the
denunciation of the Minimum Age (Agriculture) Convention,
1921, in accordance with Article 9 thereof,
(c) in respect of maritime employment shall involve the
denunciation of the Minimum Age (Sea) Convention, 1920, in
accordance with Article 10 thereof, and of the Minimum Age
(Trimmers and Stokers) Convention, 1921, in accordance with
Article 12 thereof,
if and when this Convention shall have come into force.
Articles 11-18: Standard final provisions.\1\
\1\See Appendix I.
---------------------------------------------------------------------------
Mr. MOYNIHAN. Madam President, I thank the Presiding Officer and
welcome her back enthusiastically. And I yield 15 minutes to my
eloquent and indomitable friend, the senior Senator from New Jersey.
The PRESIDING OFFICER. The Senator from New Jersey is recognized for
15 minutes.
Mr. BRADLEY. Madam President, I thank the distinguished chairman of
the committee for yielding. I thank the distinguished Senator from Ohio
for his comments. I agree fully with him on the need to ratify the
convention on the rights of the child. I have been in this body and on
this floor and sponsored resolutions for the last 5 years with the
distinguished Senator from Indiana has a cosponsor, and it is
bewildering to me why the administration would not ratify the
convention on the rights of the child.
I further agree with the Senator from Ohio in his call for the ILO
agreement. I think it is long past due that we be a signatory to that
agreement. I disagree with him strongly, however, on GATT. I rise in
strong support of the Uruguay round agreement. I think this agreement
is not only good for the United States. I think it is a requirement for
continued American prosperity.
Let me say that again because I think we are in danger of losing
sight of the stakes in our vote. Approval of the Uruguay round
agreement is a prerequisite to continued American prosperity. If we
reject the agreement, opt out of the international trading system, we
will consign ourselves to economic stagnation. We will deny ourselves
export-led growth, competitive industries with more jobs, and an
expanding tax base. We will in effect by voting no on GATT be putting a
cap on prosperity.
Madam President, in March 1985, actually for about the previous year,
I was a member of a group that was established by the Secretary General
of GATT. We met on a regular basis, and we were asked if we could to
issue a report on what should be the goals of a new GATT round. I was
the only American in that group. I was the only politician worldwide.
There were 7 members from different regions of the world. We issued a
report in March of 1985 with 15 recommendations for the upcoming GATT
negotiations that became the Uruguay round.
The most important of those recommendations were those increasing the
transparency of trade policies; in other words, making what people do
more obvious to everybody, bringing trade and textile services and
agricultural products into the GATT because they had not been in the
GATT or had special rules; reducing and controlling nontariff barriers,
those things countries would do that would have the same effect of
denying access to markets; tightening rules on subsidies, those things
countries do under the guise of helping a particular area sector that
in effect distorts trade; and improving GATT's dispute system, having
some way to resolve disputes when one country says one thing and
another says something else, pursuant to one set of rules.
Madam President, subsequent to that report, the Omnibus Trade
Competitiveness Act of 1988 set forth negotiating objectives for the
Uruguay round. The law listed three overall trade negotiating
objectives: First, more open, equitable and reciprocal market access.
Second reduction and elimination of barriers and other trade-distorting
policies and practices. Third, a more effective system of international
trading disciplines and procedures.
Madam President, these two documents establish what I think is sound
criteria by which we can evaluate the Uruguay round. The final product,
in my view, substantially meets the criteria that were laid out by the
group in 1985 and by the U.S. Congress in the Omnibus Trade
Competitiveness Act of 1988. First and foremost, this agreement opens
markets. It lowers tariffs worldwide by $744 billion--$744 billion. It
is the world's largest tax cut in history, reducing tariffs. On
manufactured products, the average cut in tariffs is over one-third. If
we were going to export a manufactured good to a country prior to this
agreement and we were going to sell it in a country for $100, with the
tariff it would be $133. Now we have cut that by a third. Because the
United States entered the negotiations with low tariffs and because we
are the world's greatest exporting nation, we gain the most from these
across-the-board reductions. These are not reductions in this sector or
that sector, but they are across the board, a one-third cut. Therefore,
it is obvious that the country that is the biggest exporter will
benefit the most, especially in the zero-for-zero sectors where tariffs
will be eliminated entirely. In some sectors there will be no tariffs.
The United States will have a tremendous advantage.
The agreement further opens markets by restricting the use of
nontariff barriers. It abolishes things like voluntary export
restraints, where two governments get together and they say we could do
this or that, but if you do that on your own, we will not make a big
deal, so you do it on your own, and they wink at each other and trade
is distorted and employment drops in export sectors. Well, they are
gone. It also converts quotas into tariffs, which cannot be raised but
can be negotiated down.
What happens so often is a country says we do not have a tariff. No,
but they have a quota, which is the same thing, because the price to
the consumer is higher. But you say, no, there is a quota and we are
going to make that a tariff so that the public can see what it costs
them. You are paying more for your product, and we are changing the
quota to the tariff so you can see how much more you are paying for
your product.
The result is to bring trade barriers under this agreement into the
light of day, so consumers can understand why they pay too much for
their goods. The best antidote to protectionism, in my view, is
transparency. This agreement makes barriers more transparent. Everybody
will be able to see who is doing what and why. It will not be in the
dark of night, stuck in some bill and some bureaucracy. It will all be
right there, and tariffs will be clear to everybody, and they will be
cut.
The Uruguay round agreement also brings important new sectors into
the international economy under the global trading system. It phases
out textile quotas, reduces agricultural subsidies and quotas,
increases intellectual property protection, brings trade and services
into the system. The result is that our productive industries will have
greater opportunities to compete on the basis of merit, rather than on
the basis of political influence.
This was one of our most important objectives, as we thought about a
new round. You cannot have a world economy where the fastest growing
segment of the economy--services--is not included in any kind of trade
agreement. It was not until this round. It will be included in this
round. And then, of course, we have countries around the world that see
an American movie or an American drug, or they see how it works, and
they pirate the movie or the product and sell it in their country, and
they pay nothing to the United States that invented the product and
spent the billions of dollars necessary to invent the medicine or make
the movie. Prior to this agreement, there was nothing you could do
about piracy. Under this agreement, intellectual property is now
included for the first time ever. It is an enormous advance.
While it is unfortunately unrealistic to ban all subsidies
altogether--I think we probably should ban all subsidies--but this
agreement defines them more precisely and brings them into the WTO
system. The agreement's dispute resolution mechanism provides recourse
for those who feel they are injured by subsidies. Even more important
over the long-term, the subsidies agreement will open Government
subsidy policy to scrutiny by taxpayers. Once voters understand the
cost of Government subsidy programs, they will put, I believe, pressure
on their elected representatives to curb them.
Finally, rules need enforcement. You cannot have a rule-based
multilateral trading system unless you have some way to enforce the
rules. We need only look at our endless trade rows with Japan for
proof. One of the most important features of this agreement is that it
strengthens the dispute settlement system. For the first time, no
single country can block a panel report. In the past, the losing party
could deny us our rights. We could win and they could say, ``I am
sorry.'' Under the WTO procedure, that can no longer happen. Either the
offending country will change its policy, or we can exact retaliation
against other exports.
This does not mean, however, that we have given the WTO sovereignty
over U.S. law, as some have asserted. When we lose cases--and we will,
although statistics show we lose less often than any other country--the
result does not automatically change U.S. law. I will quote from the
legislation so we understand this. This is what it says:
No provision of any of the Uruguay round Agreements, nor
the application of any such provision to any person or
circumstance, that is inconsistent with any law of the United
States shall have effect.
In other words, nothing that violates U.S. law will have any effect.
The decision made will have no effect. Only the Congress of the United
States can change American Federal law. That has been the case with
GATT for 47 years, and it is the case now under the WTO. Nor can the
WTO change State and local laws. Indeed, in the highly unlikely
incidence that the Federal Government would want to sue to change the
State and local law as a result of an adverse panel ruling, it will
only be able to do so after a series of safeguards have been
implemented.
I might note in this regard that in the nearly half century that the
GATT has been in effect, the Federal Government has never sued to
overturn State or local law because of an adverse GATT panel ruling--
not one time.
Madam President, we have heard concerns expressed by our colleagues
and our constituents that by strengthening the dispute settlement
resolution system, we are putting ourselves at risk.
Madam President, I think most Americans appreciate the value of
playing by the rules, whether in trade or sports or politics or life.
Given the competitiveness of our industries, we gain when the rules are
fair and when the rules can be enforced.
Indeed, take a look at what happened since 1947. We have been by far
the largest user of the existing and continuing GATT panel system,
having brought over a third of all the complaints from 1947 to 1993.
The United States has brought over one-third of all the complaints from
1947 to 1993. That is over twice as many as all of Europe has brought.
Japan is barely even on the charts in terms of bringing cases.
The United States wins in GATT more often than other countries do. As
a complainant, as a country that says some other country has broken the
rules, the United States achieved a positive result in 80 percent of
the cases initiated, either because of a favorable panel ruling or a
negotiated settlement. This is much better than the GATT average of 64
percent.
In other words, when we brought a case, we have won the case four out
of five times. Overall the other countries of the world win the case
about three out of five times.
As a respondent, in other words, a country that is charged with
violating the rules, we have defeated the charge 52 percent of the
time, which is far above the average of about 23 percent.
So what we have done when other countries have charged us under this
system the people characterize as a disaster, is that we have defended
ourselves effectively over half the time. The rest of the world is
defending themselves effectively to charges that they are breaking the
rules about 20 percent of the time.
I do not think that this should surprise anyone, because we play by
the rules, and it has always been in our interest that the rules be
enforced. The Uruguay round's dispute resolution provisions simply make
it more likely that the rules will be enforced.
May I have an additional 5 minutes?
Mr. MOYNIHAN. Madam President, I am happy to yield an additional 5
minutes to the Senator.
The PRESIDING OFFICER. Without objection, the Senator is recognized
for an additional 5 minutes.
Mr. BRADLEY. Madam President, let us get to the bottom line. The
Uruguay Round Agreement will bring direct dollars-and-cents benefits to
the American economy. The numbers bear repeating. For example, the 1994
Economic Report of the President estimates that the aggregate increase
in U.S. annual income after 10 years will be about $100 and $200
billion, the equivalent of 1.5 or 3 percent of the whole income of the
economy. That means that this agreement alone, on conservative
estimates, is the equivalent of a free year of economic growth.
The Treasury Department estimates that by the year 2004 the average
family of four in the United States will be $1,700 richer every year
because of this agreement. More jobs, higher income, more growth. How
often are we able to put $1,700 in a family's bank account and reduce
the budget deficit at the same time? Not very often. This agreement
will do that.
Madam President, exports are essential to economic growth. That is
the lesson of the Asia-Pacific region, where first Japan, then the
``Dragons,'' and now China are exporting their way to growth.
It is also the lesson of our experience. Export growth has accounted
for half of the total U.S. economic growth over the past 5 years. Half
of all our growth comes from exports that are tied to jobs. This
agreement, on conservative estimates, will increase our merchandise
exports $150 billion per year, and our agricultural exports about $8.5
billion per year by the year 2004. And that does not even count the
boost in services exports that we will get because we are bringing
services under the rules. That is a very conservative estimate as to
what we will increase in exports.
Economic growth means jobs. The Treasury Department estimates that
the agreement will lead to 300,000 to 700,000 net new jobs after 10
years. These will be high-paying jobs, since the jobs in the export
sector pay over 10 percent more than average.
Now, Mr. President, we are all Senators from States. We represent our
States as well as thinking of the national interest. My State of New
Jersey is going to be a major beneficiary of this GATT agreement. We
exported 14.5 billion dollars' worth of merchandise last year. We have
increased our exports since 1987 by 90 percent--90 percent increase in
exports. The only thing increasing jobs in New Jersey in the last 5
years, or since 1987, has been a boom in exports, New Jersey's
manufacturing exports.
People always say manufacturing is in danger. The manufacturing
exports directly supported, in my State, about 200,000 jobs. The tariff
reductions, intellectual property provisions, service rules, and other
aspects of the Uruguay Round Agreement will flow through to New Jersey
in the form of even greater export growth, more export jobs, not to
mention reduced prices for New Jersey consumers. The Treasury
Department estimates that New Jersey will be $5.4 billion richer every
year, and that 18,000 more New Jerseyans will be employed as a result
of this agreement.
That is a pretty good deal. New Jersey and all America have benefited
from a healthy international trading system. Indeed, measured by
volume, America's exports have risen faster than those of any other G-7
country, including Japan, over the past 5 years we have been talking
of. That is because we have done more than any G-7 country to adapt our
economy to the new world we face. We have made changes we are more
competitive.
I ask for 3 more minutes.
Mr. MOYNIHAN. Yes.
The PRESIDING OFFICER (Mr. Dorgan). The Senator is recognized for 3
additional minutes.
Mr. BRADLEY. As a result, we have become once again the world's most
competitive economy. According to the 1994 World Competitiveness
Report, the United States is the most competitive economy. We should,
on this evidence, pass this agreement and stride confidently into the
future.
However, Mr. President, we will be casting at least two votes on this
agreement, the agreement for it, and then the budget waiver. And it is
not just a simple up-or-down majority vote, but we have a 60-vote point
of order that we need to pass. Under the Senate paygo budget rule, any
increase in spending or decrease in taxes will be offset by equal
savings elsewhere for 10 years--10 years. Thus, under Senate rules we
must make up the revenue lost because of this agreement's tariff
reductions over 10 years--even though the legislation before us fully
complies with the Budget Enforcement Act, and even though the revenue
generated by the extra growth that this agreement will unleash, more
than makes up for the lost tariff revenue. Because the legislation
before us finances only the first 5 years it is subject to this 60-vote
point of order.
I take, personally, a back seat to no one in efforts to cut the
budget. I have offered amendments to cut unnecessary spending. I have
offered a line-item veto. I have introduced legislation that eliminates
procedural obstacles preventing effective steps to cut appropriation
levels. I have worked and will continue to work to bring our budget
under control. But torpedoing the Uruguay round is not the way to cut
the deficit.
Indeed, a vote against the agreement on the budget point of order is,
in fact, a vote against budget stringency. Why do I say that? If this
agreement is killed for narrow technical reasons, we will pay with less
growth, fewer jobs, and as a result, a higher budget deficit.
The figures bear this out, whether it is the Joint Economic Committee
Republican staff, DRI/McGraw Hill, or the International Institute of
Economics.
Make no mistake, this vote on the budget point of order is a vote on
the agreement. My colleagues cannot vote against the budget waiver
hoping to then vote for the agreement, for if the first vote is lost,
there will not be a second vote.
But let us get back to the main and final point about this vote. What
the Uruguay round does is position the United States to take advantage
of its enhanced competitiveness in an expanding global market. And it
positions us to take a bigger bite out of a bigger apple.
The choice is clear. We should ratify this agreement.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Chair recognizes the Senator from New
York.
Mr. MOYNIHAN. Mr. President, may I simply congratulate the Senator
from New Jersey for a comprehensive and convincing statement of the
whole case. And, may I add, it was the good fortune of the Senate that
he was asked to be a member of the GATT advisory panel in 1985. It
shows.
I yield the floor.
Mr. PACKWOOD addressed the Chair.
The PRESIDING OFFICER. The Chair recognizes the Senator from Oregon.
Mr. PACKWOOD. Mr. President, I yield 15 minutes to the Senator from
Washington.
The PRESIDING OFFICER. The Senator from Washington [Mr. Gorton] is
recognized for 15 minutes.
Mr. GORTON. Mr. President, the debate over the General Agreement on
Tariffs and Trade has been conducted at two highly distinct levels: The
first, of course, is the desirability of freer trade among the nations
of the world; the second, with respect to the impact of this agreement
on the sovereignty of the United States, the ability of the United
States to enforce its own laws domestically.
With respect to the first of those two subjects, the desirability of
freer international trade, I believe that the debate divides Americans
into optimists and pessimists. The optimists see the United States as a
highly competitive economy in which the great majority of its people
will be benefited by a more open trading system around the world. The
pessimists believe that the United States fundamentally is
noncompetitive with less developed nations and, therefore, by even a
modest greater opening of its own markets, that Americans will, by and
large, suffer from a free trade regime.
This is a question, of course, which is being argued on the basis of
theories and comparative wage scales and cultural and social
differences, and any such look into the future is obviously subject to
debate.
At the same time, it should seem obvious to all that we have such a
long history in the world, both in eras during which trade restrictions
were increased on the part of many countries and then most of the post-
World War II era in which in most nations trade barriers were reduced,
so that we do not really need to argue from theory but can argue from
history itself.
I believe that every previous General Agreement on Tariffs and Trade
and, for that matter, every previous regional or bilateral lowering of
trade barriers has resulted in sharply increased prosperity. Obviously,
reducing those barriers results in an increase in trade among all of
the nations which are involved. But with only the most minor
exceptions, the prosperity of the people of each of the participating
parties to previous General Agreements on Tariff and Trade has
increased. There are individual dislocations, there are sectorial
dislocations, but when one takes the good of the people of a nation as
a whole, it has been advanced by past agreements.
I am confident, as a result, that when we ask ourselves the question,
will the per capita income of Americans increase and increase
measurably as a result of an approval of this General Agreement on
Tariffs and Trade, that the answer to that question is yes. Will
consumer choice increase as a result of this agreement? The answer is
yes. In fact, reputable economists have estimated that the increase in
per capita or per family income is well up into four digits on an
annual basis.
Just a year ago, we had a similar debate over the North American Free
Trade Agreement involving only two other nations in addition to the
United States. We heard many of the same counter arguments that we are
listening to today, but in a relatively brief period of time of less
than a year, trade between Mexico and the United States has increased
sharply. Literally thousands of new jobs have been created in the
United States of America as a result, and we have a somewhat more
peaceful and prosperous immediate neighbor.
Yet, many economists say that the impact of a General Agreement on
Tariffs and Trade on the positive side of the scales of balance will be
between 10 and 50 times greater than that of the North American Free
Trade Agreement, an almost obvious truth due to the much, much larger
number of nations that are involved in this particular agreement.
What many forget is that we have a General Agreement on Tariffs and
Trade today. We have had changes in the past in that General Agreement
on Tariffs and Trade. And very few, if any Americans, would simply
cancel everything that has been done in the international trade field
during the course of the last 40 or 50 years and return us to our
international trade policies of the 1930's.
This agreement, of course, extends beyond subsidies on goods to
reducing barriers with respect to subsidies, with respect to many
services, which have never been covered by previous General Agreements
on Tariffs and Trade, and with respect to intellectual property. So as
we examine this agreement, simply from the perspective of whether or
not international trade will increase as a result of its passage and
whether or not that increase will benefit most Americans, the answer
that history gives us reinforces the answer that theory gives us.
Prosperity in this country and around the world will be increased, will
be enhanced by the ratification of this agreement.
The second level of debate, the debate over the sovereignty of this
Nation, is in some respect more important, more visceral, more
emotional, and more significant. No nation, the United States leading
among them, wishes to give up a portion of its sovereignty to any
international body much less an international body which is one country
one vote.
At the same time, it is the United States of America itself which has
been frustrated by the lack of enforceability of decisions under the
previous General Agreement on Tariffs and Trade. We are far more sinned
against than sinning at the present time, and we have not been able to
get nations which have violated the present agreement to agree to cease
those violations, even when panels have determined that those
violations are absolutely clear. And the World Trade Organization is
designed and almost certainly, in effect, will amount to an
organization which is more likely to have its decisions adhered to by
nations against whom it rules than the present system does.
That, however, is not at the essence of sovereignty. We lose
sovereignty only if the World Trade Organization has either internal
enforcement authority within the United States or, alternatively, our
commitment to it is irrevocable. Neither of those propositions is true.
We still can, as can all other countries, defy the edicts of the World
Trade Organization. And the recourse of the Nation we have wronged in
the eyes of the World Trade Organization is to impose trade sanctions
against us--exactly what can happen today and does happen frequently
today in the absence of a World Trade Organization.
And, if one proposition has become increasingly clear as this issue
has been debated during the course of the last 3 weeks, the United
States obviously can withdraw from that organization, or from GATT,
essentially at will. Under the agreement made between the distinguished
senior Senator from Kansas, our leader, and the President, it will give
to the Congress of the United States an ability to work in that field,
as well as to the President of the United States. Our sovereignty is
not implicated by the World Trade Organization.
Could that World Trade Organization be better? Of course, it could.
But we are faced in this connection with the ability to create a far
freer and more open trade regime in the world, greatly to the
prosperity of the people of the United States; an agreement which has
been negotiated over the Presidencies of three different Presidents of
the United States with different attitudes, getting the best deal they
could possibly get. We cannot, in the Congress of the United States,
unilaterally write a better deal. This is a good deal for the United
States. It is a good deal for the world. It will contribute to our
prosperity and it ought to be passed.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER (Mr. Hollings). The Senator from North Dakota.
Mr. DORGAN. Mr. President, with the authority of the Presiding
Officer, I yield myself 20 minutes.
Mr. President, we are discussing here an extraordinary piece of
economic policy for this country. And, as we begin this discussion, I
thought it would be useful to present a chart that shows where we are.
This chart shows our merchandise trade deficit in this country. The red
lines going down represent red ink, trade deficits, a hemorrhaging in
this country. This is an extraordinarily serious trade deficit that
represents a serious problem for this country. All of this red means
less income for our country, fewer jobs in America. All of this red
means a failed trade policy in our country.
With this as a backdrop--America as the largest debtor Nation in the
world; a failed, collapsed trade policy resulting this year in the
largest trade deficit in American history--we are told by the same
bipartisan group of people who have hugged and embraced this trade
policy now for 30 or 40 years: We want to do more of the same. Let us
put a bigger engine in the same old vehicle.
There is an old saying: When you find yourself in a hole, it is time
to stop digging. The crowd that would have us pass GATT says that when
you find yourself in a hole, let's pass out more shovels.
This policy, which comes to the Senate as GATT, is a trade policy
that is fundamentally hurting America. I am for free markets. I am for
expanded trade. But that must be accompanied by a fresh, new admission
price to our marketplaces. That admission price should say we will
trade with anybody, as long as they pay a living wage, have working
conditions that are fair and safe, and are not fouling the world's air
and the water. There should be some minimum conditions that must be
met.
We should not say let us simply have open markets and free trade and
go ahead, you producers, and hire 12-year-olds working 12 hours a day,
paid 12 cents an hour, and send the products of their labor into our
marketplace to eliminate our jobs. That might satisfy some--certainly
the large international businesses that profit from it--but it does not
satisfy me and it does not satisfy this country's economic interests
either.
Let me read some of the arguments of the proponents of this
agreement. I hope those who support GATT and are urging us to pass it
would listen to this.
These agreements offer new opportunities for all Americans.
For American farmers, the agreements expand world markets for
American farm products. For American workers, the agreements
offer more jobs, higher income, and more effective responses
to unfair foreign competition.
Oh, no, that is not the argument made today, Mr. President. That is
the argument made in 1979 for the Tokyo round. The argument will be
made today, in exactly the same language by many of the same people. So
let us look at what the outcome was. Better for farmers? More jobs?
Higher incomes for American workers? Oh, no. Following the Tokyo round,
agricultural exports since 1980 are up just 5 percent, while
agriculture imports since 1980 are up a whopping 32 percent.
American workers seeing good times? No. A net loss of 3.3 million
manufacturing jobs since 1979. Higher incomes? No. Sixty percent of
American households now have lower income than they had a decade ago.
Another argument: ``These agreements will result in lower prices,
increased competition and greater prosperity for all the American
people.'' An argument made today that also was made in 1979 about the
Tokyo round.
Where is the greater prosperity? Real hourly wages for U.S.
production workers, which had grown 3 to 5 percent annually for many
years, stopped growing in 1973 and have now declined to mid-1960's
levels on a real-income basis.
This new order, the new order that was promised in 1979, is identical
to the promises we are hearing today: More jobs, more income.
Nonsense. The record shows just the opposite happened.
Let me share with my colleagues something very interesting that I
read last evening. This comes from the Finance Committee from 1986.
They are talking about the Tokyo round completed in 1979.
The committee is concerned the Tokyo round of trade
negotiations and the legislative branch and executive
branch's actions to implement it have not had the effect of
improving the American standard of living intended.
They go on to talk about the sea of red ink and the trade deficits.
The Finance Committee itself said the Tokyo round did not work. Exactly
the same arguments that were used to promote that trade agreement in
1979 that we hear again today in connection to the Uruguay round.
My point is that those arguments that drove the Tokyo round in 1979
were wrong. They are demonstrably wrong. The facts show it. Our economy
shows it. Lost jobs, lost incomes show it. Do these arguments have any
credibility anymore?
We had an election recently. The election was about change. Does
anyone doubt that the election was about change? Yet this trade
strategy is business as usual. You strip away all the brush here and
what you find at the roots is one central fact: The largest
international businesses in the world want to produce where it is cheap
and sell back into our marketplace. That might be good for
international business' profits, but it certainly is not good for the
prospect of jobs and decent incomes for American families.
Open markets? Sure. I believe in open markets. But I believe there is
an admission price to those open markets. You have to pay a living
wage. You have to care about worker safety. You have to care about the
things that we fought for 50 years in this country to achieve that have
made life better for Americans.
And if you strip away all the nonsense, all the fractured statistics,
all the charts and all the graphs, there is one central question we
must ask ourselves: Is the standard of living for the American family
improving or declining? In other words, will this agreement, which asks
low-wage and low-skill Americans, who comprise nearly two-thirds of the
work force, to compete against 2 or 3 billion low-skilled people in the
world, many of whom are willing to work for 8 cents, 20 cents, or 80
cents an hour--will it improve the standard of living in this country?
The evidence is all around us. The answer is no.
This is a strategy for larger corporate profits and a strategy for
lower income for American workers and fewer jobs.
Let me show one additional chart that illustrates the problem quite
graphically, I think. The blue line shows productivity in America.
Productivity has increased. The red line shows household incomes.
Regrettably, they are moving in opposite directions. Why?
The answer is that American workers cannot compete when those who
head the multinational corporations get in an airplane and circle the
globe to try to figure out where they can produce at the least cost to
sell the products back into the best marketplace. And that is the
disconnection we have with this trade agreement.
I could talk about the World Trade Organization and other elements of
GATT. It is absurd for anyone to argue that the creation of a World
Trade Organization does not impinge on our sovereignty. Of course it
does. That is precisely why it was created. Of course it does.
I could talk about child-labor conditions: 200 million children
working in the world--3-year-olds, 6-year-olds, 10- year-olds, 12-year-
olds. It would break your heart to hear the facts. Children making
carpets, cutting knots with knives. There was testimony before the
Senate about someone in those factories who sees burnt fingers and
wonders why, and then discovers 12-year-old kids using knives to cut
knots on silk rugs are cutting their fingertips, and those who employ
them use match-stick powder to burn in those fingertips to create scars
so they can keep those kids working. It breaks your heart to see the
working conditions around the world. Should we compete with that? Of
course not. Does this prevent competition in those circumstances?
Regrettably, no.
They chant ``free market,'' like a mantra. It is as if they are
beating cymbals and chanting over and over again: ``Free market, free
market, free market.''
That is not what is important. Yes, let us have expanded
opportunities. Yes, let us compete around the world. But let us make
sure the rules are fair, and let us make sure the end result represents
a better standard of living for American workers.
That is, by far, the most important of all the measurements: What
happens to the standard of living for those in this country who
produce, who risk their capital to keep jobs in this country and for
those who work for them, who want a living wage and want a safe
workplace. That is what is important.
I regret that this administration is supporting this GATT agreement
because I feel so strongly it is bad for this country. President
Clinton and Mickey Kantor are people who have had the guts to stand up
to other nations in bilateral negotiations, such as those with Japan.
They stood up and fought for us on grain problems with Canada. This
administration has done things, when previous administrations had sat
on their hands. I compliment this administration for that.
When the winds of change out there suggest the American people do not
like the direction we are moving, you would think that this would be
the time to assess what is going wrong. Why are incomes declining in
America, and what can we do about it?
This kind of trade agreement, which asks American workers to compete
against others around the world who are going to be paid 20 cents an
hour, is a strategy for enhancing corporate profits and diminishing the
importance of, and the ability to help families, that depend on
American jobs.
Instead of having thoughtless discussions about trade where we put
people into two camps--the free-trade camp that sees over the horizon
and are the know-all, see-all wise folks; and the ``isolationist
xenophobic stooges'' who cannot see anything, and are protectionists
who want to put a wall around the country--I hope one of these days we
can do better than that. That is thoughtless sloganeering and nonsense.
I do not want to put a wall around our country. I want goods to come
into America and compete on a fair basis. The only caveat for me in the
long term is that all of us should work toward establishing policies
that will enhance the ability of American families and American people
to find good work that pays good wages and enhances and improves their
standard of living.
Frankly, the evidence is all around us, littering the floor of the
Senate and the House from past trade debates. This trade strategy is
wrong and it should not take a sea of red ink, our worst trade deficit
in history this year and the transformation of America from the largest
creditor nation in the world to the largest debtor nation in the world,
to convince us of that.
Anyone who remains unconvinced has simply been reading the wrong
information. My friend, Senator Brown, from across the aisle, I
understand, had said he previously was inclined to support GATT. But
then he courageously was the only Member of the U.S. Senate to accepted
a challenge by Ralph Nader to take a test of knowledge about GATT. So
my friend, Senator Brown from Colorado, apparently spent his
Thanksgiving reading and studying GATT, and then took the test.
I am pleased to say he upheld the honor of the Senate and passed that
test and apparently won $1,000 to be given to charity. But I think he
is going to tell us what he told some folks yesterday. Upon reading
this document, he concluded it is not good policy for this country.
This is not about us versus them. It is not about Republicans versus
Democrats. This is about change versus more of the same. And more of
the same will hurt this country badly.
I hope the Senate will reject GATT and decide instead to expect, to
demand, fundamental change in our trade strategy--not to close this
country's borders, but to declare that there is an admission price to
exercise the rights of the marketplace in a country like ours. And that
admission price is that you must pay a living wage and play by the
rules.
Mr. President, I yield back my time.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. PACKWOOD. Mr. President, I yield 15 minutes to the Senator from
Colorado.
The PRESIDING OFFICER. The Senator from Colorado.
Mr. BROWN. Thank you, Mr. President. I want to thank the
distinguished future chairman of the Finance Committee for the time.
Many Members have come to the floor and expressed concerns about GATT
or approval for GATT. Others have talked about whether or not they
favor free trade or open trade. I favor free trade. I favor open trade.
I am for lowering tariffs and eliminating quotas. I am for expanding
the world's trading market. But, if you believe as I do and study the
agreement, instead of being for GATT, you will be very concerned about
it.
Let me be quite specific because much of the debate has been bumper-
sticker debate, debate over whether you favor free trade or not, debate
about whether U.S. sovereignty is infringed or not. These are not the
issues. We must focus on the agreement itself. Let me be very specific.
GATT sets up an ineffective court system that will replace our
ability to litigate many of these trade questions in U.S. courts. The
dispute settlement body will establish a series of panels to rule on
trade disputes. Unlike U.S. courts, the proceedings of the panels will
be conducted in secret. No conflict-of-interest rules exist to ensure
impartial panelists. Decisions will be rendered anonymously by
unaccountable bureaucrats and the appeals process will not be subject
to outside review.
Who in this Chamber believes we ought to have a court system that
does not have the basic elements of procedural due process? GATT sets
up a court system without procedural safeguards to ensure due process.
In effect, it establishes a trade legislative body with the right to
rule on implementation of its own laws, unlike in the United States
where we separate these functions into separate branches of government.
Please do not be mistaken, GATT's new WTO will legislate future trade
policy. Does it force us to adopt their legislation? No, it does not.
But can they influence and amend the agreements that we are involved
in? Yes, they can.
The problem is not that we have set up an international system for
legislating in this area. The problem is that we have set up a
legislative system without fair representation. Under the new rules
established under the GATT, we will have one vote out of all the member
countries, currently expected to be at least 123, yet we will pay the
greatest share of the bills. Nearly 25 percent of the cost could fall
upon U.S. shoulders, and yet we will have less than 1 percent of the
control of how the money is spent. Is that a problem?
Please look at the World Bank and the International Monetary Fund.
During debate here in the Senate concerning more than a billion dollar
increase in taxpayer funds to the World Bank, I challenged Members of
this Senate to come forward and defend the way that the money of
American taxpayers is spent. At the World Bank, according to articles
published in prominent news sources, the average salary was $123,000 a
year--that is right, you heard me correctly, an average salary; that
includes janitors, service people, receptionists, nonskilled workers--
an average salary that is roughly equivalent to a U.S. salary of
$176,000 a year because the $123,000 average is tax free. Why do
salaries get that way? Because those who pay the bill and those who
decide the staffing are not the same.
Will that be a problem with the new GATT organization? Yes. It will
create 50 new councils, committees, panels, and working groups. It is
going to be a huge international bureaucracy. The United States will
pay the bills and other countries will decide how it is run.
Lastly, it is a one-sided agreement. Anyone who thinks we are getting
into an agreement that expands free trade has not read the text of the
agreement itself. Let me repeat that, because it is absolutely true and
I hope Members will focus on it. Anyone who thinks this is an agreement
that expands free trade has not read it.
Why do I say that? It expands the openness of our markets but
authorizes developing countries and the least developed countries to
exempt themselves from those liberalizing effects, some for 5 years,
some for 7 years, some for 8 years. The exemptions vary by agreement.
But what this agreement does is open our market and allow the
developing and least developed countries to keep theirs closed. Some
will say, ``Hank. Wait a minute. In 5 or 8 years that market will open,
or in 10 years the market will open, or in some areas in 12 years it
will open.'' If they say that they have not looked closely at the way
the WTO will operate. Most of these agreements provide authority for
the WTO to amend them. Could they clear the necessary procedural
hurdles to amend them?
More than three-fourths of the votes in the WTO are in the Third
World--more than three-fourths of the votes. Three-fourths is important
because it is the majority needed to amend and interpret the
agreements. With more than three-fourths of the votes in the WTO, the
Third World's less developed countries can extend these exemptions ad
infinitum. There is some language in the agreement that indicates that
is a possibility.
What is the bottom line? The bottom line is we set up a court system
without due process. We set up a trade legislating body without fair
representation. I do not know what you would consider fair. But let me
tell you, I do not think you will consider WTO fair. We have 1 vote out
of 123, and we are going to pay 25 percent of the cost with less than 1
percent of the votes. In the United Nations at least we have a veto. In
the IMF at least we have a weighted vote. In the WTO, we have no
protection. We pay the bills and other members will determine the cost.
It is completely a one-sided agreement.
Let me be specific because those are serious charges and they are
ones that Members ought to be concerned about. In the court system that
they set up--again it is called the dispute settlement body--a panel is
appointed.
The ministerial conference will elect the director general, and the
general council will substitute for the ministerial conference when it
is not in session. The director general will help recruit, hire and
employ the secretariat. The Third World controls the selection of the
director general. That is not speculation. If all signatories join, the
Third World will have 83 percent of the vote. You tell me who is going
to control the director general. With 83 percent of the vote the Third
World is going to control the director general. The director general
handles the hiring of the secretariat and the supervisors. When you
have a question that has to be interpreted, a litigation, in effect a
court hearing, it is the secretariat that is hired by the director
general controlled by Third World country members that will decide upon
the experts to make decisions and recommendations in a trade dispute.
Will these experts be weighted in favor of the Third World countries?
You bet your life they will be.
From that pool of experts will be selected the three or more members
that will be on the panel to settle the dispute. They decide it. Some
will say that is OK. They have to be fair. Do they have to be fair? Do
they have to have open hearings? No. They do not. They even render
anonymous decisions.
Mr. President, the heart of the WTO will be a court system that does
provide procedural due process safeguards. I hope the Members who are
in favor of this will come to the floor and tell us why we should not
expect to have due process in these hearings. Before Members vote, I
hope they will ask themselves the same question.
We have talked about trade legislation. But let me simply mention
this. The United States has one vote. The European Common Market has
16. Does anybody here think that is fair? If they think that is fair
and they are going to vote for it, please come down and tell me why the
United States gets 1 vote and the European Common Market gets 16. I
want to hear why and so do the American people. If you like the WTO,
tell me why it is fair that 18 countries with populations of under 1
million apiece will have more voting power than the United States and
the European market combined.
Let me repeat that. Eighteen countries with a population less than
half the size of California are going to have more voting power than
all of the United States and the European Common Market combined. If
you think that is fair, come down to the floor and tell me why you
think so. Anyone who thinks this is about fairness and a valid
legislative body to settle trade disputes has not read the legislation.
Mr. President, I have talked about it being a one-sided agreement. I
want to be specific about that because I think that may be something
that Members have not focused on. When I say it is a one-sided
agreement, let me be specific. Some Members are from dairy States. I
hope they will look at this. Under the GATT-WTO agreements, the
European Union is allowed to spend $2.5 billion a year to subsidize the
exports of 30 billion pounds of milk, $2.5 billion a year for EU
subsidies for exported milk. Does the United States get to spend an
equal amount or maybe a larger amount? No. Under the agreement we are
limited to less than one-twentieth of the European Union's allocation.
Anyone who thinks this is a fair, balanced, open market agreement has
not read it. The fact is, the United States was outtraded. When we are
allowed to use one-twentieth of the resources that the European
Economic Community is allowed, I do not think it is fair. If somebody
does, come down and say it. If somebody thinks having a 20-to-1
advantage is fair, please come and talk about it. Go on the record,
because it is not fair. It is not evenhanded, and it is not a good
negotiation. Is that the only example? No.
Take a look at the agreement on trade-related aspects of intellectual
property rights. We ought to respect property rights. People are proud
of this agreement because it expands free trade and protects property
rights. Read the agreement. We have 1 year to bring our intellectual
property standards into line with the accord; 1 year. Is that the same
for every other nation? No. Developing countries have 10 years. The
least developed countries have 12. Let me repeat it. We have 1 year.
They have 10 years. For 10 years they can violate those agreements and
get away with it. We have signed an accord that recognizes their right
to do so. Is that fair? Does anybody think that is fair? Will the
advocates of this measure come to the floor and tell me. Is it fair for
us to have 1 year and them to have 10 to 12 years? But the disparities
do not end here. Because after they get through with 12 years of
cheating on our patents--cheating and stealing which we will recognize
as their right--after they get through with 12 years of doing that,
they have the right to come back and amend the rules to continue. We
will not have enough votes to stop them.
Let me follow up because it is important for Members to take a look
at the exact specifics. In agriculture, if you are from an agriculture
State, let us take a look at page 1366. Here is what you are going to
find: Part 9, article 15: ``Special differential treatment.''
Those are not my words. Those are the words out of the agreement.
1. In keeping with the recognition that differential and
more favourable treatment for developing country Members is
an integral part of the negotiation, special and differential
treatment in respect of commitments shall be provided as set
out in the relevant provisions of this Agreement and embodied
in the Schedules of concessions and commitments.
2. Developing country Members shall have the flexibility to
implement reduction commitments over a period of up to 10
years. Least-developed country Members shall not be required
to undertake reduction commitments.
It is right there. That is not fair trade. That is not evenhanded
trade. We were out-traded. We opened up our markets and let them keep
them closed. Moreover, remember the exemptions that are here do not
necessarily run out because those who benefit from them can then amend
the rules.
Page 1386, article 10, ``Special and Differential Treatment.''
This is the sanitary and phytosanitary agreement. It is an important
agreement. It is what many of our constituents see as important because
they believe it will give them protection in other nations similar to
those required here and will establish a fair standard for trade with
foreign countries. Read what those fair standards are.
Paragraph 3:
With a view to ensuring that developing country members are
able to comply with the provisions of this agreement, the
committee is enabled to grant such countries upon request
specified time limited exemptions, in whole or in part, from
the obligations under this agreement taking into account
their financial and development needs.
Has anybody read it? The people who think it is so great, do they
understand it is going to apply to us and not necessarily to the
countries we sell to? Have they asked themselves who has the power to
extend these exemptions? It is a body of which 83 percent could be
developing Third World countries. In the current GATT, there are only
90 developing country members so far, well over three-fourths necessary
for approval of rule changes and amendments. Is that out of line? Look
at page 1438, Article 12, Special and Differential Treatment of
Developing Country Members, 12-1:
Members shall provide differential and more favorable
treatment to developing country members to this agreement
through the following provisions, as well as throughout the
relevant portions of other articles of the agreement.
It says ``shall provide.'' That is under the technical barriers to
trade. If you talk to Members who are advocates of this agreement, they
will tell you how great this agreement is because the agreements on
technical trade barriers are going to break down foreign trade barriers
to our products.
Read the Agreement on Trade-Related Investment Measures on page 1449,
Mr. President. And I can go on. But if Members are voting for this
because they like free trade and want to open up foreign markets and
think this is a way to do it, please read it and look at the votes that
are in the WTO. If anybody thinks this is fair, please come down and
say so. I want to know why it is fair that Americans ought to subject
their market to foreign trade without having the same access to other
markets.
Some of you may know America is a great inventive and creative
country. Part of that is because of our patent procedures that protect
our inventive creations. Under U.S. law, we currently have 17-years of
patent protection from the time a patent is approved. But the
implementing legislation will change it to 20 years from the time the
patent application is filed. The net effect according to the U.S.
biotechnology industry is that this legislation will reduce U.S. patent
protection from 17 to 10 years because of the lengthy time required for
patent approval. Who will that favor? Not the United States. A patent-
producing country, an invention-producing country, will be at an
enormous disadvantage. When you look at Japan, who leases our patents,
you can see this industry will have an enormous pickup because they
will have to pay for that patent for a period of a decade less.
Mr. President, I ask unanimous consent for 1 additional minute.
Mr. PACKWOOD. I yield 1 additional minute to the Senator.
Mr. BROWN. Mr. President, before Members cast a final vote, please
read what others have said about it. Le Monde, an influential French
newspaper, commented:
A great power like the United States has now less power to
impose its views on other countries because it has agreed to
the following rules of the multilateral game.
Mr. President, that is what the French have said. From the European
Union, Sir Leon Brittan says this:
A major trading power such as the United States now has
fewer levers with which to impose its views on other
countries because it has formally agreed to be more mindful
of the rules of the multilateral game. This has always been
an objective.
The bottom line is this: We have pretty good leverage now. We have
not done with it what we ought to. But this agreement has one big
impact: It creates unfair trading rules and it changes the rules of the
game so the United States loses its leverage and power to open up
markets. If you favor free markets, as I do, and expanded trade, please
read the agreement. I think you will find that rather than opening up
the market, this cements the closure of some and creates loopholes for
others. What it says to the rest of the world is that you can have
access to our market without us having access to yours. That does not
expand or help free trade, it hurts it.
Mr. MOYNIHAN. Mr. President, may I say for the record--and if anyone
disagrees, we can discuss it later--that the United States currently
pays 14.6 percent of the GATT budget, that being our estimated portion
of world trade. This year, the U.S. contribution is $8.8 million.
Anticipating the establishment of the WTO, the President's budget for
fiscal year 1995 will request $9.1 million. That is an increase of
$300,000. I ask my friend from Oregon, when is the last time he has
heard $300,000 debated on the Senate floor?
Mr. PACKWOOD. I thought my good friend from New York misspoke himself
when he said ``million.'' That is an asterisk in the budget.
Mr. MOYNIHAN. That is true. I thank my friend.
The most distinguished chairman of the Committee on Foreign Relations
has asked for 10 minutes to address the Senate on this subject. I am
honored to yield to Senator Pell.
The PRESIDING OFFICER. The Senator from Rhode Island [Mr. Pell] is
recognized.
Mr. PELL. Mr. President, I address the Senate today regarding the
legislation implementing the international trade negotiations we know
as the Uruguay round of GATT. Our actions here represent the
culmination of over 8 years of work started by President Reagan,
continued under President Bush, and reaching conclusion under President
Clinton. The process has been long and tedious but the result well
worth the effort. With the accomplishments of the Uruguay round, trade
in the international arena will be freer of the artificial barriers
which stifle economic interaction and opportunity, especially for the
United States, the most powerful, dynamic, and diverse economy in the
world. This means growth for all involved but especially for the
American economy which historically has demonstrated and will continue
to demonstrate its ability to compete and win in a marketplace free of
trade restrictions.
At the outset, let me state that I am a supporter of GATT. I firmly
believe that the United States stands to benefit from liberalized trade
in general and from the provisions of the Uruguay round in particular.
We have the resources, the knowledge, the quality of labor, the
infrastructure, the market, and the leverage to compete on an
unparalleled basis with any country in the world. Lowering barriers to
our products will mean that we will be able to gain access to new
markets that were previously closed to us as well as pave the way for
our developing and tapping the markets of the future.
The benefits of GATT are broad. The Council of Economic Advisers has
estimated that U.S. annual income will increase somewhere between $100
billion to $200 billion over the next 10 years, an increase of 1.5 to 3
percent of our gross domestic product. Conservative estimates of
300,000 to 700,000 new jobs have been projected as a result of the
Uruguay round. A global reduction in tariffs averaging 38 percent--or
some $750 billion--will mean that consumers will see lower prices for
the products they purchase. Enhanced protection of intellectual
property and trademarks--crucial for American growth industries--will
be put into place, protecting everything from computer software, to
movies and records, to information and news services. Agriculture
subsides and protectionism, long entrenched as unassailable in many
countries throughout the world are finally being reduced. Service
industries, such as banking and insurance, will be able to take the
first steps toward global expansion. Clearly, the achievements of the
Uruguay round present a golden opportunity for the world economy, and
for the United States as its economic leader, to step forward into the
reality of the modern marketplace.
But the Uruguay round of GATT has not been without its detractors.
Indeed, much has been said since it was signed by 123 countries in
Marrakesh, Morocco last April. We still hear the cry today that we are
moving too rapidly in approving this agreement and that more hearings
are required and that the so-called fast track process used in
considering GATT is unusual, tainted, and even unconstitutional. These
arguments, forwarded by the opponents of GATT, simply do not hold up
under scrutiny. Other detractors claim that the agreement threatens
U.S. sovereignty and will bust the budget. These arguments likewise
simply do not merit the concern that they are accorded.
As I mentioned earlier, the Uruguay round has been in the works for 8
years now, having begun in Punte del Este, Uruguay in 1986. Moreover,
the Uruguay round is just an extension of an ongoing process of
lowering world trade barriers that began in 1947 and has been through
seven successive rounds of negotiations. In most cases, matters that
could not be resolved in previous negotiation sessions are taken up in
the next one. So to say that somehow we are considering something only
a few months old is not accurate.
Regarding the fast-track process under which we are considering GATT,
this process has been used for years and indeed Congress specifically
authorized its use for the Uruguay round. And while it has been termed
``fast track'' that is somewhat of a misnomer. ``Fast track'' simply
means that once legislation is submitted to Congress it cannot be
amended or filibustered indefinitely. The reason for this is common
sense. If amendments were allowed by any of the 535 members of
Congress, the carefully crafted compromises reached in the extensive
and contentious negotiations with 123 other countries would be
unravelled in a minute. It is impossible to imagine the world community
ever coming together to agree to meaningful trade reform if each
legislator in every country had the ability to amend any portion of the
entire agreement. Recognizing this, we have authorized the President to
negotiate as best he can and if we do not like the results, we can
reject them by a simple majority vote. That is precisely what we will
have an opportunity to do when we vote on the Agreement at the
conclusion of this debate.
The concern about GATT's potential effect on U.S. sovereignty is one
that warrants careful review and indeed this issue was considered in a
hearing on this matter this summer before the Committee on Foreign
Relations. During that hearing, we explored whether or not the World
Trade Organization [WTO], as set up in the agreement to monitor
international trade disputes, in any way posed a serious threat to the
ability of the United States to make or carry out its domestic laws. As
a result of the hearing, it is my own opinion, and the conclusion of
the committee as well, that the WTO does not pose a serious threat to
U.S. sovereignty.
The WTO does not affect Congress's sole right to change U.S. law nor
does it create a new powerful international organization. The WTO
reaffirms current GATT practice of making decisions by consensus. In
the rare instances that the WTO would vote, each country would have one
vote, just as they do under the GATT today. The voting procedures in
the WTO would actually strengthen the hand of the United States and
weaken the power of smaller countries by requiring a higher majority
for decisions than is currently required in the GATT. Even if every
country voted against the United States, they could not affect the
substantive rights and obligations of the United States which can only
be changed with the express approval of the United States.
Since that time, an even further safeguard against threats to U.S.
sovereignty has been secured at the request of Senator Dole providing
for a review panel of former U.S. appellate judges which would
scrutinize WTO decisions to insure against U.S. bias. Whether or not
this additional safeguard is completely necessary is uncertain but if
it serves to alleviate any misgivings on the part of those in the
United States that somehow our domestic laws are threatened, then it
serves a good purpose. Nonetheless, I believe that there is now even
further reason to be satisfied that the WTO does not significantly
threaten U.S. sovereignty.
Finally, the argument that GATT busts the budget by cutting tariff
revenues is an interesting argument against the agreement, especially
since it is being forwarded by those who often advocate the virtues of
tax cuts, which is precisely what a tariff reduction is. But for those
who are concerned, it is likely that the U.S. Treasury will be better
off as a result of the agreement since it is estimated that the
increased revenues that will result from the increased economic
activity stemming from the agreement will far surpass the lost tariff
revenues.
Nevertheless, to accommodate the concern for the lost tariff
revenues, budget offsets have been found to make up for the reductions.
I commend the Finance Committee for working to come up with the
financing package to satisfy the requirements of the Budget Act and
believe that this obstacle to the passage of GATT has been
appropriately addressed.
In the end, the debate on GATT has been long, contentious, and
fraught with the familiar fears voiced in the last half century about
liberalized trade. Those fears have proven to be unfounded and the
benefits of freer trade have become apparent. Now, as the world moves
inexorably toward greater connectedness and economic interdependence,
we must likewise adapt the rules of world trade to reflect this
reality. The achievements of the Uruguay round of GATT are significant
steps toward during that end and it is an opportunity that we, as the
world's economic leader, cannot afford to pass up.
I commend the Reagan, Bush, and Clinton administrations for
demonstrating great leadership and skill in negotiating this
complicated and difficult agreement. As I recall, Secretary Christopher
in his confirmation hearing pledged to make U.S. economic interests a
forefront of U.S. foreign policy and I believe the Clinton
administration has fulfilled that commitment in completing the Uruguay
round negotiations, NAFTA and in promoting free trade in the Asia
Pacific region. I also commend the majority leader, Senator Mitchell,
and the chairman of the Finance Committee, Senator Moynihan for their
leadership in developing the implementing legislation for GATT and
seeing that this vitally important agreement did not fall by the
wayside during this turbulent year of electoral politics.
I urge the Senate to support passage of GATT and in the process
complete the process began 8 years ago to secure the benefits of freer
trade for the United States and the world.
The PRESIDING OFFICER (Mr. Mathews). The Senator from New York.
Mr. MOYNIHAN. Mr. President, may I express my personal appreciation
to the distinguished chairman of the Committee on Foreign Relations for
his generous remarks about the Finance Committee and to say, more
importantly, his firm assertion that the issues of sovereignty have
been addressed by the Committee on Foreign Relations, and the committee
is satisfied, and the Senator is here to represent it, and that I think
is an important fact in the debate.
Mr. PELL. The Senator is correct. As he will recall, we had that
hearing on this and we discussed it, and there is no question but that
the committee as a whole approved it.
Mr. MOYNIHAN. I thank the Chair.
The PRESIDING OFFICER. The Senator is recognized.
Mr. BROWN. Mr. President, I ask unanimous consent that a copy of the
``GATT/World Trade Organization Challenge,'' of which I was the sole
participant, be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
GATT/World Trade Organization Challenge, Nov. 28, 1994--Sole
Challenger: Sen. Hank Brown of Colorado
1. Q. Which political body shall determine the annual share
of the World Trade Organization's (WTO) operating expenses
owned by the United States?
a. The House Ways & Means Committee.
b. The Senate Finance Committee.
c. The Office of Management and Budget.
d. The General Council of the World Trade Organization.
e. Other.
A. The General Council of the World Trade Organization.
Article VII.
2. Q. The world trade pact now before Congress is to be
administered by a new international body, the World Trade
Organization that will be located in Geneva, Switzerland. The
United States will have one vote in the WTO. Will the United
States also have:
a. A veto as it does in the Security Counsel of the United
Nations.
b. A weighted vote, as it does at the International
Monetary Fund and the World Bank?
c. None of the above.
A. None of the above. At the WTO, it is one-nation-one
vote, no veto. Article IX.
3. Q. Under the WTO, tribunals comprised of three trade
experts drawn from a roster of practicing trade lawyers,
scholars and trade officials would hear challenges against
countries' laws as violating the WTO rules. Once these
panelists have ruled, their decisions are enforceable through
trade sanctions. Considering the sizable influence these
panelists will have one each WTO Member Nation's domestic
laws, what are the WTO conflict of interest provisions to
ensure there are not economic or other conflicts?
A. There is no prohibition for panelists to be conducting
their private careers simultaneous to service on a GATT
tribunal. Annex 2, Article 8.
4. The U.S. court system provides for certain due process
protections. For instance, all court documents are available
to the public and press, as are hearings on cases. The
procedural rules of the World Trade Organization prompted 50
newspaper publishers and heads of journalistic societies to
write a protest letter to President Clinton in September
1994.
When a U.S. law is challenged at the World Trade
Organization, which of the following groups from the United
States have the right to attend the deliberations or obtain
the documents of the Dispute Settlement Board?
a. The U.S. media.
b. The U.S. public.
c. The affected U.S. companies.
d. The affected U.S. workers.
e. State Attorneys General.
f. None of the above.
A. None of the above. All deliberations shall be
confidential. Annex 2, Article 14.
5. Q. The final decisions of the World Trade Organization's
dispute tribunals take effect automatically unless what
percentage of the WTO nations, that are members, reject the
finding?
A. One hundred percent, including the winning plaintiff
nation. Annex 2, Article 16.
6. Q. The United States has long used access to its markets
to enforce a variety of human rights, national security,
environmental and health laws. For instance, we have banned
imports from countries that violate human rights or products
that are not safe. As well, under trade laws such as one
called Section 301, we prohibit a country from sending goods
to our markets on favorable terms if it does not open its
market to our goods. Under the WTO, could the U.S. continue
to use these unilateral trade measures against WTO member
nations?
A. No. Under Article 23 of the WTO's Dispute Settlement
Agreement, the U.S. must use the WTO's Geneva tribunals to
resolve matters with WTO member nations for all issues
covered by the WTO and all issues that touch on the
expectations of other members under the WTO even if there are
not specific WTO rules covering these matters. Annex 2,
Article 23.
7. Q. Would the WTO require the United States to accept
imported food that does not conform to our existing
standards?
A. Yes. The WTO requires Members to accept imported food if
the exporting country shows that its different standards are
``equivalent'' in meeting our domestic level of protection.
Unfortunately, the term equivalent is not defined and similar
provisions in the 1988 U.S.-Canada Free Trade Agreement
allowed circumvention of U.S. food safety standards,
including meat inspection. Agreement on the Application of
Sanitary and Phytosanitary Measures, Article 4.
8. Q. Under the WTO Agreement on Technical Barriers to
Trade, all WTO Members are required to base their domestic
standards on international standards that are now complete or
whose completion is imminent. Technical standards refer to
any non-food product standard such as consumer product safety
standards, bans on hazardous substances such as asbestos and
environmental laws such as the Clean Air Act. the WTO would
allow countries to avoid the requirement of international
standards only for three reasons. That the international
standard does not provide sufficient consumer health or
safety or environmental protection is not one of the
exceptions. Please name three reasons.
A. Fundamental technological problems.
Fundamental climatic problems.
Fundamental geographic problems. Agreement on Technical
Barriers to Trade, Article 2.
9. Q. Under the current GATT, if a dispute panel rules
against a U.S. federal or state law, the decision of the
panel and any later decision to impose sanctions could only
be made if the United States agreed. Under the proposed WTO,
the de facto veto has been eliminated. Thus, should the WTO
rule against a U.S. law, the United States would have only
three options in response. What are those three options?
A. a. Eliminate or alter the U.S. law to conform with the
tribunal's ruling.
b. Pay compensation to the winning country.
c. Face trade sanctions from the winning country. Annex 2,
Article 22.
10. Q. The Clinton Administration has stated that the
United States would have no obligation under the World Trade
Organization to make U.S. laws meet WTO regulations. If the
United States joins the WTO, would have the legal obligation
to conform its law with the hundreds of pages of Uruguay
Round rules?
A. Yes. The agreement's exact language is: ``Members shall
ensure conformity of their laws, regulations and
Administrative procedures'' with all of the annexed Uruguay
Round Agreements (i.e. all of the substantive rules.) Article
XVI.
11. Q. The North American Free Trade Agreement (NAFTA)
clearly exempted actions to be taken under three major
environmental treaties: The Basel Convention on the Control
of Transboundary Movements of Hazardous Wastes and their
Disposal; the Montreal Protocol on Substances that Deplete
the Ozone Layer; and The United Nations Convention on
International Trade in Endangered Species of Wild Fauna and
Flora.
Which of these environmental treaties are exempted under
GATT/WTO?
A. None. Article XVI.
12. Q. Is it true or false that a ban by any WTO member
nation on the trade of goods produced by prison labor and by
child labor are illegal under GATT/WTO?
A. False. Only bans on trade of goods produced by prison
labor are illegal under GATT/WTO. Foreign trade of goods made
by child labor is GATT/WTO legal. The General Agreement on
Tariffs and Trade, which came into force on January 1, 1948,
allows contracting parties to bar imports of goods produced
with prison labor. (Includes amendments to original GATT
text.) Article XX (e). Article 16, 1, of the Uruguay Round of
GATT incorporates this and other provisions by reference.
Mr. MOYNIHAN. Mr. President, I will suggest the absence of a quorum
with the time to be equally divided and controlled.
Mr. HOLLINGS. Mr. President, I will use some of our time.
Mr. MOYNIHAN. Sure.
Mr. President, the Senator from South Carolina has control of his own
time.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, let me first thank the distinguished
Senator from Colorado for the deliberate and very thorough approach
that he used in analyzing this GATT agreement. It is a discombobulated,
tricky mess.
I am an old-time lawyer. That is how I made a living and am able to
afford serving in the U.S. Senate. Business clients would come in and
present a contract to you and say ``Hollings, what about this?'' I
would have to analyze the good and the bad and then come up and help
the client make a judgment.
Now here what we have, as pointed out by the Senator from Colorado,
Senator Brown, is the worst kind of contract that you could possibly
imagine. People do not really believe that officials representing
American interests can enter into such a contract.
Let me tell you how we have been taken over. What happened is, Mr.
President, we started at the end of World War II, the only
manufacturer, the only industrial complex left standing after the war.
Wisely, we determined to subsidize, lead, and support the development
of capitalism in Europe and particularly in the Pacific rim.
And in those days we had a number of aid programs, Public Law 480 in
agriculture, and the tax breaks for industry.
Industry resisted it at first, going abroad. They did not want to
travel all the way to Japan--they did not speak the language--or travel
to places like Korea, and certainly not to China or Taiwan and Hong
Kong and Singapore and other countries. In Europe, the Marshall plan
took root, fortunately, and no one regrets it. It was a visionary
policy to rebuild the devastation wrought by war.
But the fallout from this visionary foreign policy has become a
disaster to our economic policy. I have the greatest respect for the
chairman of the Foreign Relations Committee, but, this is not foreign
policy anymore; this is economic policy. That is the problem. We cannot
get that mindset changed.
We cannot get it changed in the administration at the White House. We
tried to with NAFTA. And we will go at length to show that, yes, that
sucking sound is there and it has been muffled here because we do not
have time for debate. But if they want to get into it, I would be
delighted to give them the facts, the numbers, because we are losing to
Mexico. We are losing jobs.
But what has developed is what you might call a trade war. And, Mr.
President, the enemy is not Japan. I have been in enough debates around
here. Well, they say, ``Oh, you are just bashing Japan. You are just
from a little textile State and you want to bash Japan.'' I do not bash
Japan. I am bashing Washington. As the nationals found out that they
could produce more economically by placing their production offshore,
they became multinationals. How do they do it?
They said that they had a hearing in the Foreign Relations Committee.
We had eight hearings. And here is the booklet. I hope they will read
this very pro and con balanced set of hearings, commended by all the
colleagues who attended. It was shown there in the hearings that for a
typical American industry 30 percent of its sales volume is taken up by
labor costs, and, Mr. President, you can save 20 percent of that cost
or volume of labor by moving your production offshore to the Pacific
rim, or to any of these low-wage countries.
Now, what has happened with the fall of the wall is that you have 4
billion people coming into the capitalist work force, 4 billion workers
making 2 to 3 percent of the American wage. You can get 50 Chinese for
one American worker, you can get 27 Filipinos for one American worker,
you can get 37 Indonesians for one American worker. And so you can go
to any of these countries, and save 20 percent by moving offshore.
If you have $500 million in sales, 20 percent savings means you could
make or increase your before-tax profit 100 million bucks by getting
out of the country, moving your production offshore. You can keep your
regular sales force here in this country, the executive branch, and sit
up there on the 50th floor of the Chase Building in New York and spin
out all of this nonsense about free trade, free trade, free trade, free
trade, while they are gutting the work force. The manufacturing base in
the United States has gone, since 1987, from 26 percent of the work
force to 16 percent.
You can make $100 million by moving your production offshore or you
can go broke by staying in the United States. That is the trade policy
that this Government has. That is why I call the Government the enemy
in this trade war. We have seen the enemy and it is us. It is common
sense.
In one of the finest news articles you have ever seen, Mr.
President--it was just a few days before the election--the USA Today
said: ``Americans in a Stoning Mood.'' And there was one sentence that
summed it all up. It was a medical technician in New Hampshire who
said, ``It used to be that you could work hard, keep your nose clean,
and you could always count on your job. But today, you could lose your
job at any time.''
And the reason for it is us right here.
So you start with a program of trying to bring about capitalism,
which has worked 40 years ago, but now gobbles us up. Now that the
nationals became multinationls, espoused free trade, knowing all along
that they were moving out of the United States where they do not have
to worry about Social Security and Medicare, clean air and clean water
and safe working place and safe machinery, and plant closing notices
and parental leave, and you do not have to worry about that Congress
raising your cost of doing business. You can go to Taiwan, Hong Kong,
Singapore, in Malaysia, in India--where you are protected from
Congressional regulation.
So if they come, these folks making big money, the multinationals,
they go to their banks who are financing them and say, ``We must
support free trade.''
If you ever run for President, they will invite you to the council on
foreign relations. And when you come at their invitation, what they
will do is they want you to swear on the alter of free trade, almighty
faith for ever and ever you are a free trader, you are a free trader.
``Yes, I am for free trade; free trade.'' That is all they want. You
can get their contributions, you can get their support. I have been
there. I know what I am talking about.
And so you have then the multinational corporations and the
multinational banks. And then they finance all the consultants and the
think tanks. And you can spew in any kind of statistical material you
want to these economists and they will support free trade with paid
studies. And that is the kind of statistical bunk we have to hear at
every one of these GATT rounds about the thousands of jobs and $1700 a
year we are going to make and everybody is going to get rich in
America.
Mr. President, I feel like that boxer who was obviously losing. By
the 10th round, he was staggering, barely able to stand. He fell back
on his stool in the corner. And, of course, his second was patting him
on the face. ``He hasn't put a glove on you. He hasn't put a glove on
you.'' And he blinks and barely opens his eyes. He says, ``'Well, watch
that referee, because somebody is knocking the hell out of me.''
I mean, they are telling us we are getting rich, while we are losing
jobs. Do not come around here and tell me they are interested in jobs,
manufacturing and economic strength of America. They are debilitating
and destroying it here today and tomorrow in the National Government.
That is blind to what is occurring in the global marketplace.
Because after they get the multinationals, the multinational banks,
the consultants, the think tanks--and we have had them all come in and
testify; we have had them at our hearings--then they go to the
retailers. And that is a story that has already been told by the
Senator from North Dakota and the Senator from Ohio. Compare prices of
foreign-made and U.S.-made blouses. I have done it myself. Go down to
Bloomingdale's: One made in the United States, one made in Taiwan--both
$32. Go over to Herman's, get a catching glove: One made in Korea, one
made in Michigan--both $42.
When Nike moved offshore, the cost of shoes did not go down. The
profits rose. That is what happened. They can take what is made in the
United States and what is made more cheaply offshore and make a bigger
profit. I remember one of the debates. I went down and got the annual
report of the Washington Post, that crowd--they made $1 billion on
advertising. I think this was about 1987 or 1989, and 80 percent of
their profits, $800 million of that profit, was from retail
advertising. ``Whose bread I eat, his song I sing.'' Do not tell me
about this business crowd and something being free. There is nothing
free in business. This is not foreign policy, this is business policy.
The other governments and the competition have made it their business
to play by business rules, and we sit around here with the golden rule.
Do as we say: Free trade, free trade, free trade. We have been trying
for 50 years, and you have seen the deficits in the balance of trade.
Not ``exports, exports, exports.'' We have a deficit in exports;
whereas our exports are totally overcome by imports. And then it came
to mind, when the distinguished Senator from Colorado was pointing out
how that agreement--how they could sell out, because all of these
particular trade representatives go back downtown and represent the
other side after leaving the Government. There are 68,000 lawyers, Mr.
President, in Washington, DC. Yes, there are a few lawyers here in the
Congress who can read contracts, thank heaven. But if you can find me
one of those 68,000 lawyers downtown who is against GATT, I will jump
off the Capitol Dome. Come on. They all have their hands in the till
here. They do not care about jobs. They have clients. They are making a
fortune.
How are they going to create jobs under this GATT? Here, not only are
we opening our markets, we are exposing our basic laws to challenge.
Suppose you do not like the Glass-Steagall Act. And it has really kept
the integrity of banking since the 1930's, but you want to change that
particular act. So all you do is get one of those Washington teams of
lawyers to get a little small country and get together with some money,
and that little small country petitions GATT, the World Trade
Organization, to say that Glass-Steagall--governing the requirements on
banking in the United States--is not the least trade restrictive way of
regulating financing. And you can abolish your law. No, this
implementing bill does not change the law, but they have a way to
repeal it over in Geneva. You obey or you pay.
Or you can get another group of lawyers to go after your investment
laws. Suppose you had trouble with securities, the SEC, the Investment
Act of 1940, and the requirements thereunder with regard to foreign
investments. You can go down and get a bunch of Washington lawyers and
get after that one, too. You can go after the environmental laws--and
they have.
The CAFE standards have been found, by GATT, as GATT illegal right
this minute. But we vetoed it, virtually, because we do not have to go
along. We virtually have a veto under the current GATT. The current
GATT found GATT-illegal our tuna-dolphin law, our embargo against the
Mexican tuna coming up where they do not obey the dolphin laws; they
find it illegal, but we have vetoed it. Now we lose our veto.
I was thinking of those lawyers. It just got me because I have to
cover one other topic. I see some others here and we want to hear from
them.
Mr. President, you have supporting the GATT the Washington
newspapers, the think tanks, the Washington lawyers, the retailers, the
multinational banks, the multinational corporations, and the Fortune
500. And why has that ``GATT now'' crowd been running those ads? None
other than Robert Reich, the Secretary of Labor, on page 95 of his
book, ``The Work of Nations,'' says between 1975 and 1990, the Fortune
500's have not created one net new job in the United States. And since
that time--I have the record here--they have invested over $50 billion
overseas. And, to bring it totally up to date, we have another
particular page here out of the Business Week article where they talk
about the spending binge being global. The spending binge.
Here are all the poor working people who never heard of any spending
binge. But I read from the November 14 Business Week. It says, ``As the
global upturn widens, the investment spree among U.S. companies is
spreading to their overseas operations.''
Can these Senators listen? Not American investment. Oh, they are
making money, all right. And they are investing it, all right. And they
are investing it overseas.
According to a recent Commerce Department survey, ``Foreign
affiliates of the United States firms plan to hike their capital
outlays by 8 percent this year to about $69 billion, the largest
increase since 1990.''
The last sentence of the Business Week article concludes: ``Capital
expenditures by U.S. affiliates in Mexico are set to jump an eye-
popping 40 percent.''
There you go; that is it. What are we talking about? We are talking
about jobs. And we are getting the rich richer and we are getting the
poor poorer. Why? Time Magazine had a cover article here, ``Boom for
Whom?'' in late October. Sure, it is a boom for this crowd, the ``GATT
now'' group, the Fortune 500 crowd, the newspaper editorial crowd, the
multinational crowd, the multinational bank crowd, and the retailers
returning all over the place trying to increase their profits.
But there are a few of us lawyers here who can read contracts, as
Senator Brown from Colorado has. And we know what is good for the
country. I do not have to serve a corporation or individual--I serve
them both. I can tell you categorically we have had an uphill fight. We
had it in 1979. We had the same rhetoric as the Senator from North
Dakota has pointed out, reading it to you. We have had our own Finance
Committee in 1986 saying: ``The Tokyo round was a bust.'' It was not
working. It did not give the economic boom and all that kind of stuff
that they continue to talk about now. It is ruining the country. They
want to take a bleeding wound and turn it into a hemorrhage. It will
ruin the middle class. And that is my point.
The crowd that came to Washington to support and prosper the middle
class is destroying the middle class. That is exactly what this article
says here, ``Boom for Whom?'' Regarding service jobs, it says: ``The
people cannot lead a middle-class life in the service jobs that are
left over.'' That is the state of America, and that is the point of the
recent election. But voters are just as angry still at Republicans as
they are at Democrats. It just was their time at bat. If they do not
understand it, some on the other side of the aisle, we will get rid of
them in 1996. I will borrow their TV ads, change the words around from
Democrat to Republican, and we will run them out of town. Because we
are both guilty. We have not faced reality. We have been selling the
industrial and manufacturing and economic backbone of America down the
tubes and we are destroying the middle class that supported this
democracy. That is why we have the inner-city crime. That is why we
have the latchkey children. That is why we have the drugs.
The GATT proponents give all those statistics. The trouble with this
crowd is that the statistics that they give measure activities, not the
impact on the social order. When we had Hurricane Hugo, then we had to
rebuild all the places down there in my back yard, and that increased
the GNP--the carpenters, the timber, the materials, and the renovation.
Likewise, you ironically get an increase in GNP when we have an
explosion of health costs. We build more hospitals. The same thing when
we get drugs, when we get crime. We build more prisons.
The cost of drugs and crimes and natural disasters--floods and all--
is 7.5 percent of the GNP, if they want to give figures. That is just
activity. It is not good activity, not favorable. What we have to do is
assume the responsibility of not being number crunchers around here,
and putting the people first and not the money first. That is the whole
point here.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time? The Senator from New York.
Mr. MOYNIHAN. Mr. President, I have the honor to yield 10 minutes to
the distinguished, formidable, and indomitable Senator from Maryland,
Senator Mikulski.
The PRESIDING OFFICER. The Senator from Maryland [Ms. Mikulski], is
recognized.
Ms. MIKULSKI. Thank you very much, Mr. President. I thank the
chairman of the Finance Committee for yielding time and congratulate
him on his recent victory.
Mr. President, I have spent my entire life trying to save jobs, save
communities, and help people who are trying to help themselves. I have
spoken many times on this floor about generating jobs, jobs in my own
home State and jobs in the United States of America.
For my own home State right now, the key to the future is export
jobs, and that is why I have decided to vote for GATT. The old ways are
not working. The world is changing and a new economy is about to be
born. I do not want the United States of America to be left behind.
As a member of the Appropriations Committee, I have been trying to do
my part to make public investments, to generate jobs in aerospace, in
high-speed ground transportation, in new environmental technologies
that the world desperately needs. I have been a leader trying to urge
our Government to work on core technologies, to focus on strategic
research to lead to new ideas and new products.
I want to see the United States of America win not only the Nobel
Prizes but also win new markets. I want the United States of America to
reap the rewards of those great new American ideas. For years, I have
worked with my colleagues to protect American inventions against
countries that deny adequate intellectual property rights. I want good
American know-how protected and the jobs that it creates to stay right
here in the United States of America.
I want to see us develop new American products, restore our Yankee-
trader tradition and export those products around the world. We have
done a great job exporting democracy and now I want us to export
products that are made in the United States of America. The future of
the United States of America does lie in high technology. Even so-
called low-technology manufacturing is now going high technology.
But in order to develop export technologies, we need to have export
markets, and GATT gives us the chance to do that. GATT will eliminate
or drastically reduce foreign tariffs on leading products that Maryland
does export. It means that my own State can sell more abroad and that
it will also protect ideas and inventions that are being developed in
the United States of America in the fields of life science, space and
transportation technology, and in the environment. That means more jobs
for us.
In this debate, I have heard from the working people of Maryland.
Some fear for their jobs and others believe that GATT will help them
and their children have good jobs now and in the future. The working
people of Maryland are on both sides of this debate, and I want to be
clear. I hear them and I acknowledge what they are saying. I
acknowledge their fears. I acknowledge their hopes. I acknowledge their
dreams, and I also acknowledge the fact that they worry about their
very lives being downsized.
Make no mistake about it, I am a blue-collar Senator. My heart and
soul lies with blue-collar America. I spent most of my life in a blue-
collar neighborhood. My mother and father owned a neighborhood grocery
store. When Bethlehem Steel went on strike, my dad gave those workers
credit. My career and public service is one of deep commitment to
working-class people. And in the last decade, working people have faced
the loss of jobs, lower wages and a reduced standard of living, and a
shrinking manufacturing base, everything that the critics say. But
voting against GATT will not save those jobs or bring those jobs back.
If I thought that is what would be the solution, I would support it.
But right now, we know that the world will either pass us by or we will
be part of the new economic relationships.
Much has been said about the loss of sovereignty. If we do not
support GATT, all we are going to be is hollowed out as our jobs flee
to other nations. The globalization of labor makes that a reality.
Demography is destiny: 1.2 billion in China. So, therefore, we need to
have relationships with these countries.
I have just gotten back from an East Asian trip focusing on trade and
national security, traveling on a bipartisan basis with John Glenn, Sam
Nunn, Dave Pryor, Kit Bond, and Bill Cohen. It was clear--clear--that
they want to do business with the United States of America, and why?
Because we are the best of the best. That is why I believe that we can
play a role and save manufacturing jobs if we support GATT.
I have been listening to America's working people, and I know their
fears personally. But I also know that the old ways are not working;
that the current rules of international trade are holding America back.
All America needs is a fair chance and a level playing field to compete
globally.
The Uruguay round is not perfect, and this implementing bill is not
perfect. But the bottom line for me is that foreign tariffs will be cut
by one-third for manufactured products, and also it will cut tariffs
and reduce trade barriers for many of Maryland's top export industries.
So Maryland will be able to export more, manufacture more, and create
jobs.
What it does mean is that there will also be more jobs for the Port
of Baltimore. It means more and more work out of our great American
minds, world-class research and development, and those issues will not
be stolen to reap profits for foreign countries.
My State of Maryland is ready, willing, and able to compete for jobs.
In 1989, one out of every six manufacturing jobs in Maryland was tied
to exports. And in the early 1990's, Maryland's exports grew at twice
the national average. This huge increase was led by a 65-percent rise
in products manufactured in Maryland being exported and sold overseas.
For Maryland, these exports mean jobs today, and it also means more
products that Maryland can export, more products that Maryland can
manufacture and, thus, more jobs in the State of Maryland.
I believe that with this new century coming, we must engage, have
constructive engagement with the rest of the world. We cannot close our
doors or close our minds to the reality of what is happening. I believe
that if we pass GATT, yes, it does present problems, but the problems
will be far more significant and the world will truly pass us by if we
do not vote for GATT.
For those emerging nations, if we do not vote for GATT now, when they
continue to become export trading nations as well--or import--they are
going to hold it against us. They are going to say, ``Where were you in
the 1990's when we could have all come together?''
The issues today are less now of strategic alliances and more of
economic alliances. Our President went to APEC. We now see EC. I voted
against NAFTA, and yet based on what I am seeing now, NAFTA maybe was
not as bad as I had anticipated.
Now on the brink of this new day, I believe that we must seize the
day and vote for GATT. So I am voting for GATT to generate more
exports, to create more jobs in my own State of Maryland and in the
United States of America, and I am voting for GATT because I believe
America's future depends upon it.
Mr. President, I yield the floor and any such time as I might have
left.
Mr. MOYNIHAN. Mr. President, may I congratulate the Senator from
Maryland on a powerful, persuasive case spoken from the point of view
of those workers at Sparrows Point and those workers at Bethlehem
Steel, those people in Maryland who earn income from exports. Just to
give one quick example from a New York firm, George Fisher, the head of
Kodak, who recently, apropos the Senator's tour of South Asia on trade
matters, said: ``There are 4 billion people in the world who have never
snapped a picture and we have plans for them.''
I thank the Senator.
Mr. President, I see our distinguished President pro tempore is here.
Mr. PACKWOOD. I have talked with the distinguished President pro
tempore, Mr. President, and he indicated to me that he would kindly
allow Senator Burns to go first. So I yield 15 minutes to the Senator
from Montana.
The PRESIDING OFFICER. The Senator from Montana [Mr. Burns], is
recognized.
Mr. BURNS. I thank the Chair. I thank my friend from Oregon.
Mr. President, as we rise today to make note of our intentions on
this important piece of legislation, of course, I am not real sure of
the time that I have in this body. This is probably one of the toughest
votes that I have ever had to deal with. So we do not take this vote
very lightly because it does have ramifications and it will have great
affect all the way around the world. We could take a look at the world
economy. But yet it all boils down to what happens locally. How does it
affect our States and the people who live in those States and what our
own local situation is? So I guess, even though having great
international implications, it still goes back to the speaker who was
Speaker of the House from Massachusetts when Tip O'Neill said all
politics--and of course, all situations--are local.
I am a free trader, and have been in the private sector all my life.
But we all were operating out of almost the same rule book, not
entirely. When I look at this and see who is making the rules and those
rules are coming from outside the framework in which we are going to
have to operate, it brings up great questions.
So I intend to vote no on the GATT agreement, and I also intend to
vote against the budget waiver because I remember those of us who came
off of campaign trails just not quite a month ago, and we said we were
going to vote for less Government and more jobs. This is not one of
those vehicles which lets us accomplish that end. The real debate boils
down to winners and losers.
This agreement by some has been called a win-win situation for
Americans. Free trade is good policy for consumers in many industries
that will benefit from new trade rules. But again when we go back,
consumers will win because tariffs on imports will be lowered. I am not
real sure, however, that those who import are willing to pass along
those savings to the consumer. Nobody has shown me where they intend to
do that. I think it is something--and I do not want to be
antibusiness--where somebody gets a product and he can put it on the
market, and the market is driven by supply and demand. But I am not
real sure that the money saved in tariffs will be passed along to the
consumer even in a competitive environment. I know whenever this
Congress repealed the wool incentive, the wool incentive was financed.
The incentive was given to our sheep producers of America, and was
financed by tariffs collected on wool imported into this country.
If we repealed part of that, we only repealed part of the law and
that was the part when we give incentives to the sheepmen. We did not
repeal the tariff because this Government kept the $120 million out of
the $400 million that they collected in tariffs. This Government kept
the $120 million for itself and diverted those funds into other funds
for which the law in the first place was never intended.
So will corporations take the same attitude? I do not know. We have
known how to deal with tariffs. But sometimes I doubt if we really know
how to deal with nontariff demand items. Tariffs and unfair subsidies
in other countries will be cut allowing our agriculture maybe to be a
winner. And I am not sure yet. But it looks good to many people.
The United States is the largest exporter. It has already been said.
Our GNP is tied to exports. We make and grow a lot of products. We sell
computers, electronics, steel, automobiles, cattle, corn, and wheat.
Our financial institutions and entertainment industry are second to
none, and our economy thrives for the most part on exports. But nobody
has talked about the losers in this deal, and they are out there. Not
everybody will win. This free trade deal will not be fair for
everybody. We have to slow down and take a look at who will be
negatively affected in our own neighborhoods. Who will see the benefits
of GATT? And when I see how this GATT will affect our daily lives with
the people in my home State, I see the negatives of GATT fall
disproportionately on States like Montana.
I will give you a good reason for that. Let us look at the agreement
and how it will affect our State. We are a rural State. We do not have
big cities. We do not have a large manufacturing base. We are dependent
on natural resource industries like agriculture, mining, timber. And,
yes, we do have a very solid and new and thriving high-technology
community that is just now getting off the ground.
So I want to know how GATT is going to be worked for the working men
and women of my State, the men and women who carry the lunchbox, who
pull the shifts, and they are just not a faceless crowd out there. They
are people, folks. They own homes. They would like to drive a new
pickup every couple of years. They like to educate their kids. They
want a part of the American dream too. They are not in the position to
make the policy that will govern this, the guys who cut the timber, the
guys that run the family farm, and the miners who provide our minerals,
our trace minerals for, yes, American industry. They are the ones who
stand to lose the most. They are the ones that are going to have to
compete in the world market. They compete with the Third World worker
who scratches for meager wages. I think it forces our workers to
compete with developing countries. Montana workers will be in direct
competition with the Argentine farmers, Chilean miners, and the
Indonesian loggers. Those decisions are not even made by those miners
or those loggers or those farmers. Those decisions will be made by the
governments of those respective countries.
So we cannot allow somebody else to pull the rug and make the
decision who wins and who loses and pull the rug from our people here
in the United States. Some folks would call that protectionist. I say
it is trying in the best way in the world in a democracy in a free
society to argue for my side and to sell my product. I do not want to
be excluded by price alone.
Agriculture was excluded in the GATT for the first time. That is good
news for producers. But a closer look will tell us that the changes are
not even across the board. The time schedule for cutting subsidies
lowering the tariffs is different for developing countries than it is
for developed countries. That is not a level playing field. America is
lucky in that we are very lucky that we can feed ourselves, and we feed
a lot of people around the world.
We do not have to worry about food shortages in this country, and we
should not trade away our food production in exchange for gains in the
service industries and, again, this agreement is not fair.
We have a longer border with Canada than any other State in the
Union. I have seen firsthand how a free trade agreement really works,
not just on paper, but in reality. We have had to deal with a dispute
with Canada not on tariff problems but on nontariff barriers. Now we
are told that GATT is not NAFTA, and I agree; it is bigger, with more
members, more bureaucracy, more pages.
So in Montana, our ranchers and grain growers are struggling to
compete with Canadian imports coming over the border. It is not a
question of efficiency. It is about nontariff barriers, such as tests
for bluetongue, keeping our feeder cattle from going north of the
border. I probably would have no problem--we have just one border
crossing up at Sunburst, MT, where you have 250 loads of cattle a day,
and these ain't bobtail loads, folks; these are semis, 250 loads a day
coming across into this country. Yet, we cannot take advantage of a $6
to an $8 per hundredweight market better than ours on feeder cattle
going to the north to be fed in southern Alberta. Why? Not because of
tariffs, but because of a nontariff barrier that they called for animal
health reasons, and the principal thing called bluetongue.
So with all of this, we see nontariff barriers going up. We can deal
with and negotiate tariffs. But we have a hard time negotiating on the
nontariff barriers. I have heard some say this helps us to deal even
with the nontariff deals, because it will bring it into a situation.
Montana was the largest buyer of Canadian wheat last year. We could not
get them to the table. Had it been producer to producer, we probably
would have worked it out. When a country such as Canada markets their
wheat through a national wheat pool and we here market our commodity by
individual farmers and they have to compete against the Canadian
Government, this is not fair because that was a Government decision,
not a producer decision. It was a Government decision.
Let us talk a little about the WTO. It creates a bureaucracy of
historic proportions to oversee international trade. Future WTO dispute
settlements may intrude upon areas of policy previously outside of the
scope of the U.S. multilateral trade relations. The bottom line is that
the WTO could put our Federal and State laws at risk. There will be
those of the legal community that say that is not a risk. Already, our
State and Federal laws and regulations on the environment, product
standards, testing, labeling, and certification have been identified as
potential violations.
The dispute settlement panel does not stand up under scrutiny. They
will say that NAFTA and the Canadian Free-Trade Agreement is not a good
example to compare it to, but we do not have anything else to compare
it to. Anytime that you can dump all of your excess commodity on the
market in less than 6 months, and it takes a year and a half to get
people to the table, let me tell you, your market has been disrupted,
eroded, and it cannot be put back together. In fact, it went so far on
the Canadian border that we had farmers put their trucks around the
elevators so they could not accept any more Canadian grain in Montana.
It was a very volatile and hostile type of situation that existed just
on the Canadian border in my State of Montana.
There is a lot of power in the WTO, delegated to them by unelected
and faceless bureaucrats, most of them put in place by foreigners.
So when we lose a case, we have to follow the ruling. The same teeth
that can be used to force our trading partners to follow the rules will
be used against us, and I guess that is a fair statement if you really
believe in what the WTO stands for. So we will be forced to pay the
price, either through compliance, compensation, or retaliation.
Does it seem fair to you, or anybody else, that we are going to pay
25 percent of the cost of the WTO and we get less than 1 percent of the
representation of the vote on that panel? I think we can negotiate a
better deal. The European Economic Community has 17 votes within that
union, and that union is being put together why? For a trading block,
just like our North American Free-Trade Agreement. But under NAFTA, a
trading block would have 3 votes. But 17 would be true with the
European Economic Community.
If you say each State or each part of the Union would have a vote,
that would probably give us 50, and we could probably deal with
something like that. I do not think that is exactly fair, either.
Nobody knows for sure what will happen when the WTO is unleashed. But
is it a risk we can take? Sure we can get out of it, like we can also
get out of any of the international organizations we belong to.
Unfortunately, we get sucked into these groups to never escape. The
only certainty is that our portion of the tab always increases and the
number of bureaucrats grows. Meanwhile, we do not have the influence in
proportion to our trading size. The United States will have one vote
and no veto. This is an unprecedented attempt to put us on the same
level as every other member. This is just one more step in the
direction of a world government.
Another glaring problem is the implementing legislation and the
financing provisions. This is not the place for surprises and sweet
deals for special interests. And Congress and the President cannot
ignore the budget rules by waiving the costs of implementing the deal.
It has been called a tax cut for consumers. That is banking on
retailers to cut prices to reflect the drop in tariffs. Short of that,
it is a loss of revenue and an attempt to break the budget, putting
American taxpayers on the short end of the stick.
In conclusion, I do not support this trade agreement. After looking
at it from every angle I am absolutely positive that this is not a fair
trade agreement for everyone. I cannot ignore problems with the World
Trade Organization, or flaws with the financing provisions and
implementing legislation. And I look at the lessons Montana has learned
from our previous trade agreement with Canada and Mexico which show
that agreements that look good on paper, do not always work well in
reality.
I am a free-trader, but I cannot support a free trade agreement that
is not fair. GATT is not fair.
The PRESIDING OFFICER. Who yields time?
Mr. MOYNIHAN. Mr. President, I do not know that the Senator from
South Carolina is present. I know if he were, he would wish to yield
time to the distinguished President pro tempore. I will take the
prerogative of yielding such time as he may desire, the time to come
from the Senator from South Carolina.
The PRESIDING OFFICER (Mr. Graham). The Senator from West Virginia is
recognized on the time of the Senator from South Carolina.
Mr. BYRD. Mr. President, with great respect to the very distinguished
chairman of the Finance Committee, and to the very able ranking member
of the Finance Committee, I make these comments, and in the spirit of
total friendship, admiration, and high regard. I am opposed to the
executive agreement on the GATT Uruguay round, and I shall shortly
raise a budget point of order against it, even though the waiver of the
point of order will not be voted on until the very end of the running
of time on tomorrow and just prior to the final vote.
While I support efforts to reduce tariffs the world over, I believe
that the Uruguay round is of such stature, such scope, and such
permanence that it should have been considered as a treaty, requiring a
supermajority vote in the United States Senate, rather than as an
executive agreement requiring a mere majority in both Houses of
Congress.
I do not take the position that it is constitutionally wrong or that
it violates the Constitution not to have this far-reaching matter
presented to the Senate in the form of a treaty, but as an executive
agreement.
I do take the position that it should have been presented as a treaty
because of its scope, its dignity, its stature, its far-reaching
importance, and I realize that, more and more, we are getting away from
the use of treaties in dealing with such vital matters and going more
and more to the executive agreement instrument. I feel that, with each
time this is done, it becomes easier on the next occasion to proceed by
way of an executive agreement rather than by the instrument that is set
forth in Article II, section 2 of the U.S. Constitution, the language
dealing with the treaty process.
Inevitably, over a period of time, the result of this growing trend
will be a reading out or an amending, in effect, of the treaty process
as set forth in the Constitution.
The messenger in the third part of King Henry VI stated it well when
he said:
But Hercules himself must yield to odds;
And many strokes, though with a little ax,
Hew down and fell the hardest-timber'd oak.
So, Mr. President, that hardest-timber'd oak of the treaty process as
set forth in Article II, section 2 of the Constitution will eventually
be hewed down and will have been felled by the many deviations from the
use of that constitutional provision.
In any event, action on the Uruguay agreement should be delayed until
next year. The Members of a new Congress, not the lame-duck Members of
the old Congress, should have the opportunity to fully study the
agreement and make their decisions with more attention to the details
of this far-reaching agreement.
People of this country are entitled to render a verdict on the
judgment of lame-duck Members as expressed by their votes on this
matter. Those lame-duck Members, those who will have retired, those who
will have been defeated at the polls--and I say this with the highest
respect for any and all of those Members--they will have had a free
ride; they will not have to answer for their vote to the judgment bar
of the people at the next election.
I regret that. I regret that this vital issue is to be decided in
this Congress.
I also regret the rape of the legislative process by the fast-track
procedures which will govern the decision by the Senate on this
agreement. ``Fast track'' should never be imposed on a matter which can
be so destructive of Senate prerogatives, so destructive of States'
rights, and so destructive of the sovereignty of the people of this
Republic.
``Fast track'' is nothing more than a quick shuffle designed to ram
through this agreement without much scrutiny. Therefore, Mr. President,
here we are at this late hour, faced with an upcoming vote on a matter
about which we know little and under such restrictions as will limit
debate and tie our legislative hands with respect to amendments,
leaving us only with a choice of voting this important legislation up
or down.
The President is not to be blamed for this fast track. The Senate
itself must bear the blame. It was the Senate that voted to bind
itself, hands and feet, with cords of steel that shut out amendments.
It was the Senate that voted to impose the gag rule upon itself and to
limit free and open debate to a paltry 20 hours concerning a matter
about which vote we may have ample decades during which to regret.
I wrote to the President earlier this year and urged that he not
present this agreement to the Senate this year, that he delay the
presentation until next year so as to give Senators more time to
consider, and so as to give the Members of the 104th Congress, who will
be fully responsible under the new leadership in the Senate and in the
House, to answer to the bar of judgment of the people come the next
election.
The President wrote back and in a very nice way declined to follow my
request.
It is my belief that the approval mechanism that ought to have been
used, especially for the WTO portion of the GATT agreement, is the
constitutional procedure for treaty ratification. In fact, the
introductory note in the final text of the Uruguay agreement declares
as follows: ``By signing this Final Act at the Marrakech Ministerial
Meeting, the participants will establish the texts''--this is the final
act from which I now read--``the participants will establish the texts
set out in the Annexes, in accordance with international treaty
practice.''
Hence, it is evident that the Uruguay Round's Final Act contemplated
action thereon as a treaty.
The new World Trade Organization would have the authority to set
parameters reaching far beyond trade law. Thus, the ability of Congress
and the ability of State legislatures to legislate in the best
interests of the United States, and the States, respectively, will for
the first time in our history be subjected to the review of secret
panels comprised of citizens of other nations. Amazingly, the World
Trade Organization can require that the United States and other members
conform domestic laws to WTO rules.
For example, laws imposing an asbestos ban would not be allowed
unless they employ means that are the ``least trade restrictive''
alternatives. U.S. laws and State laws in many areas must comport first
with the WTO's trade rules, or such laws can be challenged as an
``illegal trade barrier'' by other countries. Federal and State laws
dealing with toxics and hazardous waste, consumer protection, recycling
and waste reduction, pesticides and food safety, energy conservation,
wildlife protection, and natural resource and wilderness protection,
would all be vulnerable to WTO challenge. The new GATT would prevent
countries from rejecting products based on how they are made; for
example, with child labor or with ozone depleting chemical processes.
There is no doubt that State as well as Federal law would be
affected. Article 3 of the agreement says so in plain language.
All of this means that we can only maintain standards that are
consistent with the terms of the agreement--and here it is, 2,000 pages
of it--and they must be ``least trade restrictive,'' regardless of
political feasibility. A wholesale circumvention of many of our
domestic laws is, therefore, invited.
Now I ask the question: Who shall be the umpire or referee when U.S.,
state, municipal, or local laws and regulations are challenged by other
members of the World Trade Organization?
Under the agreement, a Dispute Settlement Body [DSB] shall have the
authority to establish panels.
A standing Appellate Body shall hear appeals from panel cases. The
functions of panels would be to examine any matter referred to the DSB
by the complaining party and stand in judgment on claims against the
U.S. by any GATT member.
There is no outside appeal, no external standing review body. None.
The proceedings of the appellate body shall be confidential and final.
Where a dispute panel or the appellate body concludes that U.S. law,
regulation or administrative procedure is inconsistent with a covered
agreement, the WTO shall recommend that the member concerned bring the
measure into conformity with the covered agreement.
Mr. President, I am opposed to the prospect of creating a new
international institution which is fundamentally antidemocratic closed
to the parties unless they are invited and closed to the participation
of the people of the world.
Mr. President, the Long Parliament in England abolished the Star
Chamber in 1641, which by means of secret trials and arbitrary
judgments, had suppressed the opponents of Charles I, who later paid
with his life on January 30, 1649. I should think that every Senator--
this Senator does--would object to this new type of Star Chamber which
will be installed with the approval of the Uruguay agreements and which
will, by arbitrary and secret meetings, render judgments and impose
sanctions against members whose laws, regulations, and administrative
procedures are not in conformity with the rules and regulations of the
World Trade Organization.
Beyond the delicate issue of the political accountability of foreign
nationals ruling on the legality of U.S. laws lies perhaps even greater
concern for states. Georgetown University Law Professor Robert
Stumberg, in a report prepared for the Center for Policy Alternatives,
has identified 90 statutes in California alone that are likely to be
subject to WTO challenge.
If a foreign nation wins a challenge to any United States law, state
or federal, and the United States declines to revise or preempt the
law, or otherwise deprive the law of its effect, the foreign country
would be free to impose countervailing sanctions including fines
against the particular offending U.S. industry or any other--not just
the offending industry, but any other U.S. industry or sector.
This could amount in effect to a secret foreign panel's levying taxes
on the American people as a punishment for not altering U.S. law to a
complaining party's liking. Think of that! Observe how we worry and
scurry and wrangle in this body whenever a tax increase is even
discussed, even mentioned, even whispered; and yet, here we are ready
to roll over and grant a secret board, a secret body, a secret panel
anonymous and secret powers to fine U.S. taxpayers if we do not rewrite
U.S. law to suit the World Trade Organization. Talk about taxation
without representation--and we once fought a revolution over that
principle--here it is in spades!
Mr. President, doubt not that the sanctions imposed by the WTO have
teeth--and claws. What should be very plain to us here is that the new
rules provide for cross-sectoral sanctions should the United States not
make the change called for by the GATT dispute resolution panel. Thus,
sanctions could be imposed on the telecommunications industry for
failure to comply with a GATT ruling on fisheries or automobiles. This
possibility of cross-sectoral retaliation is likely to pose enormous
difficulties for states and likely to provide perverse incentives for
foreign nations to seek sanctions strategically.
If a state chose not to alter a measure found by the WTO to be GATT-
illegal, the U.S. Trade Representative could choose to bring an action
against the state in a federal court, even if Congress had chosen to
allow the state's measure to remain in effect and to accept trade
sanctions on behalf of the entire nation rather than preempt the
offending state law. So there we have it. So much for Federalism. So
much for state rights. So much for state legislators and Governors.
Just leave everything for the WTO and the exalted trade representative
to decide.
Thus, even a blind man can see that this agreement involves a
substantial shift of control over each of the fifty states from
Congress to the executive branch and to foreign nations.
Mr. President, the Administration is quick to say that WTO dispute
settlement panels will have no power to change U.S. laws and that only
Congress can do that. Well, that is true. And every schoolboy and
schoolgirl in this country knows that. We already know that.
The administration seeks to tamp down the concerns of Members of
Congress by saying, ``Well, the WTO will not have any power to change
U.S. laws.''
Of course it will not have the power to change U.S. laws. Every
history book in this country worthy of the name will tell us that. I
learned that 60 years ago. It is nothing new. But the effect of the
sanctions that can be applied by the WTO will be strong enough leverage
to force U.S. and State laws to be changed to bring them into
conformity with the WTO rulings.
This would put the domestic laws passed by a duly elected U.S.
Congress and by elected state and local governments at risk to
unelected, unaccountable, unsympathetic, foreign bureaucrats.
The agreement presented for Senate approval includes provisions that
are take it all or leave it. Article 16 provides that a member state
cannot have any reservations to the WTO agreement. Swallow it whole.
Further, future amendments to the agreement can be made by a majority
of the GATT membership, without any further consideration by this body.
The U.S. can vote against such amendments, which might be adverse to
our interests, be out-voted, and we have no choice but to swallow them
whole.
So, Mr. President, here in my hand is the implementing legislation.
You do not see what you get. You do not see what you get. We will have
one opportunity tomorrow evening to vote up or down on this
implementing legislation. After which, the 124 members of the World
Trade Organization can vote to adopt amendments by a three-fourths
majority, and in some instances by a two-thirds majority, and whether
the United States likes it or not, it can be outvoted, as it is so
often outvoted in the United Nations by the same nations that will be
in the WTO.
And so, Senators, once we pass this bill, that is it. We have had it.
We have had our chance and that is all. But then these agreements,
2,000 pages of them, can be amended by a three-fourths vote in the WTO.
And we can like it or we can lump it. We can get out of the WTO. But if
we remain in, we are going to live by those amendments which are not
included in this document.
So we ought to remember that. It is the last word for us until after
the passage of the first 5 years. But this is the last word for now.
That is it. Then turn it over to the WTO to interpret and to amend. And
how many votes do we have? One. A country of 260 million people with
one vote, and 18 of the other members of this WTO will each have a
million people or less. And the vote of each member, large or small,
will be equal to the vote of the United States. So, you are not buying
exactly what you see here. You are seeing the tip of the iceberg in
this document of 2,000 pages, but that can be changed and will be--long
after we have cast our vote tomorrow evening--changed by the amendment
process set forth in the agreement.
The Senate is the only body that represents the States qua States,
and it is the only body in which every State, from the smallest to the
largest, is guaranteed equal representation. It is the only national
body in which all members are politically accountable to all the voters
in their respective states. We should not vote for this kettle of brew
which will diminish the sovereignty of the states we represent.
The distinguished minority leader has expressed concern and
reservations about the provisions of this agreement. He has made
attempt to secure an agreement from the President to fix the potential
damage and excesses that can be brought by the World Trade
Organization, upon the U.S., our laws, and regulations in many fields.
I have conferred with Mr. Dole about this proposed fix--which can only
be passed by the next Congress, and I must reluctantly conclude that
the World Trade Organization cannot be fixed by the Dole proposal.
Mr. Dole has proposed legislation which would establish a new
American Commission to monitor the decisions of the Dispute Settlement
Panels in the WTO. If the Commission found over the course of 5 years
that the WTO dispute settlement tribunals have violated the appropriate
standards of review, any Senator could introduce a privileged
resolution calling on the President to withdraw from the World Trade
Organization.
First, Mr. President, how will the Commission get the full record of
the Dispute Settlement Bodies when the U.S. is committed in this
agreement and committed by virtue of our adoption of this implementing
legislation--committed to keeping the deliberations of such bodies
``confidential?''
The documents, the deliberations, what is said in these panels, will
be secret. And even the complaining party and the offending party will
not be able to appear before those boards in the decisionmaking process
unless they are invited.
So there is the fundamental question, I say, to those who are looking
to the Dole proposition as cover. There is the fundamental question of
the secret records and the Star Chamber proceedings that will frustrate
the five judges on the commission that the minority leader wants to
create.
Now, Mr. President, we have in the specifics of the procedures and
standards established by the GATT for the World Trade Organization the
elevation of trade as the top priority over all other values. If
environmental laws get in the way of trade, they must fall. If consumer
protection gets in the way, if standards of innumerable kinds, get in
the way of trade, they go. Humane methods of trapping tuna, in order to
protect dolphins go out the window. Flipper loses. Rigid pesticide
controls which make products more expensive are GATT illegal. Out they
go. Child labor laws restricting trade are illegal. Who cares? Only
trade matters.
What happens when our laws are declared a violation of GATT? The
Administration would like us to accept the proposition that no U.S.
laws are wiped out here, and technically they are not. What will happen
is that other member nations, perhaps prodded, or even dominated by one
or a group of multinational corporations, will bring a complaint
against the U.S. before the WTO, and a Dispute Panel could rule in
secret against a U.S. law, as being GATT illegal. The room for
pernicious manufactured claims should be obvious to all of us. This
puts great pressure on us to change our laws.
Now, the question is what remedy does the proposal of Mr. Dole's
offer for this situation.
After three determinations by the Commission under the standards set
forth in the minority leader's agreement a resolution can be introduced
with a privileged status, calling for the President to withdraw from
the WTO. How hard will that be? Both Houses of Congress must pass the
resolution and then be able to muster a two-thirds majority to override
a Presidential veto. As my colleagues well know, this is a very
difficult undertaking, and we would be faced with all the arguments
about how wonderful free trade is on balance, despite a raft of adverse
decisions. What is the likelihood that this fix is really a fix? When
is a fix not a fix? When it is not a fix. It will be nearly impossible
to get out of the organization, and so this high improbability of using
the so-called fix should not dominate the vote on the agreement which
this implementing legislation approves. If the WTO agreement is flawed,
and I say it is very seriously flawed, then we ought not get into it in
the first place.
Senators with ambitious ideas about health, environmental, labor,
food labeling, or other standards would be well advised to check the
standards of international bodies approved by the WTO before bothering
to introduce legislation. One could imagine that rubber stamps embossed
with the words ``GATT illegal'' will become popular in the White House.
So, Mr. President, the minority leader's proposal is well-intended,
but in effect it is a fig leaf, a giant fig leaf pasted onto a
Tyranosaurous about to ransack its way around decades of statutes and
standards on a multitude of policy matters.
I do not have the agreement just in front of me. I had it. Here it
is.
It is the fix. The Federal commission of five judges will be
appointed and they will determine whether or not the proceedings in
back of a decision imposing sanctions on the Federal Government or upon
State governments or upon municipalities in this country or the local
governments--they will decide whether or not the proceedings have been
fair, whether or not they have been adopted according to proper
procedure. But how are they going to get the documents? How are they
going to get the materials from the panels, from the disputes board,
from the appellate body within the WTO? Those proceedings are to be
kept secret and anyone who says anything in those proceedings is to
remain anonymous. The statements are to be anonymous.
How is this Federal commission, this new commission of five judges,
to be able to make its decisions when it has no way of reaching into
the panel, the secret panel, no way of reaching into the dispute
settlement board, no way of reaching into the appellate body in the WTO
and extracting those documents, those secret records upon which to make
a judgment? This is a fig leaf.
And then, after 5 years, if the reports that are sent up by the
President indicate that some of the decisions have not been fair, any
member, they tell us, any member can offer a resolution. And we are
promised that those resolutions will be expedited in the procedures in
the House and Senate. But that legislation is to be put off until next
year. But everybody here knows the barriers that one has to run when it
comes to getting a resolution adopted.
First it has to go to committees. There is no assurance the committee
will report it out unless those expedited proceedings mandate such.
Then it has to pass both bodies of Congress. Then it has to go to the
President's desk and he can veto it. So where does it leave us?
Mr. President, Benjamin Franklin told the story of how, upon his
seventh birthday, many of his friends gave him several copper
pennies. And so off to the shop that sold children's toys he went, and
on the way, he heard a friend blowing a whistle which he had bought.
Franklin so liked the sound of this whistle that he went into the shop
and voluntarily plunked down all of his pennies for a whistle. He then
went around his house blowing it proudly, while his brothers and
sisters and cousins were all irritated by it and impressed upon him the
fact that he had paid too much for his whistle. They told him that he
paid four times the value of the whistle and listed to him all of the
other things that he could have bought instead. Ben was so vexed that
he broke out in tears. The reflection of his folly gave him more
chagrin than the whistle gave him pleasure.
Franklin later said that he had learned a lesson by this experience.
The lesson was that he had paid too much for his whistle.
I say to the distinguished minority leader and others who have
concocted this massive fig leaf that they have paid too much for their
whistle, and those Senators who are depending upon the covering of that
fig leaf to shield them from the ire of the voters come the next
election or at some future election will learn that they too, have paid
too much for their whistle.
The people on November the 8th sent us a message. They said that they
are tired of the arrogance of power that abounds in this city. They
told us that they want to be a part of the decisionmaking process. Here
we are about to decide on legislation of extreme significance--not only
in matters of employment, jobs and basic pocketbook issues that affect
every American, but also concerning the bedrock, fundamental
sovereignty of our Federal and State Governments. And to add insult to
the injury, the decision is being made by a lame duck Congress.
Why do we not ever get it in this town? An agreement that should
consume weeks of debate is going to be implemented with only 20 hours
of discussion. This is not just another ordinary trade agreement. What
is the rush? If the American people are outraged over the arrogance and
the posturing of their elected officials, we have only to look at the
present situation to understand why.
We rail against budget deficits. Yet, here we are about to waive the
Budget Act to increase the deficit so that the GATT agreement can go
forward. In a few months, we will hear the sound and fury of those in
this body and the other body crying for a balanced budget amendment:
Give us a balanced budget amendment to the Constitution, they will say,
let us all remember the Budget Act waiver vote as we craft our lofty
speeches for that coming debate.
Mr. President, do the American people buy this fig leaf? Do the
American people buy this whistle? Let us take a look at a poll
conducted by Daniel Yankelovich on November 23 through 27.
Question: The American public and GATT. Do you favor or oppose
passing GATT?
Fifty-one percent oppose; 33 percent favor; 16 percent not sure.
Second question: Budget waiver. If GATT were enacted, it would
increase the Federal budget deficit. Current law requires revenue
increases to offset those losses. The Senate can waive that law with 60
votes. Is it appropriate or inappropriate for Congress to waive the
law--that will be done tomorrow night--to waive the law so that GATT
can be enacted?
Sixty-seven percent of the people answered inappropriate; 20 percent
answered that it is appropriate; 13 percent, not sure.
The next question: Some people argue that GATT should be voted upon
by the new Congress that was elected in November and not the old
Congress which includes about 100 Members who were defeated or are
retiring. Who should vote on GATT, the 103d Congress or the 104th?
Sixty-three percent say the new Congress; 29 percent say the old
Congress; 8 percent not sure.
Fourth question: WTO, World Trade Organization, and U.S. law. Do you
think the World Trade Organization should be able to override the laws
of member nations, such as the United States?
Seventy-two percent said no; 17 percent said yes; 11 percent said not
sure.
So here we are on this chart--the American people--here is how they
feel about it. They think this question should be put off until the
104th Congress.
We owe it to the American people to put this decision off until the
newly-elected Congress is in place. We owe it to the American people to
more carefully study this mammoth bill and ponder its consequences. We
ought to heed the people's election message that was spoken to us in
the loudest, and most profound way, rather than be so presumptuous as
to turn a deaf ear to their collective voices?
In closing, Mr. President, let us review for a brief few seconds a
few words from the Book of Genesis. God created Adam and Eve and put
them in a garden of bliss and happiness--eternal happiness. He
instructed them not to eat of the tree of knowledge of good and evil
or, he said, ``you will surely die.'' But the serpent got to the woman
and said, ``You will not surely die.'' Adam and Eve ate of the tree of
the knowledge of good and evil, and then they saw that they had sinned.
What did they do? They sewed together fig leaves and created for
themselves aprons. And then in the cool of the day, they heard the
voice of the Lord God walking in the garden, and they hid among the
other trees of the garden. And God said: ``Adam, where art thou? Adam,
where art thou?''
Mr. President, the people who are reflected on this chart are saying,
``Senator, where art thou? Where art thou on the budget waiver? Where
art thou?''
And in the days to come, they will say, ``Where wert thou? Where were
you? Where were you when you voted to make Uncle Sam cry uncle to GATT?
Where were you when this monstrous bill was passed after only 20 hours
of debate without an amendment? Where were you when this new world
organization was given the power to force changes in State and Federal
law? Where were you on this legislation that will shift millions of
additional jobs overseas to the developing countries, that will cause
multinationals to go overseas more and more and more? Where were you
when you had the opportunity to say no? Where were you when you voted
to increase the budget deficit by $14.5 billion? Where were you,
Senator?'' Where were you? Where were you? And you, and you, and you?
Mr. President, my vote will be to delay this matter until next year.
How do I do it? I vote against the budget waiver, and thus sustain this
point of order. It is a legitimate point of order, and it is in
accordance with the agreement that we reached at the budget summit in
1990 when we said that such decreases in revenues should be offset.
I will make the point of order and do make it now, that the pending
bill, H.R. 5110 violates section 23 of House Concurrent Resolution 218,
the concurrent resolution on the budget for fiscal year 1995.
I thank Mr. Hollings. I thank Mr. Moynihan and Mr. Packwood.
And I thank the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, thanking the distinguished President pro
tempore for his thoughtful, gracious remarks as ever, even so, pursuant
to section 904 of the Congressional Budget Act of 1974, I move to waive
titles III and IV of the Congressional Budget Act, and I further move
to waive section 23 of House Concurrent Resolution 218, the concurrent
resolution on the budget for fiscal year 1995 as permitted by
subsection 3 of that provision.
The PRESIDING OFFICER. Pursuant to title 19 U.S.C. section 2191(g)23,
debate on the motion to waive the Budget Act, further consideration of
H.R. 5110 is limited to 1 hour to be equally divided and controlled by
the Senator who made the motion and the majority manager of the bill.
In the event the majority manager supports the motion, the time in
opposition to the motion is controlled by the minority leader or his
designee.
Order of Procedure
Mr. MOYNIHAN. Mr. President, in respect to that specific matter,
since the vote on the budget waiver will not occur until the expiration
of the 20 hours of debate, and acknowledging that Senators may discuss
the waiver at any time and may wish to do so during this debate, I ask
unanimous consent that the 1 hour of debate allocated for consideration
of the motion by the distinguished President pro tempore to waive be
vitiated.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Mr. MOYNIHAN. I thank the Chair.
The PRESIDING OFFICER. Who yields time?
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. PACKWOOD. Mr. President, I yield 8 minutes to the Senator from
South Carolina.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. THURMOND. Mr. President, I rise today to support the motion made
by my good friend from West Virginia, Senator Robert Byrd, that this
bill violates the concurrent resolution on the budget for fiscal years
1995 through 1999.
The legislation that is currently before the Senate, H.R. 5110, the
Uruguay Round Agreements Act, has many weaknesses. One of the most
severe problems with this agreement relates to its funding. As we know,
the Budget Enforcement Act of 1990 created the pay-as-you-go budgeting
system, requiring that direct spending or revenue legislation not add
to the deficit. This budgeting procedure was implemented to help our
country to balance its budget and reduce our national debt. The
concurrent resolution on the budget contains an enforcement provision
to the pay-as-you-go system. Unfortunately, GATT violates pay-as-you-go
rules.
Estimates by the Congressional Budget Office indicate that the
passage of GATT will result in $43 billion in lost revenues. According
to an analysis of this bill by the Joint Committee on Taxation, revenue
offsets total less than $12 billion. A $31 billion shortfall results,
not covered by budget cuts or revenue increases, thus adding to the
budget deficit and our national debt.
Mr. President, the $12 billion in revenues that are included in the
funding mechanisms of this bill are basically gimmicks and tricks.
Funding proposals totaling over $3.5 billion relate to compliance and
timing. However, such provisions do not add to total revenues, only
change when the revenues are collected. We are asked to pay for GATT by
requiring newborn infants to have a Social Security card to reduce tax
fraud; eliminating the 4 percent minimum interest rate on savings
bonds; and instituting voluntary withholding of taxes on unemployment
compensation and other Federal payments to individuals.
Another funding provision concerns the Pension Benefit Guaranty
Corporation. The implementing legislation contains an extensive 106-
page rewrite of Federal law governing pension plan funding and
benefits. The Retirement Protection Act has not been given adequate
consideration by any Senate committee not by the full Senate. The
inclusion of such a comprehensive measure in trade legislation, subject
to fast track limitations, is inappropriate.
Mr. President, waiving the budget rules for any purpose is a serious
proposition given the huge deficits and debt of our government. In the
103d Congress, budget waivers have been proposed 35 times. In only four
instances has the Senate passed such a waiver. I urge the Senate to not
add to the deficit with this vote. There is sufficient time to properly
budget for GATT in the next budget resolution, if that is the will of
the Congress. I will not vote to waive the budget enforcement
provisions and encourage my colleagues take that position.
Finally, Mr. President, the legislation addresses an area of great
concern to many Americans. The Pioneer Preferences licenses provision
is included in the GATT implementing legislation. This section sells
the rights for cellular telephone licenses at a reduced rate. It has
been estimated that the Federal Government could sell these licenses
for $2 billion more than provided for in this legislation. Why is
Congress being asked to waive the budget when $2 billion more could
have been raised to help pay for GATT. This provision should not be
included in this trade bill.
Mr. President, regardless to one's position on the merits of the
trade provisions of this bill, there is adequate reason to not support
the legislation based on the fiscal provisions of the measure. The
American people spoke loud and clear in the last election. They want a
smaller government and a government that stays within its budget. The
consideration of this bill, at this time, under the budget arrangement
is contrary to the expectation of the citizens of this Nation. Let us
begin now to say not to further deficits and increased debt. Let us
stand firm on the principle some have supported throughout this
Congress. The enforcement provisions of the Budget Act and the budget
resolution should not be disregarded. Again, I urge my colleagues to
vote no on the waiver of the budget point of order.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. I yield 15 minutes to the distinguished Senator from
Nebraska.
The PRESIDING OFFICER. The Senator from Nebraska is recognized for 15
minutes.
Mr. EXON. I thank my friend and colleague, the chairman of the
Commerce Committee, Senator Hollings. I would like to ask certain
questions. Unfortunately, Senator Moynihan has had to leave the floor.
There may be others on the floor who could answer these questions. Some
of my concerns were best highlighted by the excellent remarks and
presentation made by the President pro tempore of the Senate, our
distinguished colleague from West Virginia, Senator Byrd. I want to
compliment him on his usual excellent presentation. He went right to
the heart of the problem. I have not made up my mind for sure how I am
going to vote on several of the votes that are going to take place. But
I do want to compliment him for bringing up one of the many concerns
that I have about the new World Trade Organization that we are going to
be asked to vote on, and certainly aside from everything else a key
vote obviously will be a vote on the waiver of the budget requirement
that he properly within his rights brought up, with regard to the
breaking of the budget on the approval, if that is what the Senate body
as a whole is to do.
I would like, though, to ask Senator Byrd about some of the testimony
that was received--and I have a record of it here--in the Commerce
Committee, initiated by Senator Hollings, and of which I was pleased to
be a part. There were several questions of the balanced panels that
were brought before that committee for the pros and cons on the matter.
I, too, asked several questions of several witnesses over and over
again on a whole series of matters, and I came to the conclusion that
was so well brought out by Senator Byrd in talking about the figleaf
that has been advanced with regard to if we do not like what we are
into with this, we can relatively easily get out. In fact, we made it
so easy that we have set up a meaningless panel to help us get out, and
the panel absolutely would do nothing.
I saw in the Washington Post this morning a story, and there was a
statement in the story that was not attributed to anybody, just a
reporter's view, where it said Senator Dole had worked out an
arrangement whereby we could pull out of the treaty. Well, the
arrangement that has been worked out has already been in the treaty, or
the agreement, whatever you wish to call it. I simply point out that
when the matter was sent over by the administration, there was a
provision that is in the treaty that any nation, within 6 months'
notice, can withdraw from the treaty. So I think that the figleaf or
window dressing--call it what you wish--is not something that anybody
can stand behind by saying the sovereignty issue has therefore been
settled, it is over and done with, there is no problem. It is phony and
it should not be given any serious consideration. But I recognize if
somebody wants an excuse, at least it is an excuse but not a very good
one.
One of the things that I think the Senator from West Virginia did not
bring up that I would like to mention, in the testimony--and I may be
getting into this a little further, and maybe the chairman of the
Commerce Committee will also--time and time again, witnesses, when
pressed on the situation as to how do we get out--I think the bottom
line of summation of what we heard was you are not going to get out.
Once you are in, you are in. So either now you make the decision as to
whether you think it is right that you go in and, if so, right or
wrong, we are in. If we do not go in, we do not have to worry about
getting out. I think we should not finesse that. I think we should lay
it right out on the line.
One of the other things I think about--let us assume that 3 or 4
years from now, after all of these procedures, after we go through the
song and dance of having retired Federal judges making determinations
and recommendations, and say that was sent to the floor of the U.S.
Senate and it was passed to pull out, then it could be vetoed by the
President, as Senator Byrd has very well pointed out. And then we would
have to override the veto. Even if all of that were to be done, can you
imagine the dilemma we would be in as a nation? Could you imagine the
hue and cry of the many corporate giants in the United States and not
so large corporate giants that know full well that they are going to
foreign countries to make substantial investments that they would hope
and probably would receive a return on if we are a part of the new
World Trade Organization? Can you imagine the hue and cry that would go
up? We would have many companies in the United States that would come
to the Congress of the United States and say, ``What are you doing?''
If you do go through these procedures, if you do finally pull out, as
Senator Byrd pointed out very eloquently--the art of the impossible, if
it were accomplished--these companies would say, ``You are going to
bankrupt our company. You are going to pull us out of the World Trade
Organization after, because of the strengths of it, we have gone over
and established plants in these other countries, and now you are going
to, for all practical purposes, make our substantial investments in
plants and equipment null and void because you have pulled out of the
agreement.''
I simply say that maybe that is not a salient point. I say that this
is one more proof positive that it is a lot easier to get into this
agreement, and we may well be going into it. But it is going to be
extremely difficult--the art of the impossible would be tried and tried
over and again on something like this. So I think none of my colleagues
should be lulled into the conclusion--and they have the right to vote
however they want, and there are some good reasons, I might add, why we
should go into this agreement, and I may address that later. But let us
not be fooled. Let us be forewarned.
I simply would like to amplify the other excellent point that the
Senator from West Virginia made, the sovereignty issue. I believe the
sovereignty issue probably is one that my constituents are very much
concerned about. I would say, Mr. President, from my view, that the
constituents in Nebraska are probably pretty equally divided on this
issue. It is not an easy call as to what we should do. I have told all
of them that I will be asking questions, and I will be making
statements, and I will be involved in this process. I have studied it a
lot and I have spent as much time, I guess, as anyone, with the
possible exception of my friend, Senator Hollings, in committees that
have studied this, and I have listened to experts.
One of the experts I listened to with great interest, though, on this
sovereignty issue that first brought it home fully to me--although I
had some concerns about it--was Professor Tribe, who testified in front
of the committee. I inquired of him in some detail about the World
Trade Organization, the three-member secret tribunal that would make
the final decision on whether or not sanctions could be imposed against
the United States. He clarified it when we were talking about the one-
man/one-vote principle.
Let me emphasize this once again so there is no misunderstanding.
While I have been assured by many people in knowledgeable positions
that we should not worry about this sovereignty issue, that it is
something that should not concern anyone, the facts of the matter are
very clear that under the World Trade Organization, we are taking and
removing all of the protection we have had under the GATT agreements up
until now by going into this new World Trade Organization. Certainly, I
think it is true, as the defense says, in this: Look, it explicitly
says in this agreement that no laws of the United States or any of the
States of the United States can be changed. That is true. But let me
give an example of what I think is not fully understood. Let us say,
for the sake of discussion, that the State of Nebraska had a widget
manufacturing company that was very important to the economy of our
State, and let us suppose that the State of Nebraska had laws
preventing the importation of widgets into Nebraska for strictly
parochial reasons; let us suppose, for example, that Bangladesh could
make widgets cheaper than we could because they have about one-seventh
to one-tenth the labor costs that our widget manufacturer in Nebraska
would have.
So, no, I do not believe that Bangladesh can change the law of
Nebraska. But certainly under the World Trade Organization, unless I
could be corrected by other people, Bangladesh could bring an action
that the Nebraska law is in violation of the World Trade Organization.
They could not make Nebraska change the law, but if it could not be
worked out by negotiations and if it cannot be worked out by
negotiations it is explicitly spelled out in this agreement that there
would be a three-member panel that would meet in secret, as Senator
Byrd has said. They would make a determination. If they decided with
Bangladesh, then the only way that the United States could overturn
that is not by one-man, one-vote and a 50 percent of the 113 or 130
nations that would be part of the World Trade Organization. The United
States could make an appeal that the 3-man tribunal was wrong, but to
overturn the 3-man tribunal you have to have a unanimous vote of all of
the nations involved, whether they are 113 or 127 or 131, including
Bangladesh who brought the charge in the first place. They would have
to vote against their own interests which is another way of saying that
let us not be too sure that everything is just hunky-dory and there
would not be any problems on down the line.
In this regard, I asked Lawrence Tribe the question as to how he
viewed this. This was his answer published on page 327, Committee of
Commerce hearings, S. 2467, GATT implementation legislation:
Professor Tribe. Senator, I think there is a mistaken
premise in your question that I really want to be as clear
about as I can, and I think the chairman may have stumbled
onto the same issue.
Yes, it is true that under article 9, paragraph 1 of the
WTO agreement, there is the one-person-one-vote approach in
certain circumstances, and I think the question you raise is
a very good one. Does that give enough protection to us? Is
it unusual?
But what perhaps you have not focused on is that when it
comes to decisions by WTO panels that find that one of our
laws, either an act of Congress or a law of a State, is
illegal under one of the GATT agreements, that decision is
treated differently, and not in a way that gives the United
States more voice. It is less than one-country-one-vote in
this sense.
That is, I think you all have this fat volume that was
distributed a couple of days ago, and just for your
convenience, I will tell you that what I am quoting from
appears on page 1,670. It is in article 22, paragraph 6 of
the dispute settlement understanding. Though it is buried in
fine print, it is going to make a huge difference in the
future of this country. It makes very clear that the trade
sanctions that are to be imposed within 30 days of a certain
period of time will be imposed unless the DSB--that is, the
decision body decides by consensus to reject the request for
sanctions. Then it explains that consensus means unanimity.
So, that means that if 113 countries say, we think that was
outrageous to find Nevada or California or South Dakota or
Alaska or the United States of America guilty in these
circumstances, the fact that there are votes the other way
prevents the sanctions from being lifted. That is not one-
person-one-vote. That is much worse, and that is the way this
works.
With respect to sanctions imposed upon an offending State
or country, the only way that one can reverse the decision to
sanction is to get unanimity. Now, I do not know how long the
U.S. Trade Representative thinks people will not focus on
that, but I sure hope they do now.
I simply say that there is time remaining if anyone would like to use
time. I would like to have someone if they could assure me that what
the understandings of Senator Byrd, the understandings of Professor
Tribe and others have and the concerns that they have about the loss of
sovereignty under that three-man secret tribunal whether or not there
is some explanation for that that I have missed.
The PRESIDING OFFICER (Mrs. Murray). The time of the Senator from
Nebraska has expired.
Who yields time? The Senator from Oregon.
Mr. PACKWOOD. Madam President, I will use a moment before yielding to
the Senator from Utah to answer one question of the Senator from
Nebraska.
As to panels involved in the trade dispute, if Germany wants to sue
us or we want to sue Germany, the panels are picked by the parties
involved in the dispute and every side can veto any panelist. The
parties have to agreed on a panelist.
You get into an argument as to whether or not they are meeting in
secret. This is not some secret tribunal whose panelists are imposed
upon us or imposed upon anybody else. We agree to them or not agree to
them.
I yield 10 minutes to the Senator from Utah.
The PRESIDING OFFICER. The Senator from Utah is recognized 10
minutes.
Mr. HATCH. Madam President, I find it ironic that we are gathered
together in a special lameduck session here in the Senate to debate the
implementation of a trade agreement that has languished in obscurity to
the average Member of Congress and the average citizen of this country
for the better part of a decade.
What is it about trade agreements that garners so little interest
until Congress is poised to vote on whether to ratify them?
It was just over a year ago when the Senate was preparing to take a
vote on another piece of trade legislation, the North American Free-
Trade Agreement [NAFTA]. As you will recall, Mr. President, it was not
until long after President Bush had signed the NAFTA and Congress was
preparing to take a vote for final passage that it arose out of
relative obscurity to become the number one agenda item for a wide
variety of interest groups and individuals even to the extent that
those on both sides of the agreement were running ads on television.
Interestingly, as is the case with the Uruguay round agreement, the
NAFTA could trace its origins back to the Reagan administration when
the idea of a Mexican Free-Trade Agreement, tailored after its
predecessor the Canadian Free-Trade Agreement, was floated and initial
discussions got underway.
While working closely with the administration to craft an acceptable
bill that will implement the terms of the Uruguay round agreement, I
recalled those issues that have been the most controversial over the
last several months and that threaten to delay passage of the Uruguay
round legislation before the end of the 103d Congress are largely the
same as those that threatened to delay and defeat NAFTA last year. I
would submit that we might learn something now if we look at what has
happened since we passed NAFTA, especially in light of some of the
grave predictions that were made during its debate. In fact, not only
have those grave predictions of NAFTA opponents failed to materialize,
but the immediate results of NAFTA have been as good or better than
what many of us would have expected. I encourage my colleagues to bear
these results in mind as we debate many of the same points that were
raised during last year's NAFTA debate.
Therefore, Madam President, in the interest of time, I will enumerate
the positive results of NAFTA during the first half of 1994 along with
some elaborative comments on the points I will make today in the Record
upon the completion of my statement.
In an effort to clear the air of misleading information regarding the
Uruguay round and its impact on the United States in economic and
constitutional terms, I would now like to briefly address some specific
points that have been raised by opponents of the Uruguay round.
First, Uruguay round opponents claim that the agreement will further
increase the budget deficit by $31 billion above the $11 billion that
is offset by the implementing legislation. This figure is derived from
the CBO estimating what the tariff reductions will be over a 10-year
period. However, there is no way to confirm the accuracy of this
figure, especially when you consider that this projection is 10 years
in the future. More importantly, this figure does not take into account
the dynamic effects of tariff reductions on market access and economic
growth.
I believe that the approach taken by the administration of offsetting
the Uruguay round was a reasonable one, given the political realities.
Certainly, no one, including me, is totally happy with the financing
provisions; but, as we all know, politics is the art of compromise for
the greater good.
Second, Uruguay round opponents cite billions of dollars in giveaways
to media giants including the Washington Post. Madam President, I am
certainly not here to defend the Washington Post--it is certainly
perfectly capable of defending itself--but I refer you and the rest of
our Senate colleagues to a detailed, cogent, and truthful explanation
of this complicated issue as drafted jointly by the majority and
minority committee staffs of the House Committee on Energy and
Commerce. At this time, I ask unanimous consent to have this document
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record as follows:
Questions and Answers About the Pioneer Preference Provisions of H.R.
5110
1. Why are these provisions included in the GATT bill in
the first place? What do these provisions have to do with
trade?
You're right, they don't have anything to do with trade.
However, under the ``pay-as-you-go'' requirements of the
deficit reduction laws, any bill that increases spending or
decreases revenues has to be accompanied by provisions to
neutralize the effect on the deficit. Since the GATT
agreement reduces tariffs, thereby reducing revenues to the
Government, Congress is required under law to include
provisions that offset the otherwise negative effect these
tariff reductions would have on the deficit. The pioneer
preference provision would generate at least $500 million,
and probably much more.
The alternative--offsetting the revenue loss by increasing
trade-related revenues--would require that other tariffs be
raised.
2. What is a pioneer preference?
The Federal Commuunications Commission (FCC) established
the ``pioneer preference'' policy, by rule, nearly four years
ago. This policy offered the guarantee of an FCC license to
entrepreneurs who successfully developed important new
communications services and technologies.
There is substantial evidence to indicate that the
``reward'' of the license has proven to be sufficiently
attractive to encourage hundreds of companies, small and
large, to seek innovations worthy of the pioneer grant. The
``reward'' has also encouraged financial institutions to
invest in the innovators seeking the pioneer grant. To obtain
a pioneer's preference, companies have to risk more than just
time and money; they also have to put proprietary design
details into the public domain. This public disclosure, while
a significant competitive risk, fosters the rapid development
and deployment of new technologies which is at the very core
of the purpose of the pioneers preference policy.
The public has already benefitted from the pioneers
program. Innovations in the areas of low earth satellites,
wireless cable, and narrowband personal communications
services (PCS) services have led to the granting of pioneer
awards, and the advancement of new services and technologies
in these areas. The narrowband PCS auction raised over $650
million for the U.S. Treasury.
3. Is pioneer preference unique to PCS?
This FCC policy is not unique to PCS services. For example,
pioneer preferences have been awarded for other
telecommunications services. The first pioneer's preference
was awarded to Volunteers in Technical Assistance (VITA), a
non-profit company, for being the first to develop and
demonstrate the feasibility of using a low-earth orbit
satellite system on VHF/UHF frequencies for civilian digital
message communication purposes. The second award was made to
Mobile Telecommunications Technologies Corporation (MTEL)
for developing and testing an innovative new 900 MHz
narrowband PCS technology that will increase spectrum
efficiency.
4. The Federal Communications Commission's order requires
the pioneers to pay 90 percent of the average bid in the top
10 markets. Isn't Congress undercutting the FCC's decision by
giving the pioneers a better deal than the FCC?
No, for several reasons.
First, the FCC has no explicit authority to require a
licensee to pay a fee in return for the license. In its
decision, the Commission claimed that it has implicit
authority contained in the general provisions of section 4(i)
of the Communications Act:
``The Commission may perform any and all acts, make such
rules and regulations, and issue such orders, not
inconsistent with this Act, as may be necessary in the
execution of its functions.''
While it is risky to predict the outcome of litigation,
there is a very strong likelihood that when a court rules on
whether or not the Commission can require a licensee to make
a payment, the Commission's order is going to be reversed. In
that case, the taxpayers will get nothing.
Second, the Commission's order does not permit the payment
of the fee over time, and does not require the payment of
interest charges. Because these provisions are included in
the GATT bill, the pioneers will actually pay more utilizing
the GATT formula than they would if the Commission's formula
is upheld in court.
5. Is this a ``backroom deal'' or did Congress consider
this in a deliberate fashion?
The pioneer preference issue has been thoroughly examined
over the past several months by at least three Committees in
the House. The Subcommittees on Telecommunications and
Finance and Oversight and Investigations in the Energy and
Commerce Committee; the Budget Committee and the
Appropriations Committee have all examined and/or held
hearings on the issue.
On December 23, 1993, the Federal Communications Commission
awarded the pioneer preference to three companies for
personal communications services licenses. Under the
Commission's decision, the three companies would be permitted
to apply to licenses while no competing applications would be
accepted by the FCC. The Commission also decided that
licenses would be awarded for free to the pioneer companies.
Last May, the Energy and Commerce Committee's Subcommittee
on Oversight and Investigations initiated an inquiry into
allegations of irregularities in the Commission's decision
making process, and whether the contributions of the
recipients justified granting a PCS license under this
process instead of the auctions that will govern the award
of all other PCS licenses. Questions concerning the FCC's
process also where raised at the FCC's Appropriation
hearing. To remedy the problems the Oversight and
Investigations Subcommittee discovered in the Commission's
program, Chairman Dingell and Ranking Minority Member
Moorhead, Subcommittee Chairman Markey, along with
Chairman Sabo introduced H.R. 4700 on June 30. This bill
required that the pioneer recipients pay 90% of the market
value of the license instead of receiving them for free.
On August 9, 1994, the FCC revised its policy to require
the pioneers to pay an amount comparable to that in the
legislation. The Energy and Commerce Committee remained
concerned, however, that the Communications Act does not give
the FCC explicit authority to compel a licensee to pay the
Government in return for a license. It was the Committee's
opinion that the FCC decision would likely be overturned in
court.
Around this time, the Administration began negotiating with
the House and Senate and arrived at the 85% payment
requirement now contained in Title VIII of the GATT
legislation. On September 28, 1994 the Energy and Commerce
Committee marked up the GATT legislation. Title VIII was
discussed at the markup. On September 29, 1994, the Budget
Committee held a hearing on the pioneer preference issue.
6. Critics claim that the pioneers preference amounts to a
``billion dollar giveaway.'' Is this allegation supportable?
No. This claim is wildly inflated and based on
insupportable assumptions. Everyone agrees that the three
service areas in question have a total population of 55
million. The Office of Management and Budget (OMB) and the
Congressional Budget Office (CBO) have determined that the
value of a license per person should be calculated at $24 per
capita. (While densely populated urban areas obviously have a
greater per capita value, the pioneers' licenses awarded also
include large, sparely populated rural areas where the value
is much below this figure). Thus, based on this $24 figure,
the total potential revenue in an auction without any
discount or preference would be $1.32 billion. The preference
set out in the GATT legislation requires the pioneer to pay
based on a formula of 85 percent of the average per capit
cost in the top twenty markets awarded through PCS auctions.
By averaging the top twenty markets, the formula avoids any
anomalies created by looking solely at the price paid for the
other license awarded in the pioneers region. (This issue is
discussed in greater detail in Question #7 and 9.)
Thus, the pioneers are likely to pay $1.12 billion, under
this OMB and CBO endorsed model. The ``benefit'' to the three
companies, collectively, is $200 million. Based on
information provided by the three pioneer preference winners,
their investment to date is roughly $100 million.
Consequently, the net award is closer to $100 million. And,
as noted above, the entrepreneurial efforts, risk, and
``sweat'' equity of these three companies, which the FCC
deemed worthy of the pioneer's award, will result in the more
rapid deployment of the next generation of cellular, PCS
technology.
7. On what basis were these three companies awarded a
preference for a broadband PCS license?
Last December, the FCC awarded a pioneer preference to
three PCS applicants, out of more than 100 applicants. In so
doing, the FCC guaranteed each of these companies the
opportunity to file an application for a license without
giving other companies the opportunity to file a competing
application. The preference is for one of two licenses to be
granted in each of the three markets. If the pioneer fails to
build out and operate the system throughout the service area,
the FCC may revoke the license. The FCC awarded these
preferences based on its determination that their unique
contribution to the development of broadband PCS services and
technology justified the grant. The three companies which
were awarded a preference are:
American Personal Communications: APC, which is 70 percent
owned by the Washington Post, was awarded its pioneer
preference principally through two, interrelated
developments. First, APC provided the Commission with a study
demonstrating that the 1850-1990 MHz band had a sufficient
amount of usable spectrum to initiate PCS service without
relocating the many microwave operations already licensed
there. As the Commission acknowledges, that study focused
attention on the 1850-1990 MHz band by demonstrating that a
significant technical hurdle to using this spectrum--the
existing microwave users--could be overcome.
APC's second significant contribution--its FAST
technology--is related to the first development. Because the
Commission agreed with APC that the 1950-1990 MHz band would
be appropriate for PCS service, an efficient technology was
needed to allow sharing that spectrum with existing microwave
licensees. The FCC determined that FAST meets that need. The
technology uses measurements of microwave transmissions at
PCS base stations to determine frequencies that can be used
for PCS communications without interfering with microwave
incumbents. Without this technology, either microwave
incumbents would have to be relocated before PCS could begin
(a time-consuming and expensive process), or the spectrum
that is now being auctioned would be useless for PCS (which
would mean little or no auction revenue).
Cox Enterprises: Cox was the first cable company to apply
for an experimental PCS license proposing the use of cable
television plant to achieve spectrum efficiency, and
centralized modulation and distributed antennas to achieve
cost efficiencies. Cox was the first company to demonstrate
the technical feasibility of these ideas by testing them on
live cable, developing a cable/PCS interface (the Cable
Microcell Integrator or CMI), demonstrating centralized
modulation, and demonstrating a 2 GHz cell-to-cell handoff
with cable connected microcells. These efforts demonstrated
that existing networks can be used as part of the PCS
infrastructure.
Omnipoint: The FCC granted Omnipoint its pioneer's
preference for its significant accomplishment in developing
PCS equipment--specially, its design, development,
miniaturization, and deployment of the first 1850-2200 MHz
handheld phone. Ominpoint developed this PCS equipment based
on a unique implementation of spread spectrum technology; it
documented the feasibility of its system; and it demonstrated
the system in operation. The technical feasibility of
Omnipoint's system was also tested and documented by more
parties than any other PCS system and has been independently
verified to be capable of coexisting with incumbent microwave
users in 1850-1990 MHz spectrum band, thus minimizing the
number of microwave licensees that must relocate.
8. Why are the markets in which the pioneers received their
licenses excluded from the formula? Won't this result in a
windfall to companies like the Washington Post and Cox
Enterprises?
First, all predictions about the behavior of bidders at
spectrum auctions are entirely speculative. We have little
experience on which to base predictions. Earlier this year,
when the only auction that is comparable to the PCS auction
was held, bidders paid a total of $678 million for 10
licenses that Government economists thought were of so little
value they didn't even bother to estimate how much was going
to be raised.
Second, while attempting to predict the behavior of bidders
is at best speculative, we do know this: the bidding on
licenses in markets where pioneers have been awarded another
license at a discount is going to be different than the
bidding in markets where there is no pioneer license.
For instance, a case can be made that the winning bid for
the remaining license is going to be higher than it otherwise
should be, because the supply of licenses available for
bidding has been reduced by 50 percent. Since the supply has
been reduced, the price is likely to be artificially
increased.
If the pioneers are required to pay an amount equal to 85
percent of that artificially inflated price, they could well
end up paying more for the license than they would if they
simply bid for it at the auction.
On the other hand, giving the pioneers a discount--either
of 100 percent, as originally proposed by the FCC, or 15
percent, as contained in the GATT legislation--will confer a
competitive advantage of some magnitude on the pioneer. That
could have the effect of reducing the amount competitors are
willing to pay, and reduce the amount of the winning bid.
The short answer is this: we know that the bidding in
markets where there is a pioneer is going to be different.
What we don't know is whether the difference is going to
result in higher or lower bids. In order to reduce the risk
created by this uncertainty--to the Government and to the
pioneers--those markets have been excluded from the formula.
9. The GATT legislation requires the pioneers to pay
according to a formula that is based on the top twenty
markets, which ignores the fact that two of the pioneer
licenses are the two biggest cities in the country. Doesn't
this create a windfall for the pioneers, because the New York
and Los Angeles markets are very concentrated and highly
lucrative?
We don't think so. Given the speculative nature of
attempting to predict the behavior of bidders at auction, a
definitive response is impossible to predict. However, there
are several reasons to conclude that there will not be any
windfall to these companies.
First, the serve areas--known as Metropolitan Trading Areas
(MTAs) are huge. Sure, the New York MTA includes Manhattan--
but it also includes North Hero. Vermont, and Elmira, New
York. The Southern California MTA includes Los Angeles and
San Diego--but also includes Kingman, Arizona and Beatty,
Nevada. And the FCC's rules require that the pioneers offer
the same services in these remote areas as they do in
downtown New York or Los Angeles. If the licenses were
limited to the urban areas, there might be some basis for
this claim. But as the size of the service territory
increases to include vast rural areas and small towns, the
differences between the various MTAs disappear.
Second, the allegation that there is a substantial
difference in the values of the very largest markets and
other large markets is not borne out by an examination of the
existing cellular marketplace. Recent transactions involving
the sale of cellular systems do not reveal any price
distinction, on a per capita basis, between the very largest
cities and other large cities.
Finally, our limited experience with auctions indicates
that when the bidding for the most desirable licenses gets to
be too expensive for some of the bidders, they simply drop
out of the bidding for those licenses and bid up the prices
of the next tier of licenses. To the extent that there is a
distinction between the very largest MTAs and other large
MTAs (and we don't anticipate that there will be), this
behavior will have the effect of drawing up the prices being
paid for all MTA licenses.
Mr. HATCH. Madam President, the issue of pioneer preferences as part
of the funding mechanism of the Uruguay round has been held up by
opponents of the agreement as a back room deal cut by large
telecommunications businesses for their benefit. On the contrary, the
provision contained in the implementing legislation that requires three
telecommunications pioneers to pay 85 percent of the average PCS bid in
the largest 20 markets in the country was worked out between
Republicans and Democrats in both Houses of Congress and will
potentially save the pioneers $200 million collectively.
However, what is not mentioned by Uruguay round opponents is the fact
that before this issue was ever considered for funding offsets for the
Uruguay round, the FCC was originally prepared to offer these pioneers
PCS licenses for free under the pioneer preference provisions of the
Communications Act of 1934.
Third, the loss of U.S. sovereignty resulting from membership in the
World Trade Organization has been debated extensively by many
individuals, groups, and constitutional scholars--all with conflicting
views. So, Madam President, how do we resolve this difference of
opinion? I have spent considerable time reviewing this aspect of the
Uruguay round agreement.
I believe we must put the issue in context, and the context is found
in the last 47 years of U.S. membership in the GATT. We must ask
ourselves what our relationships have been with not only the GATT
itself but to other GATT-member countries and how these relationships
have affected U.S. laws and the ability we have as a nation and
Congress to conduct the affairs of our Nation.
The fact is that never has any GATT obligation been imposed upon the
U.S. resulting in a change in U.S. law that has not been approved by
Congress. Never. Claiming that this practice will change with the WTO
directly contradicts statutory language found in title I, section 102,
of the implementing bill of the Uruguay round which states clearly that
``No provision of any of the Uruguay round agreements, nor the
application of any such provision to any person or circumstance, that
is inconsistent with any law of the United States shall have effect.''
Madam President, I do not believe we can be any more clear when it
comes to where the Uruguay round and the WTO stand in relation to our
Constitution.
Fourth, claims have been made regarding voting procedures in the
proposed WTO. Again, Madam President, we must look to the context of
the GATT for the past 47 years of making decisions regarding operating
rules, procedures, and amendments to GATT. The fact is that GATT has
determined its administrative course by consensus. This process will
not change under the WTO. This means that WTO decisions will be made on
a consensus basis, not according to majority voting blocks. If and when
voting procedures are invoked, member countries will not be held
accountable to amendments to WTO rules and procedures that they do not
support.
Fifth, Uruguay round opponents have also repeatedly advocated
considering the Uruguay round as a treaty, requiring a supermajority of
two-thirds of the Senate, instead of as an executive agreement to be
passed by a simple majority by both Houses of Congress. Quite frankly,
Madam President, the distinction between whether international
agreements should be considered as treaties or as executive agreements
is quite dubious.
In fact, Prof. Louis Henkin, who is considered by many to be the
premier expert on constitutional foreign affairs issues, has stated
that this debate is juridically a political question and thus
nonjusticable.
Presidents have repeatedly submitted international agreements to both
Houses of Congress, and the House and Senate have repeatedly joined
together in exercising their article I powers to approve a wide range
of important international agreements, ranging from Bretton Woods to
SALT I to NAFTA. Moreover, to exclude the House from consideration of
legislation that has such significant revenue impacts would be a
serious mistake in my view.
Sixth, one issue that is important to everyone in this body--no
matter which side of the aisle or argument he happens to be on--is
jobs. Opponents of the Uruguay round make the claim that jobs now and
for the future will be lost if we pass this agreement. But, Madam
President, I believe we must look at how jobs are created. Jobs are
created by capital investment resulting from increased demand, which
spurs economic growth.
This demand has been generated largely by consumers around the world
who want the best goods and services at the lowest possible prices.
Foreign countries like Japan began meeting that demand decades ago by
improving quality and reducing costs. As a result, U.S. jobs were lost
while U.S. manufacturers adjusted to the increased competition. Now, in
many industries, U.S. products are in high demand all over the world.
Unfortunately, the costs, both tariff and nontariff, associated with
accessing these markets has made exporting expensive, thus encouraging
U.S. firms to shift their manufacturing bases overseas.
Fortunately, due in part to efforts by the United States to reduce
these market access barriers and create fair trading rules, U.S. and
foreign firms have begun to take advantage of the labor efficiency
gains found in the United States. This is evidenced by the growth of
our export sector in recent years--the fastest growing sector in the
U.S. economy. Rejecting the Uruguay round now will only set back this
positive trend that I believe will create more high-paying jobs
for Americans in the future by creating incentives to invest more in
their own skills and education because of the opportunities opened by
increased access to overseas markets.
Seventh, there are fears held by Uruguay round opponents that
ratifying the agreement will threaten our food safety and environmental
laws. Madam President, historically GATT was established on two
fundamental principles: First, to liberalize trade; and second, to
institute a system of minimal standards and rules to enhance the
benefits of liberalized trade.
Inherent in the principle of establishing a set of minimal standards
to which all member countries agree to adhere does not prohibit
countries from setting higher standards as long as long as it can be
proven that the standards are scientifically based and there is no
discrimination between foreign and domestic entities.
A recent example of this principle was exhibited by a challenge to
our gas guzzler law and the Corporate Average Fuel Efficiency Act by
German auto manufacturers. The claim made by the German companies was
that these laws were an unreasonable barrier to trade. However, the
challenge was rejected by a GATT dispute resolution panel citing that
these statutes were nondiscriminatory and therefore not a barrier to
trade. I ask unanimous consent to have printed in the Record an
overview of that panel decision provided by the U.S. Trade
Representative's office.
There being no objection, the material was ordered to be printed in
the Record as follows:
Executive Office of the President, Office of the U.S.
Trade Representative,
Washington, DC, September 30 1994.
u.s. fuel conservation measures upheld by gatt panel
Ruling in an important trade dispute with the European
Union, a GATT panel in Geneva found in favor of the United
States today on key provisions of U.S. laws regulating auto
fuel economy and luxury taxes.
The GATT panel, which the European Union asked last year to
review the three U.S. automobile laws, found that the core
provisions of the three laws are consistent with GATT rules.
Two of the measures at issue, the Corporate Average Fuel
Economy (CAFE) requirements and the ``gas guzzler'' tax, are
central components of the U.S. automobile fuel conservation
policy that emerged in response to the 1973-74 OPEC oil
embargo. The third measure is the luxury tax on cars over
$30,000, enacted in 1990.
U.S. Trade Representative Mickey Kantor welcomed the
panel's report. ``The panel has emphatically rejected the
European claim that trade-neutral legislation intended to
further energy conservation goals and protect the environment
could be attacked because Chrysler, Ford and GM invested and
complied with the laws while Mercedes and BMW chose not to,
and had to pay penalties.''
``The panel's finding also confirms that GATT's trade rules
can be compatible with our laws that conserve natural
resources and protect the environment,'' Kantor noted. ``This
decision is a recognition that our government--and those of
other countries--have latitude to legislate and regulate in
these crucial areas as long as they are not discriminating
between domestic and imported products.''
``I would expect the panel's report to help steer the
debate when GATT countries take up trade and environment
issues under the new World Trade Organization,'' he said.
The panel rejected EU complaints that the CAFE
requirements, the gas guzzler tax, and the luxury tax
discriminated against cars manufactured by Mercedes, BMW and
other European luxury car makers. Those manufacturers have
paid a large share of penalties and taxes under these laws.
The panel report broke new ground in crucial respects:
It found for the first time that the general exception
under the GATT for conservation measures could excuse a
country's law that was otherwise inconsistent with the GATT.
It recognized for the first time that, in reviewing a non-
discriminatory measure of a country, it is not relevant
whether other, more economically efficient alternatives might
be available to achieve the government's legitimate policy
objectives.
It laid to rest the concern that governments were obligated
to select the ``least trade restrictive'' conservation
measure. A measure is consistent as long as it clearly serves
the purpose of energy conservation or environmental
protection, and does not arbitrarily or unjustifiably
discriminate between domestic and imported products.
The panel agreed with EU complaints on one technical
issue--the CAFE accounting rules that establish separate
``domestic'' and ``import'' fleets for determining overall
fuel economy. Because these rules do not have any actual
economic impact on EU auto manufacturers, and therefore no
trade damage results from this requirement, Ambassador Kantor
said that the United States does not intend to make any
changes in the CAFE rules.
Copies of the panel's report are available in the USTR
public reading room.
Mr. HATCH. Finally, Madam President, after all the arguments that
have been made by Uruguay round opponents on the substance of the
agreement, they question the wisdom of considering this document during
a lame duck session, claiming that nonreturning Members are not
accountable to voters and that we should not be hasty in taking a vote
on this document.
However, Mr. President, the Uruguay round agreement has been worked
out over an 8-year period, which began during the Reagan
administration. There have been several delays since 1986, and there
have been several Congresses involved in crafting improvements to the
agreement. There comes a point at which further delay only hurts our
economy because it cannot take advantage of the benefits that will
surely accrue from the agreement, such as tariff cuts, increased market
access, and protection of intellectual property, just to name a few.
Furthermore, if dynamic economic projections are correct, the
increased economic activity resulting from the agreement will help to
reduce our budget deficit. Thus, each month we delay hampers us from
reducing our budget sooner and costs the United States, in terms of
increased gross domestic product [GDP], about $1.25 billion and 4,000
new jobs.
The Uruguay round is simply a sequential step along the trade-
liberalizing policy path that the United States has been engaged in for
more than half a century. The time has come to cast our vote on the
economic future of our Nation. There will be plenty of opportunities in
the next Congress and in Congresses that follow to continue improving
our trade laws without defeating this important agreement that has been
carefully negotiated by three administrations and five Congresses.
It is time to move ahead. I encourage my colleagues to support this
agreement.
Let us look for a moment at the results of NAFTA since its
implementation.
IN GENERAL
United States exports to Mexico and Canada during the first half of
this year were up 17 and 10 percent, respectively.
The United States trade surplus with Mexico has increased to a record
level of $2.1 billion during the first 6 months of this year.
Exports to Canada and Mexico, so far this year, are responsible for
more than 52 percent of overall United States export growth.
United States exports to Mexico are running at an annualized rate of
$48.9 billion, up more than $7.3 billion from the 1993 level.
Keep in mind, Mr. President, Mexico is currently our third largest
export market for consumer goods, behind Canada and Japan. This means
that Mexicans are buying United States products. And it will not be
long before Mexico surpasses Japan as our second largest export market
for consumer goods.
specifically
From January to May of this year--
United States auto exports to Mexico exceeded the total number of
exports during all of 1993--an increase of approximately 600 percent.
In my home State of Utah, WordPerfect has attributed significant
sales increases in Mexico to better intellectual property protection
afforded under NAFTA.
Primary metal exports to Mexico from Utah have increased almost 3,000
percent from 1993 levels during the same period.
Industrial machinery and computer equipment exports from Utah to
Mexico have increased almost 500 percent over 1993 levels during the
same period.
And Utah chemical exports to Mexico have increased over 250 percent
during the first quarter of 1994.
In addition, despite the job loss predictions that were prevalent
during the NAFTA debate last year, the Department of Labor has reported
that fewer than 5,000 applications for assistance were made at the
NAFTA Adjustment Assistance Program during the first half of this year.
Yes, imports from Mexico and Canada have also increased, but is not
that what the objective of the agreement was--to create a more open
market where goods and services could flow more freely? We want to
provide American consumers with the widest array of choices.
Moreover, can we expect our trading partners to agree to do business
with us without realizing some mutual benefits? We must remember that
the fundamental reason the United States pursues more liberal economic
relationships is that on a level playing field we can out-compete
anybody.
But, Mr. President, we are not here to discuss NAFTA. We are here to
discuss the Uruguay round. And the reason I raise NAFTA at this time is
to draw attention to the fact that we have all expressed concerns
pertaining to specific sections of the Uruguay Round Agreement and the
implementing language, just as we did a year ago during the NAFTA
implementing process.
As you will recall, we argued heavily over funding for the NAFTA,
labor and environment issues as they related to our NAFTA trade
objectives, and the potential threat that NAFTA posed to our national
sovereignty. Ironically, these are the same issues that both the House
and Senate are struggling over during this current debate on the
Uruguay round. Therefore, Mr. President, I encourage all of my
colleagues to consider the historical lessons that we have learned from
NAFTA and not to lose focus on what we have the opportunity to do for
our economy now.
Our problem has been that many countries have yet to match our system
of openness, a system that has served us well for the better part of
200 years. But we still struggle with trying to encourage other
countries to adopt our same philosophy of openness where the benefits
outweigh the drawbacks.
Therefore, we must continue to ask ourselves whether we would rather
raise our level of protection and nontransparency to that of our
trading partners, refusing to afford them any benefits of our markets
until they adhere to our terms, or try to raise other nations'
standards to our level of market access, low tariffs, and transparent
trade laws, which will exploit more fully the advantages we have in
economic efficiency and ingenuity, not to mention the benefits that
accrue to U.S. consumers in an economy where there is more competition
and more choice.
In other words, do we take a leadership role in world economics by
seizing the day and controlling our own economic destiny; or, do we
wait for others to hopefully act in a way that is beneficial to us? It
seems to me that we have consistently and successfully chosen the
leadership role.
But before the Senate determines the fate of the Uruguay Round
Agreement, I would like to address a few of the key issues that
surround this debate, because I am concerned that there is a lot of
misinformation being spread about the Uruguay round, the General
Agreement on Tariffs and Trade [GATT], and the World Trade Organization
[WTO].
First, let me bring up the issue of sovereignty. As I said, this is
not a new concern when it comes to entering into trade agreements. I
have heard it said that the WTO will have the new-founded ability to
force the United States to change Federal and State laws that inhibit
trade or are ``GATT inconsistent.'' In light of these criticisms, I
have given serious consideration to this aspect of the Uruguay round.
In order to understand the WTO, it is imperative to understand
exactly what the GATT is. The original GATT was ratified in 1948 by 23
nations including the United States. The original agreement was the
culmination of a post-World War II effort to prevent the return of the
troublesome protectionist trade measures of the 1930's. Since that
time, there have been eight subsequent GATT negotiating rounds that
have expanded upon the original agreement, the latest round of which is
the Uruguay round. Of course, the charter establishing the WTO is part
of the Uruguay round text.
The fundamental assumption that GATT espouses is that reduced trade
barriers enhance economic well-being among participating nations.
Therefore, GATT was established with two objectives in mind: First, to
liberalize trade; and second, to institute a system of minimal
standards and rules to enhance the benefits of liberalized trade.
To use an analogy, just as individual freedoms within a political
system create greater potential for citizens of the system to maximize
the benefits of life and liberty, greater freedom within an economic
system maximizes potential for members to obtain economic benefits,
that is, higher standards of living. Therefore, the United States has
always been a leader in promoting agreements such as GATT.
However, allowing more freedom within a political system without a
commensurate system for fair and credible law and order creates chaos,
inequality, and eventually, repression. Likewise, a more open
economic structure without a system of fair rules and a credible
dispute settlement mechanism only creates a situation wherein members
may exploit others to their economic detriment. Unfortunately for the
United States, as the world's most open economy and its largest
exporter, we are at a severe disadvantage without such a system that
seeks trade liberalization while employing a legitimate dispute
settlement mechanism. The alternative to such a system is to become
isolated and subject to the arbitrary market entry rules of each
individual nation.
In 1988, Congress recognized the need for a tougher international
trade dispute settlement mechanism because the United States has been
the plaintiff in dispute settlement cases brought to GATT many more
times that we have been the defendant, and we have won many more cases
than we have lost.
Unfortunately, under the current GATT, a country that receives a
negative panel decision can choose to block the adoption of the ruling
or bog it down through procedural measures until the issue died without
any resolution. Thus, in the Omnibus Trade Act of 1988, Congress
spelled out several objectives with regard to trade. One of the
objectives was to create stronger, more timely dispute settlement
procedures.
The proposed WTO seeks to accomplish the 1988 congressional objective
and is the result of a systematic expansion of the traditional GATT,
not a completely new and powerful body that will ride roughshod over
U.S. law. On the contrary, the WTO is simply an attempt to strengthen
the enforcement of international trade obligations to which the United
States has been committed since 1948.
Therefore, contrary to what has been characterized as a serious
digression from traditional U.S. trade policy, the WTO will provide a
framework and a forum to work out trade disputes and to resolve
economic differences. Moreover, if Congress votes to ratify U.S.
membership in the WTO, the subordination of U.S. international
obligations to the Constitution and Congress' ability to make laws will
not change.
In fact, Judge Robert H. Bork stated in a May 26, 1994, letter to
Trade Representative Mickey Kantor that:
* * * no treaty or international agreement can bind the
United States if it does not wish to be bound * * * Congress
should be reluctant to renege on an agreement except in
serious cases, but that is a matter of international comity
and not a loss of sovereignty.
Therefore, as one who is a student of constitutional matters, I am
satisfied that the WTO will not threaten U.S. or State sovereignty any
more than it has been threatened under the current GATT system.
Second, I have heard dismay expressed over what the Uruguay Round
will actually do for our economy, as if negotiating with other nations
to break down trade barriers around the world is somehow a dangerous
policy that will only lead to economic woes for the United States. Mr.
President, these are the same types of fear-promoting predictions that
we heard last year during the NAFTA debate and which have not
materialized.
The world is a very different place than it was at the conclusion of
World War II. We are seeing myriad new and emerging markets, which were
virtually closed before and which are creating new challenges and
opportunities for the United States. Many of these emerging markets
operate under differing economic principles and conditions. GATT and
the Uruguay Round provide an opportunity for greater U.S. access to
these markets.
In turn, boosting the economic conditions of many less-developed
countries through trade not only expands market opportunity and
customer base for developed countries like the United States, but also
helps to promote free enterprise economic reforms within these
countries--not an insignificant fringe benefit of free trade.
At the same time, we expose these markets to our transparent trading
regime and our principles of nondiscriminatory trade policy and justice
system, which protects things such as intellectual property. Only
through exposure to our way of doing business will countries begin to
change unfair trade practices and reduce trade barriers. GATT provides
a forum for this progress to take place, and the Uruguay Round provides
yet another step along the trade policy path that the United States has
been pursuing since World War II.
At the risk of boring my colleagues with statistics, it is important
to understand exactly what we are talking about in terms of the
potential benefits to our economy that the Uruguay Round will afford.
Currently, trade represents more than 10 percent of our annual gross
domestic product [GDP], which now exceeds $6 trillion. This means that
we are exporting over $600 billion of goods and services. Jobs that are
attributed to trade account for approximately 9 percent of our total
workforce, or approximately 12 million people of a total of about 119
million workers in the United States. These figures have steadily grown
since 1947, when the United States first entered into GATT and the
gross national product [GNP] was at approximately $234 billion, with
trade accounting for about 8 percent of that figure.
It is clear and indisputable that trade contributes significantly to
our economy. We can't ignore this fact. Trade is now a larger portion
of our economy in an environment of increased competition--competition
which did not exist in 1947. I believe that without strict adherence to
a post-World War II trade policy of expansion and liberalization, of
which our membership in GATT has been a key component, we would be much
worse off economically than opponents of our trade policy claim that we
are today.
Another strength of the implementing language before us is the
improvement it makes in our existing system of patent protection. It
alters the term of patent protection from its current length of 17
years from date of issuance to the new standard of 20 years from date
of application. Because the average time to process a patent
application is 18 months, in most situations inventors will receive a
longer term of patent protection under this provision. Also, by
focusing on the date of application rather than the date of issuance,
the disruptive tactics of some who have sought to manipulate the patent
system through the use of so-called ``submarine'' patents will come to
an end.
I am aware, Mr. President, of the controversy that is associated with
this issue. Unfortunately, it is a factual dispute to which the
conflicting parties are in nearly complete disagreement. Some say this
change in our patent law will disadvantage small inventors; some say it
will instead benefit them. Only time will tell. But I have given
assurances to the many small inventors in my home State of Utah--and
throughout the Nation--that I will be vigilant in watching this issue.
And I will not hesitate to sponsor private relief or other legislation
that might be required to restore to any inventor who is disadvantaged
by this change in the law to the full 17 years of protection available
under current law. But it would be inappropriate for Congress to act
further until there are actual, demonstrated instances of inventors
being disadvantaged--through no fault of their own--by this change in
the law.
In short, the clear benefits of this amendment to our patent law
should not be forestalled because of the specter of theoretical cases
that might arise in the future. Should those cases actually arise, the
Patents Subcommittee, where I have served as ranking member for 8
years, stands ready to act and to act quickly.
Finally, Mr. President, I would like to address the issue of funding
for the Uruguay Round. There has been a great deal of debate concerning
the financing of the Uruguay Round. Because of the budget rules that
Congress has established and the fact that this legislation is being
considered under the fast track procedure, we find ourselves in a very
interesting and somewhat difficult position as to passing this
implementing legislation.
Because the Uruguay Round will lower tariffs that the Treasury will
collect on imported goods, there will be a loss of revenue that
otherwise would be collected. Thus, under the current methods of
estimating the revenue effects of legislation, and according to the
budget rules, this implementing legislation will require an offset to
prevent it from increasing the budget deficit. It is important to note
that the budget rules in the Senate now require that these losses be
offset over both a 5-year and a 10-year period. Failure to provide
adequate offsets leaves the legislation open to budget points of order,
which can only be overcome by a vote of 60 Senators.
However, Mr. President, as you and our colleagues know, the budget
rules of the Senate do not always reflect the economic reality of the
world. We have seen many examples that amply demonstrate that the fact
that estimated revenue effects of various bills are sometimes woefully
inadequate. In the case of the Uruguay round, it is already evident to
almost every economist in the Nation that the overall economic impact
of the agreement will not result in a loss of revenue to the Treasury.
People on both sides of the political aisle agree that the economic
benefits to the United States of increased trade as a result of the
agreement will far outweigh the tariff revenue lost due to the lower
rates.
By opening up new trading opportunities to U.S. businesses, up to
500,000 more jobs will be created in the country. This will result in a
great deal of new economic activity throughout the Nation and a large
increase in our gross domestic product. All of this new business will
swell the receipt of payroll and income tax revenue to the Treasury,
which will far more than offset the amount of revenue loss resulting
from the reduction in tariffs.
Unfortunately, the new revenue coming in to the Treasury because of
the increased economic activity and new jobs is not taken into account
by the Congressional Budget Office, Joint Committee on Taxation, and
Office of Management and Budget for purposes of deciding how the budget
rules will apply to this legislation. Thus, we find ourselves in the
strange position of facing budget points of order unless this
implementing legislation is paid for by tax increases or entitlement
spending cuts.
This situation put the Clinton administration in a predicament--
having to come up with a package of tax increases and spending cuts to
pay for the agreement to avoid having to waive the budget rules. As we
all know, Mr. President, it is never much fun having to propose tax
hikes or spending cuts, especially when most experts agree that they
really aren't needed. This predicament was further complicated by the
new budget rule in the Senate that requires the first 10 years of the
agreement to be offset, instead of only the first 5 years. In terms of
dollars, this requirement means that the value of the offsets has
increased from an estimated $11.5 billion required to offset the first
5 years to an estimated $40 billion to offset the full 10 years.
The administration was forced to make a difficult decision--whether
to propose to fully offset the estimated cost over the 10 years, and
totally avoid the budget points of order, or to offset less than the
full amount and face potentially fatal budget points of order from
opponents of the Uruguay round. To fully offset the agreement would
have required $40 billion of tax increases and/or spending cuts, which
could also have killed the deal. Not offsetting the estimated revenue
loss at all would have opened the administration up to criticism from
various factions that a full budget waiver irresponsibly increases the
budget deficit, or at the least, sets a bad precedent. We must keep in
mind, Mr. President, that once the implementing legislation was
delivered to the Congress, it could not be amended. Thus, the
administration had to get it right the first time.
The administration chose a middle-of-the-road course. It decided to
try to offset the 5 year cost of the agreement, but also decided that
to come up with adequate offsets to pay for the 10 year cost would have
been counterproductive. Thus, the administration set itself on a course
to find about $12 billion worth of tax increases and spending cuts. As
we all know, Mr. President, this decision has left the implementing
legislation subject to budget points of order. Thus, in reality, it
will take 60 affirmative votes to pass this deal tomorrow.
I don't know of anyone who is entirely happy with the package of
offsets that the administration ultimately included in this
implementing legislation. There is much to criticize. To start with, I
am of the opinion that we didn't need to fund the agreement at all.
When it is obvious to almost every economist that the dynamic economic
effects of implementing the agreement will bring in far more revenue
than is lost by the tariff reductions, why shouldn't we simply waive
the budget rules and pass the bill? I realize that my viewpoint would
probably not carry the day in the Senate and that an unfinanced GATT
would not have the votes to pass. Thus, even though I personally do not
like the idea of having to raise taxes to pay for an agreement that in
reality needs no funding, I am willing to go along with the offsets
that this package includes, for two reasons.
First, many of the revenue increases in the financing package are
innocuous. Almost $4 billion of the revenue raised in the package comes
from compliance initiatives and accelerating the receipt of taxes.
These are not tax increases, Mr. President. They meet the technical
definition of budget offsets, but they are not harmful tax increases.
Another almost $1 billion is raised through the reform of the Pension
Benefit Guarantee Corporation [PBGC]. While I am not thrilled that this
reform package did not go through the usual legislative process, I am
generally satisfied with the result.
Second, to the extent that the financing package does contain
obnoxious and harmful provisions, and there are some, I believe we can
justify them by the tremendous benefits the Nation receives by
ratifying the Uruguay round. As I mentioned, I do not believe that
anyone's taxes should be raised to pay for an agreement that, in
reality, doesn't need to be paid for. Therefore, for example, I am not
happy that 4-percent floor on savings bond yields has been eliminated.
This provision only raises $122 million, but could damage the
attractiveness of U.S. savings bonds. I am also not pleased that the
interest rate that the Internal Revenue Service will pay corporate
taxpayers on refunds over $10,000 would be lowered. This seems unfair
to me, especially considering the fact that interest paid by
corporations to the IRS on amounts due would stay the same. Although
these are not traditional tax increases, they nevertheless take money
from the pockets of taxpayers and put it into the Treasury.
Although the financing package is not perfect, the administration is
to be commended for its willingness to work with the Finance Committee
in settling on the final package of revenue increases. Many of the
earlier proposals, which were much more harmful to taxpayers, were
removed after objections were raised by various Members of Congress.
For the most part, our concerns were considered and changes were made.
All in all, Mr. President, I believe that the approach taken by the
administration if offsetting the Uruguay round was a reasonable one,
given the political realities. I do not believe that anyone is totally
happy with the financing provisions, but, as we all know, politics is
the art of compromise. I will vote to waive the budget point of order.
In conclusion, Mr. President, the Uruguay round is not a perfect
agreement that is going to solve all of our trade problems, of which we
have many. However, we must look at what our strengths are and move
forward. The Uruguay round is a sequential step in the effort to do
just that.
We cannot afford to deny ourselves the benefits of an agreement that
will add $100-$200 billion to our economy over the next 5 years; that
will, for the first time add provisions protecting intellectual
property--the United States loses billions of dollars a year in
intellectual property violations by other countries; that will
significantly reduce allowable subsidy, tariff, and internal support
levels for agricultural products of our trading partners, which could
yield as much as an $8.5 billion increase in agricultural income over
the next 10 years; and that will potentially create 500,000 jobs due to
the increase in economic activity generated by the Uruguay round.
The facts are that the United States is the largest market in the
world, we have the lowest average tariff rates in the world, and we are
the world's largest single exporting country. For these reasons, it is
in our interest to gain access to foreign export markets and to
strengthen the credibility of a dispute settlement process. We
accomplish these objectives by reducing current barriers to these
markets and creating a stronger administrative body to ensure
enforcement of the rules. The Uruguay round seeks to reduce these
barriers, and the WTO provides the forum for a more credible dispute
settlement process.
By reducing these barriers, we provide more opportunities for
Americans to produce goods and services to export throughout the world.
By creating more exporting opportunities, we create more jobs. More
jobs create more earnings, which create more consumer spending and
private investment, creating even more jobs. These activities also
create more revenues which help to reduce the Federal budget deficit.
I support the objectives of the Uruguay round because they are good
for our economy. Without a strong economy, then I believe that we do
face the possibility of losing some of our sovereignty as a nation and
a people.
The PRESIDING OFFICER. Who yields time?
Mr. ROCKEFELLER addressed the Chair.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. ROCKEFELLER. Madam President, I ask unanimous consent that the
junior Senator from West Virginia by yielded such time as he may
require.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROCKEFELLER. Madam President, it is up to the Senate to seize
this historic opportunity. The trade agreement now before the United
States Senate for approval represents the culmination of nearly 50
years of efforts designed to open global markets that have unfolded
since the end of World War II. These moves towards a more free, a more
fair, and a more open trading system have been led at every turn by the
United States.
With this agreement, known as the Uruguay Round, we will join 123
other countries in adopting and improving rules of international trade
in ways that are in the direct and vital interest of Americans. That is
the basic reason that I will vote in favor of the legislation before us
to implement the Uruguay Round Trade Agreement, better known as the
GATT.
Madam President, the people of my state of West Virginia and the rest
of the country are hearing from numerous critics who urge the defeat of
this agreement. They are correct in saying the GATT is not perfect. But
that argument completely misses the point. With this agreement,
American companies and workers will see barriers to our products come
down. Our industries will have more access to more markets around the
world, and that is essential to creating better jobs for more of our
people. At a time when Americans are understandably frustrated about
stagnating wages, this is precisely when we need to make and sell more
products for export. With this trade accord, it's predicted that real
income for families in the United States will go up by more than
$1,000. That kind of economic progress is what West Virginians and our
fellow Americans are asking their leaders to help bring about.
In considering this trade agreement, we are making a choice.
Defeating it will mean keeping current practices and policies in place,
like the tariffs that shut out American products and the toleration of
foreign companies pirating and copying our inventions, our patents, our
intellectual property. Adopting this agreement, on the other hand, will
make the playing field more accessible, more fair, and more beneficial
for Americans.
The reality of the international market place is something we not
only have to deal with, it is something that Americans must take
advantage of. We do not have a choice about the nature of the
marketplace and the economy that Americans now have to deal with. That
is, unless we want to go back to Smoot-Hawley and effectively close our
markets, which back then deepened the Depression and could cause the
same results now. The world is now America's marketplace and where our
economic destiny and more importantly, our economic opportunities lie.
I did not approach the Uruguay Round as either a doctrinaire free
trader or a die-hard protectionist.
From the beginning, I saw the talks as a chance to win the best
possible deal for America and my state of West Virginia.
From the beginning, I also supported the founding goals of the
Uruguay Round--to open markets; to standardize more of the trading
rules that all 124 participating countries would then pledge to follow;
and to enforce the newly developed or improved rules so together we do
more to deter unfair trade.
Through the seven years of the Uruguay Round talks, our trade
negotiators have pursued these goals. In the broadest sense, the effort
has been about building a more healthy global economy, while charting a
stronger economic future for this country.
But untold numbers of hours and pages have been devoted over these
years to hammering out the nitty-gritty details of our trade laws, and
thinking through the impact of hundreds, if not thousands, of small
changes in those laws.
That's where I have tried to hover over the process, and play a role
in affecting the outcome. I have spent a great deal of time working on
this Agreement, trying to fix what was not coming out well at various
stages of the talks, and fighting for what I saw as essential for the
people of West Virginia and the nation.
And let me be clear, my decision to support this agreement was not a
foregone conclusion. Until our trade negotiators worked out the final,
crucial deals, and until the Congressional committees worked out the
final version of the legislation before us, I was not prepared to sign
on.
My constituents know that I voted against the NAFTA because I did not
think it was in the best interest of the people of West Virginia. As I
said at the time, and still believe today, the idea of effectively
merging the economy of the United States with a country so far behind
us in economic development as Mexico still is, was a threat to the
workers of West Virginia that I was not willing to accept at the time.
I also said at the time, that as Mexico only accounted for 2 percent of
West Virginia's total exports, I was not convinced that passage of the
NAFTA was going to mean much in terms of job creation in West Virginia
either. And the jury is still out on the NAFTA. Perhaps in a few years
we will find that some of the worst fears were unfounded--I certainly
hope so.
But the Uruguay Round of the GATT is not a free trade agreement like
the NAFTA. From West Virginia's perspective, the Uruguay Round is
essentially about establishing rules to ensure trade is conducted more
fairly, with the promise of lower tariffs in countries that represent
the most of our state's export markets. Tariffs act like walls that
prevent American goods and services from being sold in countries as
different in size and development as New Zealand is from Brazil. The
Uruguay Round will lower tariffs and open markets around the world to
West Virginia products. At the same time, it will offer greater
protection for things like intellectual property, which is vital to the
chemical industry, West Virginia's largest manufacturing employer.
The Uruguay Round represents the eighth round of negotiations since
the GATT was formed in 1948 to establish basic principles and
guidelines of world trade. The United States has always been at the
forefront of promoting free and fair trade. The question before the
Senate is essentially whether to update the rules by which countries
across the globe interact economically.
The world has changed in incredible ways since 1948. Communism is no
longer a threat, and new economies across the world are emerging as
important trading partners of the United States. More significantly,
the global economy itself has been transformed in ways our post-World
War II leaders never could have envisioned.
Undreamed advances in transportation, communications, and information
technology has made the global economy a daily and permanent reality.
Simple transactions, like shipping fresh flowers or produce halfway
around the world, are now routine when twenty years ago they were
logistically impossible. Complex transactions that move billions of
dollars or other currencies are completed with a few keystrokes.
Business deals can be negotiated with trading partners on the other
side of town or on the other side of the world via teleconference and
fax.
On a macroeconomic level, globalization and expansion have led to
unprecedented growth and creation of national wealth. But back home on
Main Street, that growth and wealth still hasn't flowed or trickled to
where they make a positive difference in enough lives. What's good for
Wall Street or Dow Jones doesn't always put food directly on the table
back in Moundsville. In fact, for the working men and women of West
Virginia and people across the country who are struggling to pay the
rent and save for their kids' education, they have felt greater
insecurity about their personal economic situation. Globalization has
opened markets all over the world, but it has also exposed our
industries to foreign competition, not all of it fair or market-based.
As a result, our people have benefitted as consumers, but we have not
done as well as producers. West Virginians tell me they are concerned
about their jobs, their ability to build a better life than their
parents, their health and retirement benefits. The opponents of this
trade agreement have tried to stir up these fears, but I think they are
doing the American people a real disservice.
These anxieties are not misplaced, but killing the GATT is no
solution or even an antidote. In fact, it could be more like poison.
The simple truth is that we cannot stop the globalization of our
economy, and, even if we could, I do not believe it would be in our
interest to do so. Export-related jobs are, on average, better paying
jobs, and free trade has always spurred economic growth. Our objective
must be fair trade in this changing world and reality.
That's why I have focused my energy on making changes to those parts
of the law that deal with unfair trading practices that hurt West
Virginia companies and workers. Industries like chemicals, steel, ball
bearings, pipe and tube manufactures, glass and chinaware, and other
traditional industries are particularly vulnerable to unfair trade
practices, and my duty to the people of West Virginia is to see that
opening the trading system does not lead to the sacrifice of American
jobs.
Even before the Uruguay Round negotiations were concluded, I went to
Geneva to fight to preserve U.S. laws that enable our industries and
workers to defend themselves against unfair and market-distorting
foreign competition. I insisted that the Administration seek a trade
agreement that achieves consistent and fair rules among all the
participating countries.
In this process, I worked closely with West Virginia industries on
issues that affect jobs in our state. In my view, the final text is a
much better agreement than the initial draft text, but it was still far
from perfect. It left a number of important questions about how to
implement the Agreement--which are answered in the bill we are
considering today.
Answering those questions has taken a great deal of effort. We faced
opposition from special interest groups that seem to care more about
importing goods from other countries into the United States than
preserving our own domestic industries. In the end, we fended off many
of the worst threats by crafting a reasonable approach that will
ultimately achieve more open and fair trade.
Madam President, following my statement, I would like to insert into
the Record a list of specific issues that I addressed during
consideration of this legislation. Throughout this process, my
priorities were clearly defined by what was important to West Virginia
workers and the companies that compete in the global marketplace,
industries as diverse as steel is from fiber optics.
My list expanded and contracted over the last year. Some smaller
items that I addressed early on were resolved last spring, while others
needed constant attention throughout the summer, such as the work I did
on protecting intellectual property rights and captive production.
Overall, I am very pleased with the progress made. We won some large
victories and some small victories for domestic industry. Overall,
roughly 14 of the 16 items I addressed turned out well. Those are
victories for West Virginia companies and their workers that will help
them compete in the highly predatory realities of the global market
place, and they are solid reasons why this legislation should be
approved.
Overall, we toughened our dumping laws, defined illegal subsidies,
and took measures to improve our trade laws across the board. This is
just about the best trade bill we could have come up with for American
industry and American workers. While it takes steps to promote open
trade, it makes sure that trade is done fairly and in the best interest
of Americans, not foreign special interests.
The GATT agreement will increase trade among the United States and
all of our trading partners, and I believe that West Virginia will
benefit as markets for our exports open and become reliable. That
should translate into more jobs and higher wages for West Virginians.
Overall, it is estimated that trade liberalization resulting from the
Uruguay Round will add $100 to $200 billion to America's GNP within ten
years. And every $1 billion in exports means approximately 20,000
American jobs.
A key, key point is that export-related jobs tend to be higher-paying
jobs. Again, Americans are understandably upset over their stagnating
wages. There are a number of reasons for this, and one is that rising
health care costs have quietly eaten into employers' ability to pay
their workers more.
But there are also a number of areas where we must act to build a
better standard of living for American families, and one key way is to
expand our export markets and sales.
In 1993 alone, West Virginia recorded exports of $754 million, an
increase of almost $100 million since 1987. That figure should grow
considerably. Just a few of the West Virginia industries that the
Commerce Department expects will benefit directly from this trade
agreement are the chemical industry, household glassware and pottery,
and wood products which are all listed as potential ``winners.''
Overall, the chemical industry represents 35 percent of West
Virginia's manufacturing output, and employs 20 percent of the state's
manufacturing workers--16,800 people. Add to this the other industries
in West Virginia that rely on the chemical industry for their inputs,
and we're talking about 127,000 workers in West Virginia who rely at
least in part on a strong chemical industry.
And as I said, in addition to chemicals, the Commerce Department
picks wood products and household glassware and pottery as potential
big GATT winners. Foreign duty reductions of up to 69 percent will
significantly improve access for U.S. household glassware and pottery
products in world markets; this is especially true in Europe, East Asia
and South America. And reductions in our own tariffs will be staged
over a 5- or 10-year period so our companies can adjust.
As to wood products, on average we can expect reductions of about 23
percent. But more importantly, Japan, which is our largest export
market will be reducing their tariffs by an average of 52 percent. And
Europe will be reducing theirs by about 40 percent.
These types of foreign tariff reductions should translate into
greater job security for workers in those fields and in other areas
where West Virginia businesses compete around the world.
In addition, the tariff cuts that will promote access to our market
should be looked at for what they will mean to American consumers--a
tax cut. A tariff on goods coming into the United States, even with our
lower tariff levels, is still essentially a sort of sales tax. We will
be reducing these tariffs--or you could say cutting taxes--by $11
billion over the next 5 years and $20 billion over the subsequent 5
years. The Treasury Department estimates that 80 percent of those
tariff reductions will be received by American consumers and businesses
in the form of lower prices for foreign made consumer goods or
products. This is the kind of progressive tax cut that will benefit
America's working families, unlike a capital gains cut which would
primarily reward wealthy investors.
Now, Madam President, before I conclude, let me also address some of
the concerns surrounding the dispute settlement procedures in the new
World Trade Organization [WTO]. While I have taken the concerns people
have about sovereignty very seriously--I have sworn to uphold the
Constitution and would never support any measure that infringed on that
obligation--in this instance, I agree with Ambassador Kantor that most
of the concerns raised by GATT opponents about sovereignty are
exaggerated. This is one of the areas where I think the agreement's
opponents have really skewed the facts. That does not mean that the
dispute settlement procedures in the WTO are perfect. We can and should
be diligent in making sure that the WTO is fair, and that America's
best interests are served by maintaining membership in the
organization.
It is abundantly clear that the WTO cannot, by itself, change U.S.
law, although it can object to a U.S. law if it does not comply with
internationally agreed upon trade rules, and it can ask us to change
our laws. Only the U.S. Congress can make or change laws in the United
States. To be even more precise, section 102(a)(1) of the legislation
implementing the Uruguay round says:
No provision of any of the Uruguay Round Agreements, nor
the application of any such provision to any person or
circumstance, that is inconsistent with any law of the United
States shall have effect.
This is followed by the additional note that:
Nothing in this Act shall be construed to amend or modify
any law of the United States, including any law relating to
the protection of human, animal, or plant life or health, the
protection of the environment or worker safety, or to limit
any authority conferred under any law of the United States,
including section 301 of the Trade Act of 1974 [this is the
provision which allows us to enforce U.S. rights and
retaliate against unfair trading practices], unless
specifically provided for in this Act.
This legislation could not be more specific about the primacy of U.S.
law. If a WTO panel finds that a U.S. law violates the agreement, then
we can either change our law to comply with the rules, or we can decide
not to. In that case, the country that claims we violated the rules can
impose a trade sanction against the United States. Essentially, this is
the same as the way things work now.
Under the current GATT, the United States wins more cases than it
loses, and considering that we were the driving force behind the
Uruguay round, and the principal shaper of the Agreement, that trend is
expected to continue. However, there are often unintended consequences
to actions taken involving so many entities, and that is why I believe
that the establishment of a Dispute Settlement Review Commission--
worked out between the administration and Senator Dole--is a good idea.
This Commission will consist of five Federal appellate judges appointed
by the President in consultation with Congress. The Commission will
review all final, i.e., adopted, WTO dispute settlement reports where
the final report is adverse to the United States.
If the Commission determines that the WTO overstepped its authority
or ruled in some other sort of arbitrary, unfair manner that infringed
on United States rights or obligations, then we can initially seek a
way to make sure the problem doesn't recur, or if this happens three
times in any 5-year period then we can get out of the WTO altogether.
Again, this agreement is clear on that, all it takes is 6 months notice
for us to get out of the WTO.
Article XV of the Uruguay round agreement says:
Any Member may withdraw from this Agreement. Such
withdrawal shall apply both to this Agreement and the
Multilateral Trade Agreements and shall take effect upon the
expiration of six months from the date on which written
notice of withdrawal is received by the Director-General of
the WTO.
So we are not locked in to the WTO if it doesn't work. We have
established a review mechanism that will oversee the workings of the
WTO, and overall American sovereignty is clearly preserved.
In conclusion, let me say again that I support this bill, not just
because it is good for American businesses--which it certainly is. And
not just because it is good for most Americans--which it is. A very
central reason is my belief that the passage of the Uruguay round is in
the best long-term interest of the people of my State of West Virginia.
The changes that will be made in our trade laws are just about the best
possible outcome for America's industries. Markets that we have sought
for two generations will open up to American and West Virginia
products. Intellectual property rights will finally be protected.
Tariffs, taxes, will come down, and our economy will be given a blast-
off into the next century.
But we can't let our guard down, and we also can't put on blinders.
The world is changing and we have to change with it. The question is
therefore, how do we do that in a way that is in the long-term best
interest of the working people of America? One immediate answer is by
approving this trade agreement and passing the legislation before us.
In the coming years, I also think we have to continue to look at the
whole universe of international trade. What globalization means to the
world, the United States, and more importantly, to the workers of West
Virginia and our nation. How do we provide security at home while the
engine of economic growth vaults forward? And what about the broader
question of ``what is a national economy for''? Is it intended to
create capital? To create wealth? Or can it be looked at as an element
in our social contract guaranteeing a degree of personal security and
economic stability for working Americans?
Those are just some of the questions we must ask and try to answer in
the coming years, but what's before us today is a trade bill. This
won't be the first trade agreement we have passed in this country, and
it certainly won't be the last. It is obviously one of the most
important pieces of legislation we have considered in some time, and I
believe it is in our nation's best interest to pass it. Madam
President, this is not a question of ``should we move forward?'' That
will happen with or without us. It is a question of how do we give some
direction to the way we move forward. That is what passage of the
Uruguay Round of the GATT will mean. It provides a base for us to work
from as the globalization of our economy takes place. It provides rules
and structures to both open the world to our products and make everyone
compete with the same playbook.
With this trade agreement, we have a chance to spur the growth and
economic benefits that can make a real difference in the lives of hard-
working West Virginians and Americans. I feel an obligation to approve
this major step, and hope to see enough of this body reach the same
conclusion.
Madam President, I congratulate this Administration and its
predecessors for investing leadership and hard work into this important
effort on behalf of the United States. Ambassador Kantor and his team
have earned special commendation. Chairman Moynihan proved his
commitment to economic progress by steering the work on the
implementing legislation through the Senate Finance Committee, helped
at a critical stage by Senator Packwood. I also want to single out Ken
Levinson of my own staff, for his talented labors in assisting me to
serve West Virginians and the country's interests in every possible
way.
explanation of specific provisions of the implementing legislation for
the uruguay round trade agreement
issue breakdown
1. Captive Production: This provision was one of my chief efforts to
improve the ability of domestic steel companies to make the case that
dumped imports are harming them.
2. Intellectual Property Rights/Section 337: I authored the provision
in the bill that will make it easier to enforce our intellectual
property rights--patents and trademarks--against infringing imports.
This is important to preserve the effectiveness of our trade laws for
high tech companies like Corning.
3. Fair Comparison: This issue will affect all industries that
compete with dumped imports. It changes the way we measure the cost of
a product in the United States versus the cost of a product in its home
market or another market. There is a lot of detail to this, and the
provision as it came out of the Finance Committee was better than what
made it into the final bill, but if this is done right it should be
``fair'' and effective for all concerned.
4. Duty absorption/Sunset: This partly deals with the problem of
importers who don't pay enough duty because the related foreign company
they buy from covers the cost of the duty--``absorbs'' it--which
offsets the effect of our trade laws. This is not as good as the ``duty
as a cost'' provision, which would have doubled the absorbed duty, but
it is a step in the right direction. The steel industry was very
interested in dealing with absorption of duties by related parties.
5. Circumvention/Diversion: For the first time, this bill addresses
the problem of importers who try to get around our trade laws by
importing a product from a third country. The example everyone uses
would be if Korean televisions were assembled in Mexico to get around
our dumping laws. This provision should help prevent that kind of
abuse.
6. Anti-competitive practices: The bill maintains our ability to use
our leverage to open markets that are closed to our products (Section
301, and Super 301); to battle things like Japanese keiretsus that
unfairly block American products from being sold in Japan. Just this
Fall we cited Japanese practices in auto parts under Section 301. These
are valuable tools for increasing American exports worldwide.
7. Causation: This is another ``small'' provision that could have a
big impact. The Administration agreed with me that dumped imports need
only be A cause of injury to a domestic industry, not the cause of
injury. This makes it much more likely the ITC (International Trade
Commission) will vote to find injury when it exists.
7A. The Administration agreed with me that improvements in the
condition of an industry after posting the initial bonding rate should
not be taken into consideration when making a final determination. This
preserves the intention and integrity of our dumping laws.
8. Standing: We won an important concession when it was agreed that
if a domestic producer opposes a dumping petition brought against a
company that is related to the domestic producer, then their opposition
should not be counted. This is only reasonable. For example, if Sony
USA objects to a dumping case being brought against Sony Japan, their
opposition should not be considered--they're not an objective party.
9. Subsidies: For the first time, international trade laws recognize
that only certain kinds of government assistance are allowed. This is a
huge step. The implementing legislation also ensures our ability to
retaliate against harmful subsidy practices. In the future I hope we
even more strictly limit the ability of foreign governments to
subsidize weak industries. Overall, this is a big step in the right
direction.
10. Negligibility/De minimis: This relates to the question of when
the ITC can add imports from different countries together in order to
decide if the domestic industry has been injured. From our point of
view, the more they add together, the easier it is to find injury--and
the more accurate too. Under the bill, if imports from a country are
less than 3 percent of the market, then they are considered
insignificant, but if you add up negligible imports from a number of
sources and they add up to more than 7 percent, then they are counted.
I advocated this ``bright line'' standard and it made it into the bill.
11. Averaging: This is another tool we have in our dumping laws to
make sure we account for variations in price of imported goods if they
sell for one price in one place, but another price in another place, or
at another time. The way we determine what the price really is, is
vital for determining if it is being undersold in a particular market.
The methodology that the Administration is going to use in
``averaging'' prices is what I advocated.
12. GSP (Generalized System of Preferences): GSP is the program we
have in our trade laws that allows some leniency in our trade laws for
goods from developing countries. Generally, this is a pretty good
program, but they only went half way on one of the changes I wanted in
it: To permanently exempt from this provision import sensitive
commercial chinaware, glass, and glassware. Instead of making the
exemption permanent, they extended exemptions to 3 years instead of
having to apply for them yearly. This is a half victory, and since we
renewed GSP for only 1 year, we can have at it again next year.
13. Suspension of the duty on ODI: In 1993, on behalf of Miles Inc.,
who employ 1,400 people in New Martinsville, I introduced legislation
to eliminate the duty on ODI (Octadecyl Isocyanate), a chemical that is
used to make the sticky surface of Post-It note pads. This was then
included in the legislation implementing the Uruguay round.
Following is a description of two proposals that I opposed and that
were fortunately omitted from the bill:
14. Economies in Transition (EIT): This would have created a real
loophole in our laws that would have made it easier for countries like
Russia to dump goods into the United States. There might be sound
foreign policy reasons for helping the Russian economy, but this
particular program would have hit domestic industries like steel and
other metals particularly hard, because countries like Russia can make
those products cheaply. I fought against this idea, and it didn't make
it into the bill.
15. Short (or No) Supply: This was another attempt by importers to
get around our legitimate trade laws. I fought hard against this, and
I'm pleased that it was soundly defeated.
16. Start-up: When we are trying to decide if an importer is selling
below his cost of production, we have to figure out what his actual
costs are. Part of that is what costs are included in starting a
production line (known as ``start-up''). There are some good things in
this, but I am concerned that ``variable costs''--materials you have to
buy, hourly labor, etc.--are allowed to be included in the calculation
of what are considered legitimate precompetitive costs.
The above might sound like Greek to people who haven't specialized in
trade issues, but for those of us who have worked on the Uruguay round
for years, they are the bread and butter of our trade laws. As I said,
some of these issues take up but a few lines of text in the bill, but
they can make a real difference to an American company that is harmed
by predatory foreign trade practices. Of the 16 issues that I addressed
in the process of negotiating the Uruguay Round and writing this
legislation, 14 of them came out in a way that benefits domestic
industries and their workers in West Virginia and across the United
States.
Mr. PACKWOOD. Madam President, I am shortly going to yield to the
Senator from North Carolina.
When the Senator from West Virginia referred to small companies, I
have the same situation in Oregon. We hear ``multinational,
multinational, multinational'' all the time. One company in Oregon, a
husband and wife and a third person, have invented an insert to use
after a tracheotomy. They have a patent, a worldwide patent, and they
are selling these things all over the world. Three people.
Another company, which I doubt has a score of employees at the
outside, has found a process for freezing baked potatoes after they are
baked, and they are selling them all over the world. These are
individual entrepreneurs who have found a niche and they found that the
world is ready for them, assuming there is an opportunity.
I yield 15 minutes to the Senator from North Carolina.
Mr. HELMS. I thank the Chair and the distinguished Senator from
Oregon.
Madam President, I think it was exactly 22 days ago that the American
people went to the polls and voted for less government, lower taxes,
and an end to backroom deals. Clearly, the American people were
demanding--and they are entitled to it--fundamental changes in
Washington.
Here we are 3 weeks and 1 day later, and what is the Senate's
response? It is business as usual, with a lame duck Congress preparing
to approve a treaty that is not being considered as a treaty, with
legislative language that pitifully few Senators have even bothered to
or had time to read. As a matter of fact, Senator Hank Brown of
Colorado is one of the few to step forward and announce that he had
indeed read the entire agreement.
Several of us asked the President to delay the vote on the GATT trade
agreement until early next year, like the middle of January, so that it
could be carefully considered by the new Congress. The vote on this
GATT agreement should be delayed, but it will not be, obviously.
Madam President, we have a 22,000-page world trade agreement --a
treaty, if you please--poised on a so-called ``legislative fast track''
with only 20 hours of debate allowed, with no amendments in order and
motions in order. This raises several legitimate questions like: What
is the President afraid of? What is it in this agreement that could not
withstand just a little bit of sunlight? The hearings in the Foreign
Relations Committee lasted 3 or 4 hours. The number of witnesses was
limited. What is the necessity of pushing this trade agreement despite
the will of the people?
I have in hand a Yankelovich poll of yesterday, and this pollster is
widely respected. Sometimes he comes forth with findings that I do not
agree with, and sometimes it is the other way. But yesterday his poll
showed that by large margins the American people oppose the General
Agreement on Tariffs and Trade. Most Americans surveyed think that the
current lame duck Congress should not vote on GATT. They oppose waiving
the Senate budget rules to approve GATT, and they think that GATT
should not be able to override the U.S. laws. By a 5 to 1 margin,
Republicans think that it is inappropriate for the lame duck Congress
to vote on GATT.
The Yankelovich pollsters contacted 1,000 American adults and found
that 63 percent of Americans want the next Congress, the 104th Congress
to vote on GATT--not this lame duck Congress that is meeting today.
Furthermore, 67 percent of Americans think that the U.S. Senate should
not waive its budget rules to pass the GATT; 57 percent of Americans
think that GATT will bring about a loss of American jobs; 51 percent of
Americans indicated opposition to GATT, with only 33 percent in favor
of it.
Madam President, this proposed World Trade Organization that is
created is being called by many Americans ``the United Nations of world
trade without a veto for the United States.'' Madam President, all of
us want to expand world trade and eliminate foreign trade barriers.
But, speaking for myself, I am for world trade all right, but I am flat
out against world government.
And I believe this is what we are marching toward, and I believe that
the vast majority of Americans feel the same way about it.
Madam President, it is a fact that this agreement will add billions
of dollars to the Federal deficit. The Senate is about to ignore the
law, to ignore the Constitution, to ignore the budget rules and vote to
increase the deficit. That is not an appropriate thing for the Senate
to do.
I commend the able Senator from West Virginia, Senator Robert C.
Byrd, the President pro tempore of the Senate, for his decision to
raise a point of order.
I had the honor of serving with another remarkable Senator, a great
constitutional scholar, named Sam Ervin. One of Senator Ervin's
greatest apprehensions was the danger that international agreements so
often pose to the national sovereignty of the United States. Senator
Ervin used to say the United States has never lost a war nor won a
treaty, but that was before American military forces were sent to
Vietnam to fight a war that they were not allowed to win.
In any case, this new trade agreement should have been submitted to
the Senate as a treaty and considered as a treaty under the
Constitution of the United States.
The United States joined the United Nations by treaty. The United
States joined NATO by treaty. The Congressional Research Service
concluded that pursuing the position that treaties and Executive
agreements are ``interchangeable'' could result in ``reading out of the
Constitution the treaty process'' entirely, and that is a quote from
the Congressional Research Service.
Madam President, I reiterate that very few Senators have even glanced
at this trade agreement, let alone read it, let alone studied its
implications. As I said earlier, Senator Hank Brown of Colorado did,
and he expressed astonishment at what he found. The able Senator from
Colorado concluded that he could not vote for this GATT agreement.
Small wonder, because under the World Trade Organization, the United
States has precisely one vote out of 123. And since the United States
will have only one vote, it is a certainty that the United States will
be outvoted by Third World countries, just as is the case in the United
Nations where 83 countries vote regularly against the United States.
The United States is likely to be outvoted by such countries as Uganda,
Ghana, Chad, Zimbabwe, Cameroon, Bangladesh, Cyprus, the Maldives, and
others.
Madam President, in the United Nations, the United States does have
veto power in the United Nations, but the United States will not have
it under this agreement.
Madam President, the American taxpayers, once again, will fund an
international bureaucracy that is in no way accountable to the American
taxpayer. It is a bureaucracy that will grow and grow and grow just as
other bureaucracies of international character have grown and grown and
grown. Just consider, for example, the World Bank. In 1951 it employed
400 people. In 1994, the World Bank bureaucracy exceeded 6,300 people.
Once again, let me emphasize that the United States will no longer be
able to veto bad decisions from this international agency, the WTO. If
we can use the WTO against Japan and France to cut down their laws,
foreign countries can use it to cut down United States laws. We cannot
have it both ways. Either it works or it does not.
Finally, Madam President, this agreement will harm workers in many
small businesses in North Carolina and indeed throughout the country.
Apparel and textile employees will be particularly hard hit. There is
no way that U.S. workers can compete with Communist Chinese slave labor
or with child labor anywhere in the world, especially in the Third
World countries, who are paid 50 cents an hour for their labor.
I think the Senate should support the point of order and postpone
consideration of this agreement until early next year and let the next
Congress, not this lame duck Congress, do the job of examining it
carefully. And by all means there should be separate votes in any case
on the World Trade Organization itself. There ought to be two issues,
the agreement and the World Trade Organization.
I thank the Senator for yielding to me, and I yield the floor.
The PRESIDING OFFICER (Mr. Wellstone). Who yields time?
Mr. HOLLINGS. Mr. President, I yield 20 minutes to the distinguished
Senator from Montana.
The PRESIDING OFFICER. The Senator from Montana is recognized.
Mr. BAUCUS. Mr. President, I thank the distinguished Senator from
South Carolina.
Mr. President, I rise, with great regret, in opposition to this bill,
and I will explain why.
When we opened the Uruguay round in the fall of 1986, we Americans
hoped to bring trade in services and farm products under the GATT, cut
agricultural export subsidies, require GATT members to protect
intellectual property rights, continue cutting tariffs and opening
markets on a fair, reciprocal basis, and approve dispute settlement
while protecting American interests, particularly our rights as
American citizens.
Those were ambitious goals, the right goals, and the Uruguay round, I
think, is an agreement which, although all of us worked for and
although it meets many of those goals, it does not meet enough of them
and we should not vote for it today.
I believe that we have not met the last and most important goal, that
is, preserving U.S. sovereignty, and we are not assuring that the
middle-income American receives enough of the benefits that the large
companies under this agreement themselves will reap.
That is why I cannot support this. And I urge the Senate to reject it
today, come back next spring after we have negotiated with other
countries--we have been on this, after all, for 8 years; a few more
months is not going to make a big difference--and address these
fundamental problems and solve them.
I believe the World Trade Organization this bill creates has two
problems. I do not think it makes sense to give the United States, the
world's largest economy, the largest importer and the largest exporter,
no more voice in major WTO decisions than any other country. It just
does not stack up. It is unfair. It is wrong.
I also fear that the dispute settlement process threatens one of the
most important rights of citizens, that is, the right to due process in
American courts.
Let me begin with the positive. The United States is already the top
exporting country in the world, exporting $464 billion in goods and
$180 billion in services last year. Together, our exports of
manufactured goods and farm products support 9.3 million jobs, one job
in every 12 across the country.
We are also the world's most open economy.
So here, as in every one of our other trade agreements, we reduce our
barriers by less than other countries reduce theirs.
The Uruguay round cuts tariffs by an average of 33 percent around the
world. That means America cuts tariffs 1\1/2\ cents on the dollar. The
foreign countries, on the average, cut by 4 cents on the dollar and
Japan cuts 2\1/2\ cents and Europe about the same, India 15 cents, and
Brazil 11\1/2\ cents, and so on around the world.
Then consider intellectual property--the copyrights, patents and
trademarks which make our artists and inventors get the benefit of
their creative work. Today we Americans lose tens of billions of
dollars to intellectual property piracy. We suffer because not just a
few but dozens of countries let individuals, companies, and mafia
organizations skip the creative work of writing a book, recording a
song, shooting a film or writing software and avoid expensive research
and development and essentially rip us off.
Under this agreement, they will adopt our high intellectual property
standards and because of that we will be better able than ever before
to fight pirates and rip off artists around the world.
Then take agriculture. Europe will cut export subsidies by 21
percent. That should open wheat and barley markets around the world to
American farmers, and by binding tariffs, this agreement blocks others
from discriminating against us.
China, for example, retaliated for a textile dispute in 1985 by
refusing to buy Montana wheat. When China eventually joins the GATT,
that will stop for good.
Equally important is something this agreement does not do. It does
not weaken our domestic trade lawsuits. We preserve our right to use
Section 301 antidumping and countervailing duty laws and keep fighting
theft of intellectual property through Special 301.
And we update our laws to cover such critical issues as exclusive
Japanese business practices. So the economics, in terms of overall
total GDP, may be on the side of the bill. It will increase total
aggregate GDP in this country and other countries around the world. But
there is a deeper, more fundamental issue involved.
No trade agreement, no matter how good a deal it is, is worth
sacrificing our basic rights as American citizens. I am afraid the new
World Trade Organization this bill creates will do just that. And that
risk is too great. And that is why I will vote against this bill.
I must say, Mr. President, this is not an easy decision. I have
supported fast track legislation on the last major trade bill. I
supported the Canadian Free Trade Agreement and I supported NAFTA
because I thought they were good for America.
Mr. President, for 8 years I supported the Uruguay round with
confidence that the changes in dispute settlement would not intrude
upon our fundamental rights. But an event just 3 months ago shook that
confidence. I will not go into great detail, but essentially we reached
agreement with Canada during the CFTA negotiations to settle subsidy
disputes through our countervailing duty laws with dispute panels
available to Canada only to make sure the laws were properly used.
Although I received assurances from constitutional lawyers, trade
experts, the Reagan administration, and everybody else that the
Canadian dispute settlement panels would work strictly in accord with
American, the fact is, that is not what happened. Our members on the
panel played fair. The Canadian members did not play fair.
Here is a statement of Judge Malcolm Wilkey, a U.S. panelist, who
said:
The panel started, of course, by giving us the litany of
standard review of administrative agency action as enunciated
in the United States law, all thoroughly familiar. The panel
then proceeded to violate almost every one of those canons of
review of agency action.
Why? Because we played fair and the Canadian members did not play
fair. It is a system that is flawed.
What about the WTO? Will that be any better? I have tried to persuade
myself that the problem that occurred with Canada cannot happen with
the WTO. I debated the issue with my staff, with experts and friends. I
studied this with great care. The problem is, the more I have studied
it, the more my worries grew, the more problems I had, and the more I
reached the conclusion that not only these kinds of problems but
probably many more problems will occur under WTO.
It has been mentioned often that WTO provides that we will not be
able to veto any of the panel's decisions. Presently, we can. And that
is why we have not worried too much about the membership of the present
GATT.
Currently, each country in the GATT gets one vote. We have not
worried about that standard because any country could veto an
egregious, unfair decision by a GATT panel.
Now, the laws have changed. The stakes are much higher. And that is
why it is so important that we look much more closely at the
composition, the standards of review, the selection process, and the
procedures under this new WTO. This body has not done that. And I
submit the more one looks at it, the more one sees flaws.
Mr. President, it is outrageous. The United States of America has one
vote and every other country also has one vote. It is an outrage.
Nobody, and I say nobody, can stand here on the Senate floor and defend
that. Nobody. Nobody.
What about the World Bank? The World Bank vote is weighted according
to the size of the country, as it should be. What about the
International Monetary Fund? It, too, its composition, its voting
powers are weighted according to the size of the country, as it should
be.
What about the United Nations? Sure, we have a General Assembly, but
we also have a Security Council. That is fair. That is the way it
should be.
This agreement does not do that. This agreement is totally contrary
to the basic precepts of American civil process. We should go back to
the drawing board and make some changes. It is clear other countries
want this agreement. It is clear the United States wants this
agreement. And we know, Mr. President, where people want an agreement,
they can find a way to reach an agreement. There are a lot of ways to
skin a cat. We can get this done.
I hear all of these horror stories that if this is not approved, the
world is going to come to an end, a cataclysmic response, Smoot-Hawley.
You hear all these horror stories.
Mr. President, it is all baloney. It is untrue. What is going to
happen if we reject this? Do you know what is going to happen? Big
headlines in the paper, big stories on the evening news. How long is
that going to last? Maybe a day, maybe 2. A lot of scrambling around.
We want to address the trends in trade in this world. Other countries
want to address the trends in trade in the world. We will find a way, a
more realistic way that more realistically reflects the powers and the
strengths of countries to get a better solution. That is what is going
to happen.
Overall, we have been working on this thing for 8 years--8 full
years. This agreement does not have to go into effect until July. What
is wrong with going back and renegotiating for a few more months? I ask
you, what is wrong with that? Nothing. Nothing is wrong with trying to
get a little bit better agreement. Not because we are trying to achieve
perfection; but because we are trying to do what is right.
There is one other point, Mr. President. I heard a lot of comments on
the floor of this body today saying, well, gee, the world has become
more global, with faxes and modems and computers and program trading
and advances in technology. We have to get with it. We have to adopt
this because if we do not, the world is going to pass us by.
That is not true. It is true the world is changing. The world is
changing dramatically. Different people, different organizations,
different countries are doing different deals within the country and
around the world. Capital travels at the speed of light. It does not
respect national boundaries. Investors go to where they can get the
greatest investment.
That is what is happening. The world is incredibly competitive. As a
result, it is not only American companies, it is not only Japanese
companies, it is not only European companies, it is other countries'
companies that are downsizing. They are laying people off. In many
respects, they have to become ``more efficient,'' to be more
technological. That is happening. And it is going to happen with or
without a trade agreement.
But what else is happening? What is happening is the major companies,
those in position to take advantage of this new world order, are
getting the benefits. That is fine. They should get benefits. I
strongly believe in competition. I strongly believe someone should go
out and try to make a better product more efficient. That is fine.
But what also is happening? The average middle-income American is not
getting in on the deal. He is not getting the benefits.
We have to find a way, Mr. President, when we pass trade agreements,
that not only the companies--and they should get higher profits, their
officers should get higher incomes--but the working stiff, the guy who
is working in the plant, the average middle-income American, sees his
income increase. And we all know, according to statistics, the exact
opposite has happened. As trade has increased, as GDP has increased as
a consequence of trade, average middle-income Americans have seen their
incomes decline.
I am not standing up here and saying it is an exact quid pro quo. I
am not standing up here and saying this is an exact correlation and
totally causal. I am not saying that. But I am saying there is some
cause, some relation; there is something going on here that we
Americans, as we pass this big trade agreement, are not dealing with.
I have been over to Geneva. I have been to Brussels. I have been part
of these trade negotiations. Who is there? It is the major companies,
the multinational companies. The big economists and the big bankers.
That is fine. They should be trying to do a better job for themselves.
But who is not there? Who is not there is the average middle-income
American, the average middle-income Montanan, West Virginian,
Oregonian. They are not there and they are not being represented and
they are not part of these agreements.
Mr. President, I have what I call workdays. One day a month I work at
some job in Montana. I show up at 8 in the morning with my sack lunch.
I am there to work. Not to watch but to work. I have worked in saw
mills, worked in mines, waited tables, hospitals, helped Alzheimer's
patients, day care centers, Meals On Wheels--I love it. It is great.
And I tease people at home by saying one day a month I do an honest
day's work. It is very educational.
My workday a few weeks ago, just preceding the election, was in
Lewistown, MT. I worked in a bottling plant. It is called Big Springs
Bottling Plant. They bottle spring water. I worked all day there
putting bottles on assembly lines and I was working with a forklift
operator. His name was Rick.
Rick turned to me and said, ``Max, my father said anybody who carries
a lunch bucket ought to vote Democratic. But I don't vote Democratic
anymore.''
I said, ``Why?''
He said, ``I don't know, it just seems to me''--and he is a typical
fork lift operator, in his fifties, has a mustache; typical American,
typical Montanan. He says, ``I don't know, it just seems to me that
Democrats kind of have forgotten people like me. They have forgotten
the average guy. They are more concerned about gays in the military,
about foreign aid, about welfare,'' and he probably could have said
about these trade agreements. That is, benefits for other people--the
wealthiest people, or some of the most unfortunate people--but not
enough about him.
I say that passage of this agreement today as it stands now with its
current provisions is another example of--I do not say Democrats, I do
not say Republicans, I am just saying all of us, who represent the
average American--forgetting Rick again. But saying no to this
agreement is saying we can make it better, to better reflect what he is
grappling with, what he is trying to cope with, where his rights are
better protected as an American citizen. Figuring out some way to get
more of the benefits to the average middle-income American is something
I think he would like us to do.
I have said many times it is a hard thing for me to do because I
generally support trade agreements. But I am also saying just because
somebody supports a trade agreement does not mean all trade agreements
are good. There is a lot that is good in this agreement. But there is a
lot that is not good. I am not trying to achieve perfection. Perfection
can be the enemy of the good. But I am saying that the WTO dispute
system is set up in a way that is not fair to Americans. I am also
saying we have an obligation as Members of this Senate to try to find a
way, a better way to make sure more benefits go to average middle-
income Americans.
I have been struck by the debate here this afternoon. But the major
point I think has not been engaged. It is like two ships passing in the
night. More free trade may be better for America, but we should better
help the little guy. We should spend more time trying to figure out how
the benefits of trade agreements get down to the average middle-income
American.
With that, Mr. President, I yield the floor and thank the Senator
from South Carolina.
Mr. HOLLINGS. I thank the distinguished Senator from Montana. It is a
very understanding statement. As the chairman of our trade subcommittee
of finance, it is a very, very significant statement.
It is my colleague's turn?
Mr. BREAUX. If the Senator wants to alternate, if that is all right,
I inquire of the Senator from Virginia how much time does he wish?
Mr. ROBB. I would say to the Senator from Louisiana, about 10 to 12
minutes max.
Mr. BREAUX. I yield whatever time he may consume to the Senator from
Virginia.
The PRESIDING OFFICER. The Senator from Virginia is recognized.
Mr. ROBB. Mr. President, I thank you and I thank the Senator from
Louisiana for yielding time.
Mr. President, in a perfect world there would be no tariffs or
restrictions on trade whatsoever--and foreign governments would not
subsidize their domestic industries to give them an unfair advantage on
price competition. GATT does not bring us a perfect world, but it does
move us in the right direction.
GATT combats protectionism abroad and spurns it at home. Rejecting
the most comprehensive trade accord in history would tell Americans
that we could not cope with change and that we did not have confidence
in America's ability to compete in a world economy. I think that is
precisely the wrong message to be sending, and it reminds me of dark
days in America over 60 years ago.'
Mr. President, there was a time in our history when we made the
mistake of looking inward, isolating ourselves from the world, and
ignoring what the global economy had to offer. Republican Herbert
Hoover was President and the 1930 Smoot-Hawely Tariff Act was the law
of the land. In his economics primer, Nobel Economic Laureate Paul
Samuelson notes that ``economists--who are supposed to agree on almost
nothing--were unanimously opposed to the extreme tariff rate in the
Smoot-Hawely Act.''
Mr. President, Senator Smoot and Representative Hawley had it wrong
then--supporting a wall of tariffs around America--and we should have
the wisdom not to repeat those mistakes. This country should lead the
world economy by example. Free, unencumbered trade is in our interest.
Tariffs impede U.S. economic growth, reduce our standard of living, and
prevent our job base from growing.
GATT reduces the tariffs other countries impose on U.S. manufactured
goods and services and it will reduce the cost to U.S. consumers of
goods manufactured abroad--and in so doing will create an estimated
500,000 jobs over a 10 year period, while increasing America's income
by an average of about $1,700 per family. GATT's fundamental
accomplishment is basic and real: It provides Americans new economic
opportunity, a vital chance to improve their livelihoods, and new
horizons abroad to build something from nothing.
In particular, Virginia businesses large and small have demonstrated
their ability to compete in the far corners of the globe, and our
overall trade policy, it seems to me, should reflect an effort to
assist, not inhibit, U.S. exporters. These companies are seeking
greater market access, lower tariffs, and less foreign government
intervention abroad. GATT makes breakthroughs in all three areas.
Mr. President, Virginia companies are increasingly dependent on
export markets abroad. The Commonwealth of Virginia recorded
merchandise exports in 1993 of $8.2 billion, a 160 percent jump
achieved over just the last 6 years. Virginians stand to make
tremendous economic gains from GATT given tariff elimination on paper
products and reductions on furniture and wood products by the European
Community, which is the State's largest export market. The same goes
for Virginia produced industrial machinery, tobacco, electronic
equipment, renewable energy technology, fish and fish products,
chemical products, and high technology exports. Virginia is ready to
seize additional market share abroad, and GATT serves as the linchpin
for easing if not eliminating outright foreign protectionist barriers.
Mr. President, the effect on one Virginia industry perhaps
crystallizes the debate over GATT better than any other. Our
Commonwealth exported $856 million in transportation equipment in 1993,
second only to tobacco in net dollar terms. As a result of the Uruguay
Round, tariffs on transportation equipment will be reduced anywhere
from 40 percent to 80 percent worldwide.
Virginia companies and Virginia workers stand to benefit from GATT
immediately. Amadas Industries, based on Suffolk, employs 160
Virginians to build peanut harvesting machinery and other kinds of
agricultural equipment. It estimates that GATT will pump exports as
much as 50 percent in the next 3 to 5 years, particularly to Asia and
South America. The Marine Development Corporation in Mechanicsville,
the Sonix company in Springfield, the Hampton Roads Maritime
Association and the Mobil Oil corporation join dozens of other
industries, companies, organizations, and people in Virginia rallying
for GATT. And I hear their voices loud and clear.
But are there elements of the agreement we ought to be concerned
about? Absolutely. 22,500 pages of new trade rules do not come without
problems. A range of opposition voices has observed that this trade
deal vests far too much power in the World Trade Organization, which
will have the authority to dole out penalties for trade violating
nations through a complicated system of panel adjudication.
Under the WTO, the three nation member panels that will hear and
judge trade complaints from one nation about another will meet in
secret. Hypothetically, the panel could rule against the United States
in a particular case, and only a limited appeal could be made to the
broader GATT membership. Failing at that level, the United States would
have no choice but to change the policy, regulation or law in effect or
else the nation initiating the trade complain could return to the GATT
membership to invoke appropriate penalties.
Given these arguments, I will support legislation next year that
establishes a WTO Dispute Settlement Review Commission consisting of
five appellate judges who will, according to the Administration,
``review all final WTO dispute settlement reports adverse to the United
States.'' Acting as a fail-safe mechanism, the Commission's judgments
could signal Congress to initiate a procedure allowing the U.S. to exit
the WTO in short order.
The Administration has worked hard to resolve other problems as well.
For example, provisions in the legislation relate to an auction of
spectrum for personal communications systems. Three pioneers in the PCS
industry have been awarded licenses to encourage their participation in
this innovative environment. Originally, these companies were slated to
receive the licenses for free. But while we should encourage innovation
and improved technology, we should not do so at an unreasonable expense
to the American taxpayer. The compromise rewards the innovation of
these companies by allowing them to purchase spectrum at 85 percent of
market value. The agreement reflects a reasonable balance between
stimulating advances in technology while ensuring that taxpayers are
fairly compensated. The resolution of this matter in the legislation
will make PCS services available for the first time in Virginia, giving
our consumers greater choice and lower prices in purchasing wireless
services.
But should these limited arguments about GATT, particularly the ones
about circumscribing sovereignty, cause us to reject the whole package?
Not at all, Mr. President. In fact, we would be foregoing a $750
billion global tax cut by voting GATT down, as well as causing a
significant blow to our leadership in the world today.
Finally, Mr. President, as we move to adjust to the international
economic order through GATT, we have a responsibility to assist those
Americans currently working in industries that are unable to meet the
competition abroad. They deserve our support through retraining
assistance and other means as they face a transition from one job to
another.
Mr. President, I will conclude by quoting from a November 22
editorial from the Roanoke Times & World News which paints a
discouraging picture of a world without GATT that I happen to share:
``If GATT goes down, so will stock in America as a leader in
liberalizing trade rules. If international support for the agreement
collapses, protectionism would surge, commerce would contract, and the
likelihood of trade wars would loom large. Congress should approve GATT
on its merits, and for the good of the country.''
Mr. President, I will vote for the GATT implementing legislation, and
I will vote to waive the budget point of order.
I thank the Chair, I thank the Senator from Louisiana, and I yield
the floor.
Mr. HEFLIN addressed the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. HOLLINGS. Mr. President, I yield 20 minutes to the distinguished
Senator from Alabama.
The PRESIDING OFFICER. The Senator from Alabama is recognized.
Mr. HEFLIN. Mr. President, I ask unanimous consent that at the
conclusion of my remarks, there be printed in the Record a letter from
Carol E. Johnson of Madison, AL. I think that she has written me a very
excellent letter pertaining to the GATT. I do not agree with all of the
statements that she makes in regard to the letter, but I think overall
it is one of the best documents that I have seen pertaining to GATT and
I ask that it be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. HEFLIN. Mr. President, I also ask unanimous consent that at the
conclusion of my remarks there be printed in the Record an article by
Anna Quindlen, who is a columnist for the New York Times, which is
entitled ``Out of the Hands of Babes.'' I ask that it be printed in the
Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 2.)
Mr. HEFLIN. Mr. President, the fundamental question we must answer
with this historic vote is: Will the best interests of the United
States and our citizens be served by joining GATT and the World Trade
Organization? When we clear away all the politics and pontification,
facts and figures, television ads and radio sound bites, pros and cons,
does this agreement result in a net win or net loss for the American
people?
In my judgment, passage of the Uruguay round will ultimately result
in a new loss for America, and should not be approved until significant
changes are made. Despite the fast-track authorization, we shouldn't be
forced to hurry this massive agreement through a lame duck session with
inadequate consideration, deliberation, or debate. Most importantly,
this agreement should not be approved for the sake and appearance of
free trade at all costs. I fear GATT will lead to a ``hocus-pocus trade
trap'' that will be difficult to escape.
At a time when we are finally beginning to deal with our massive
budget deficits, it would be unwise to put our stamp of approval on an
agreement that even its supporters say will increase the deficit in the
short-term. Reduced tariffs will necessarily result in a loss of
revenue, not all of which is offset by the GATT implementing
legislation.
Arguments that GATT's passage will increase revenues and reduce
deficits remind me of the same arguments that were made regarding
supply-side tax cuts in 1981, when income taxes were reduced
approximately 30 percent over a 3-year period. Instead, we saw our
deficits soar.
I was strongly opposed to NAFTA because it would create relocation
incentives which would cause severe job losses in this country,
particularly in labor-intensive manufacturing industries. The major
relocation incentive is cheap labor. GATT will allow products to come
into this country from low-wage paying countries--6 to 10 times lower
than American wages. It will be difficult, if not impossible, for such
labor-intensive manufacturing firms to compete with Mexican- or Asian-
made products. This means that more and more American industries will
move to Mexico or to other low-wage countries. Let me illustrate with a
specific labor-intensive industry that provides a tremendous number of
jobs in the United States, particularly in the Southeast. I'm talking
about the textile and wearing apparel industries.
GATT does away with multifiber arrangements, which are the sets of
international agreements that have regulated the textile and apparel
trade for the last 30 years. Cheaper labor caused the relocation of the
wearing apparel industry from New England and New York to the Southeast
several decades ago. Now, with the phase out of the multifiber
agreements, we will see an exodus of these jobs to nearby countries
like Mexico. The resulting competition from abroad under GATT will
provide a powerful additional incentive to relocate.
In Alabama, there are over 100,000 jobs in the textile industry,
which make up approximately 35 to 40 percent of all its manufacturing
jobs. Most of these jobs are in the cut and sew wearing apparel
operations. Recently, I went to an area of my State hit by severe
unemployment and visited a sewing company whose employees were almost
entirely women. Their wages were based on an incentive basis--a piece
basis--but they were relatively substantial. These are the kind of
hard-working people who will be hurt by companies such as this
relocating to take advantage of lower wages and standards elsewhere.
What nation has had the best trade policy with respect to its
citizens over the last 30 years? If we stop and think the obvious
answer is Japan. And what has been its policy? Japan has taken care of
certain industries, and should serve as an example of a country that
has prospered through its trade policies. We can and should operate
according to free-trade principles, but this should not preclude us
from adopting certain needed protection measures that would be helpful
to our economic well-being as we look to the 21st century. I believe
the United States would have a much better trade policy if we followed
many of Japan's historic practices.
Moreover, we will not be able to eliminate some of the most
adversarial trade practices through the GATT system. The nontariff
barriers they use, the extended financing possible in the cartels of
Japan, China, and Europe will not be eliminated under mechanisms
provided by WTO.
I was in England a couple of years ago, where I met with the Minister
at that time who formulated economic policy, Mr. Lamont. He had just
announced the day before that he was lowering interest rates. He had
also called for a 40-percent income tax depreciation deduction in the
first year for all new equipment and buildings. It was, basically,
similar to our investment tax credit.
I went on to ask Mr. Lamont if that would not spur England's economy,
since it was comparable to a 12- to 15- percent investment tax credit
in the United States. I was surprised when he replied that the
reduction would not have much effect since England had ceased to be a
manufacturing country, with only 15 percent of its jobs in the
manufacturing sector. Many members of the European common market have
lost their manufacturing jobs to low-wage countries. Look at the
unemployment rates of the major European nations: The average
unemployment rate is in the neighborhood of 11 to 16 percent.
I opposed NAFTA because I was convinced that labor-intensive
industries would move to Mexico, where there are many incentives to
relocate, such as an extremely low-minimum wage, few OSHA standards,
practically no workman's compensation programs, weak unemployment
compensation programs, and lax clean air regulations. Under GATT,
another relocation incentive will be added due to the increased
competition in the textile and wearing apparel industries from Pacific
Rim countries like Malaysia, Taiwan, and Hong Kong who will be able to
sell in United States markets. To remain competitive, our companies
will be forced to go to Mexico or other low-wage countries. Many will
relocate, and jobs will be lost. GATT will be like rubbing salt into
the wounds already suffered by American workers from NAFTA's passage.
The Uruguay round establishes a powerful new bureaucracy in Geneva,
Switzerland known as the World Trade Organization [WTO], one of whose
functions will be to adjudicate trade disputes between member nations
who are signatories to the new world trading pact. The provisions of
GATT notwithstanding, I have come to the conclusion that the WTO is not
in the best sovereign interests of the United States or its citizens.
The WTO will operate much like the United Nations, except it will do
so in the area of international trade. It will have the power to
establish, administer, and enforce global trade rules and will be
governed by a ministerial conference, where each nation will have only
one vote.
Approximately 124 nations could belong to the WTO, and my research
reveals that it will be dominated by less-developed nations, much like
the U.N. General Assembly is heavily weighted toward such countries.
Under the new WTO, each nation, no matter how large or small, will have
one vote. The WTO agreement does not have a weighted voting arrangement
based on a country's financial contribution to the organization.
Conspicuously absent is the ability of any nation to cast a veto
vote, which is distinctly different from the parallel situation at the
United Nations where the security council provides a forum for a veto
vote. This ``one vote per country/no veto'' policy will clearly put the
United States at a voting disadvantage in the ministerial conference,
which is analogous to the U.N. General Assembly.
When a country finds itself in a dispute with another WTO member, a
dispute settlement body [DCB] will administer all dispute proceedings
including establishing panels which hear disputes, adopting panel and
appellate decisions, monitoring the implementation of these decisions,
and authorizing retaliatory measures. The panels, which hear initial
disputes, will consist of three or five citizens of nondisputing
countries and appeals panels will consist of seven citizens of
nondisputing countries. The decisions of these panelists can be
rejected by the disputing parties only for compelling reasons which is
a term not well-defined under this GATT Agreement.
Where a panel makes a finding that a country's laws or regulations--
Federal or State, as the case might be--are inconsistent with the GATT
Agreement, the panel will recommend that the losing party ``bring the
measure into conformity with that agreement.'' A losing party cannot
veto a panel decision as it currently can under existing GATT
procedures.
A party which loses a decision can choose to ignore it, but the WTO
could impose fines or allow the winning party to retaliate. There is no
question in my mind, if the United States were to lose a decision,
there would be great pressure on our country to bring a violative law
or regulation into compliance with our obligations under GATT.
It is true that panel decisions will have no direct legal effect on
Federal or State laws and regulations--only Congress and the executive
branch can change laws and regulations. However, the decisions of these
foreign panels will, if we are on the losing side, have an indirect
effect on our sovereign laws and regulations. Whether direct or
indirect the ultimate result is the same.
In reviewing the agreement which establishes the WTO, I looked at the
``miscellaneous provisions'' section and found the following language:
``Each member shall ensure the conformity of its laws, regulations and
administrative procedures with its obligation as provided in the
annexed agreements.''
Thus, by joining the WTO, the United States under this provision
agrees to change its laws, regulations, and administrative procedures
to conform to the obligations of the new trading agreement. It is the
WTO who will give the final say as to whether these obligations have
been met.
Does the cumulative effect of the dispute settlement procedures of
the WTO have, at the least, ``de minimus'' implications on U.S.
sovereignty? I think the short answer is ``yes.'' Remember, if a WTO
panel or appellate body decision goes against the United States, the
United States could decide to ignore a panel decision. However, the WTO
could then impose fines or allow the aggrieved party to retaliate
against the United States. Under current GATT policy, this cannot
happen. This new arrangement could infringe on sovereign U.S.
interests.
There is no doubt in my mind that at the ministerial level, the ``one
vote per nation'' rule will substantially increase power among the
smaller, less-developed nations. Over 18 member nations with
populations of less than 1 million people will have the same weighted
vote as the United States, Canada, Germany, Japan, and the other major
trading partners. It should be pointed out that developing nations will
constitute 83 percent of the votes of the WTO. Further, each nation of
the European Union will have one vote, and history has shown that trade
relations with our European allies have not always been smooth.
GATT will also put State laws at risk. If a State law is successfully
challenged by a member nation, the United States cannot simply veto the
adverse ruling as it has done in the past. Under the new GATT rules,
the executive branch must force the State to change or repeal its
offending law or the United States will be subject to economic
sanctions. True, this GATT cannot make us change our laws if we don't
choose to, but the penalty for ignoring an adverse ruling could be very
expensive. That is the point of the sanctions provision. It is intended
to make it too expensive for us to ignore an adverse ruling.
The deck is stacked against the United States in light of the fact
that we will have no veto power in the ministerial conference should
the Third World or the European Union choose to try and kick us around
in the World Trade Organization. We can no longer veto a panel decision
in a trade dispute proceeding further eroding our sovereign interests.
Article XI will also allow the lesser developed nations to exempt
themselves from many market-opening requirements due to their status.
Article XI states as follows: ``The least developed countries
recognized as such by the United Nations will only be required to
undertake commitments and concessions to the extent consistent with
their individual development, financial, and trade needs or their
administrative and institutional capabilities.'' This is a loophole of
monumental proportions for developing nations that will put us at a
huge disadvantage in terms of trade.
Another issue which has been raised in connection to the WTO is
whether joining might force the United States to lower standards
adopted by the Federal and State governments in their consumer,
environmental, and work safety laws. Again, one only has to look at the
textual language of the ``miscellaneous provisions'' section, which
states: ``Each member shall ensure the conformity of its laws,
regulation, and administrative procedures with its obligation as
provided in the annexed agreements.''
The WTO will be the forum where member nations can challenge
consumer, environmental, and worker safety laws as ``unfair trade
barriers'' because such laws containing higher standards can and do
often restrict trade. If our laws are more stringent than say those of
Malaysia, Singapore, or Taiwan, the United States could find itself
frequently under attack in the WTO. A panel decision declaring U.S.
laws to be ``unfair trade barriers'' will put the United States in a
bind to change those laws, or face potentially heavy fines, or if we
choose to ignore a panel decision, subject the United States to
retaliatory retribution from the complaining party.
Remember, under the current GATT structure, we can veto a panel
decision. U.S. sovereignty is not threatened. I believe our sovereignty
will be threatened under this new system of the WTO. We should reject
membership in the WTO until changes are made regarding voting
procedures and sovereignty provisions are dramatically altered to
protect the interests of the United States and the American people.
Regardless of how one feels about the World Trade Organization and
the issues of sovereignty it raises, we should all be disturbed at the
procedure under which this agreement is being debated and considered.
In my judgment, WTO membership should be considered as treaty
ratification.
According to Laurence H. Tribe, Constitutional Law Professor at
Harvard, ``If there is any category of international agreement or
accord that must surely be submitted to the Senate for approval under
the usually rigorous two-thirds rule of the treaty clause, that
category must include agreements like the Uruguay round, which
represents not merely a traditional trade agreement but a significant
restructuring of the power alignment between the national government
and the States.''
``It's hard to imagine what kind of agreement must be regarded as a
treaty, and subjected to State ratification as such through the Senate,
if the Uruguay round not be so regarded. However inconvenient, the
structural safeguard of the constitution must not be ignored.''
Article II, section 2, clause 2 of the U.S. Constitution says that
the power to make treaties is expressly conditioned on the requirement
that ``two-thirds of the Senators present concur.'' If America's
membership in the WTO doesn't require a treaty vote, what does?
The United States joined the United Nations by treaty. We joined NATO
by treaty. And when the United States rejected the International Trade
Organization, the 1947 version of WTO, it rejected such membership as a
treaty. Every other democratic country is considering the WTO as a
treaty.
The issue of ``downward harmonization'' of laws is also of grave
concern to me. Under GATT, almost any of our critical food safety or
environmental laws can be challenged by another country. In the past,
the Marine Mammal Protection Act, which protects dolphins from needless
slaughter by the tuna industry, and our CAFE standards, which are in
place to promote cleaner and healthier air, have been challenged. Other
countries have also targeted the U.S. new, clearer nutritional labels
and California's strict limits on lead in wine as ``barriers to
trade.''
Under GATT, pressure will be great to scale back our laws so that
they are in harmony with weaker international standards, thereby
creating a ``lowest common denominator'' approach to trade legislation
and a significant relaxation of important social safeguards.
Membership in WTO would also undermine our food safety, consumer
safety, and environmental protections by limiting the goals the United
States may pursue in its standard, for instance by restricting what
issues would be considered ``legitimate'' grounds for regulation; by
limiting the means the United States may use to promote GATT-allowable
health, safety, and environmental goals with the requirement that such
means be ``least trade restrictive,'' regardless of political
feasibility; by requiring the United States to accept imports that do
not meet our standards, where they satisfy different, but
``equivalent,'' standards. This requirement invites wholesale
circumvention of U.S. law; and by specific statutory changes in the
GATT implementing legislation to existing U.S. standards for poultry
and meat imports.
According to William Lovett, professor of law and economics at Tulane
University Law School, even the gains for U.S. agriculture are weak and
largely illusory. He writes that ``great hopes for U.S. gains in
agriculture exports were raised by U.S. Trade Representative Clayton
Yeuter in the mid-1980's when the Uruguay round was launched. The
cairns group--14 other agricultural exporting countries--were hopeful,
too. But European Community resistance was very strong, and the
resulting Blair House accords, December 1992, into the GATT 1994 deal
provided only modest gains. The EC conceded only a 21-percent reduction
in key agricultural subsidies over 6 years. No surprise,'' Lovett
continues, ``the majority of EC countries have very powerful farm
lobbies.''
In addition, the GATT 1994 deal provided strong preferences for
developing country agriculture, their exports, and broad freedom for
LDC farm subsidies. For these reason, U.S. agriculture is a substantial
net loser under the GATT 1994 deal.'' Also, section 22 is abolished,
but concessions were given in tariffication.
There are also concerns surrounding the agreement reached between the
administration and Senator Dole last week with regard to the appeals
process and the ability of the U.S. to withdraw from WTO. According to
that agreement, the administration will support legislation next year
to establish a WTO dispute settlement review commission. The Commission
would consist of 5 senior Federal appellate judges, appointed by the
President in consultation with the leadership of both Houses and
chairmen and ranking Members of the Ways and Means and Finance
Committees.
This panel will review all final WTO dispute settlement reports
adverse to the United States to determine whether the WTO panel
exceeded its authority or acted outside the scope of the agreement.
Following the issuance of any affirmative determination by the
Commission, any Member of each House would be able to introduce a joint
resolution calling on the President to negotiate new dispute settlement
rules that would address and correct the problem identified by the
Commission.
If there are 3 affirmative determinations in any 5-year period, any
Member of each House may introduce a joint resolution to disapprove
U.S. participation in the WTO. If the resolution is enacted by Congress
and signed by the President, the United States would commence
withdrawal from the WTO Agreement. This is a good provision that
improves the appellate process within WTO, but it leaves some questions
unanswered.
What happens if we have a pure free-trade President who vetos the
joint resolution? Can we count on the review commission to be
sufficiently knowledgeable on trade issues to make the proper
recommendation to Congress? There is a great reluctance on the part of
constructionist judges to become involved in proposing legislation.
Besides, the proceedings under the WTO are secret and confidential. I
am concerned that there is enough vagueness and uncertainty regarding
the appeals process that it will ultimately work to our disadvantage.
Under the current GATT rules, any member nation can withdraw with 6
months notice, at the discretion of its head of state. Even under the
new agreement with Senator Dole, the new GATT provisions make
withdrawal more time-consuming, arduous, and elusive.
The bottom line is that American workers, U.S. trade, manufacturing,
and industrial interests are not well served by the 1994 Uruguay round
deal as presently before us. All the issues and provisions I have
outlined here--the revenue loss, the loss of jobs, the inability to
sufficiently combat unfair trade practices, the operations of the WTO,
the weakening of our laws, the losses in agriculture, and others--
together justify rejection of the proposed 1994 GATT and its proposed
world trade organization.
I don't oppose free trade. I am for free trade. I am for a version of
GATT. But I do not favor free trade if it means sacrificing trade
policies that serve our best interests. Furthermore, no trade agreement
must even threaten our sovereignty or reduce our standards to the
lowest common denominator. Our decision should be clear: The Uruguay
round before us does not serve our best interests, and should be
rejected.
Exhibit 1
Madison, AL, November 21, 1994.
Hon. Senator Howell Heflin,
Tuscumbia, AL
Dear Senator Heflin: I vote in all elections, as does my
husband. I am a taxpaying contributing member of society, and
my chief concern is the pending GATT/WTO bill. While I am
certainly in favor of expanding export and import
opportunities for the U.S., it appears that doing this under
the stipulation of GATT would spiral our nation into economic
disaster. This bill promotes a Rousseaunian utopian
globalism, lessens America's self-determination for a host of
vital issues, and moreover, places unprecedented and
burgeoning national debt--adding $31 Billion!!!--on all
taxpaying American citizens (excluding, of course, the money
aristocracy who are able to insulate themselves by becoming
trans-national citizens). I strongly urge you to allow
yourselves more time to carefully study possible
ramifications yet unanticipated. It is abominable that due to
fast track status, you are not even engaging in a formal
debate process. No one as yet fully understands this bill and
its effects. If the WTO is going to supersede any U.S. laws
that contravene it, why is it a matter for Congress to decide
by a majority vote? Shouldn't it be subjected to the treaty
process, requiring approval by two-thirds of the Senate?
Since the intense negotiation of GATT under three
presidential administrations has had every involvement in
getting and spending, would not the House of Representatives
be the rightful evaluators of its own handiwork? Since we,
the United States have been the primary plaintiff in the
trade wars of the past generation of grievances against
Japan, France, Italy, Germany, and China, what reasoning
person would think that the proposed multi-national
parliamentary decision-rendering process is going to benefit
America consistently? At very least extend your time-frame to
the second-quarter of 1995 before the vote must be rendered.
I find Newt Gingrich's recent declaration of being deeply
committed to its passage revolting and I am outraged that he
touts the weak explanation that it is only partisan
opposition tactics by democrat Senator Hollings to derail
this bill. Why aren't you bringing forth this issue to a
public debate forum for all Americans to be given an
opportunity to appreciate its merits?
Please work to ensure that colleagues of the 1993/94
Congress who are now voted out and may be taking a corporate
lobbyist job which poses conflict of interest, face
retribution if they do not decline to vote on this issue. I
have supported you by my vote in the past. I consider the
proposed GATT/WTO to be a defining one and will only continue
to support those politicians who have the best interests of
their constituents in mind and this bill in my opinion
certainly does not seem to be in our best interest! I and
other constituents will be screaming about the many GATT-
induced stresses to come if it is passed. As one of your
constituents, I implore you to vote NO on GATT/WTO, and if
you don't, we will be mad as hell at the polls next time.
Firstly, how will we pay for it? (I have studied the
September 14 published breakdown of items both the Senate and
House have agreed to in their proposed funding--which only
amounts to just $5.7 million out of the total $43 billion to
be lost in decreased tariff revenues--even on a five-year
payment schedule!) Furthermore, with >$600 billion of our
national debt being owned by foreign interests, how does this
agreement provide US infrastructure with which we will
eventually pay this debt? The following is a brief outline of
GATT/WTO's seemingly inevitable alarming ramifications:
Prosperous nations produce actual widgets--so much of U.S.
domestic production has ceased or is increasingly in
jeopardy. I have read gripping accounts of this phenomena in
the summaries of a scholarly work Magaziner and Patinkin
produced in The Silent War (1989, Random House, New York).
One finds a litany of justification for governments
fostering--not undermining--a highly-technical and well-
educated labor force, and consequently, a higher-caliber base
citizenry. An ever-rising percentage of the U.S. economic pie
belongs to service-oriented jobs--which certainly proved
economically unsound for the United Kingdom over the last
several decades. National wealth is best created with raw
materials manufactured into complex products. Included in
U.S. export figures is the sum value of disassembled-
assembled American factories exported! I submit to you,
sir, that face-value representation does indeed not tell
of the more accurate reality of the trade deficit.
Furthermore, the chief product among our exports to Mexico
is not indicative of a highly-skilled labor force and
industry fashioning raw materials into technical, high-
performance devices, but rather, it is pet food! Did you
and your colleagues know this?
Our former military superiority is now dangerously
subjugated to foreign production and ownership of its high
technology components. (I cite the study done revealing the
incident of grossly-delayed availability of vital Japanese-
owned components for high-tech equipment used in the Gulf
Storm campaign.) This was discussed in a C-SPAN program in
the post-campaign `lessons learned' evaluations. Somewhere
within these first two points clearly belongs also the
argument in favor of strong protection for intellectual
property rights--which the current GATT sorely lacks.
Our national wealth is pouring out of our own economic
system ($1.4 Trillion trade deficit since 1988 Uruguay Round,
nearly order of magnitude rates at which this deficit has
climbed annually--please feel free to substantiate any
dispute in your response.) Many third world nations have
different foresight and fiscal policies to guard their own
abilities to generate capital and thereby increasingly create
national wealth which remains in their country.
The Cargolux jumbo jet now doubling its shipment frequency
between Huntsville and Luxembourg carrying by business
activity percent to Alabama (not from Alabama): North
America, 27%; Asia, 23%; Europe, 23%; Central & South
America, 15%; Africa, 11%; and Australia, 1%. It would be
interesting to see disclosed the nature of any goods
presumably produced in Alabama being exported; and also just
how much of its weight or wealth--whichever the term
`business activity' used in the article represents. This
question reflects The Huntsville Times, September 11, 1994
article, ``Global Growth.'' The author has not responded to
my three inquiries. I am concerned about the compositional
product of U.S. exports, so that advanced technology in a
widely-based labor pool has been utilized to produce
commodities, not the export products such as the $2.00 trees
that comprise our allegedly satisfactory trade balance
figures wherein minimal human skill has been involved in its
``production.'' I hear and read a lot of empty rhetoric about
desired policies to foster the growth of labor skills both in
the Southeast and nationally. If you share this vision, where
is the muscle behind any intent to implement upgrading a
labor force to any great significance? Will the alleged new
jobs to be created consist primarily of distribution and
retail industry jobs that will service the alleged plethora
of consumers who will presumably have an increased share of
the wealth available for discretionary spending? There is a
fundamental flaw in allowing consumer-driven ideology to
rule: Such a consumer-driven economy is counter-productive to
the manifestations of the quality of life our culture has
provided under the increasingly obsolete notion of a labor-
standard-protected work force in many of the targeted
producing foreign countries. Besides, the latest glowing
figures pronouncing such a healthy economy always measure the
consumer index perspective--not that of production!
Trans-national companies answer to NO ONE--it is self-
evident that they will enjoy frightful impunity of any
legislative policies that the GATT/WTO agenda would hope to
enforce. They will thereby definitely not bring about a more
humanitarian, rising tide elevation of worker conditions and
fair practices. Free and fair trade, a mantra being used to
bring about a new world order to the demise of Americans'
personal freedom and living standards as we know them today.
My basic liberty to buy food and other products deemed safe
by our FDA is already shrouded in unknown foreign growers or
production sources with inevitably inferior growing or
assembly standards regarding pesticides, existing soil
contaminants, substandard components (compositional screws
that readily break), etc. The many countries part of GATT/WTO
would of course attempt to declare our FDA and National
Product Safety Commission standards too restrictive and
unfair: the penalties inflicted on the U.S. are heavy and
far-reaching according to the GATT/WTO document, exacting
fines permanently `. . . until the unfair practice is
corrected.' And further pertinent to inflicting
substandard health and safety practices, what about the
future regulation of now foreign-owned or pending for sale
American properties that could potentially be used as
toxic dumping sites for global radioactive waste? It is my
understanding that the US taxpayer would bear severe
penalties for refusal to comply!
Huntsville's Dunlop Corporation plant, now owned by the
Japanese, provides more than 1,500 jobs to employees who on
average earn $16.55. They watch their benefits dwindling with
each dispute--this past September narrowly escaping closure.
Could we expect to see Mexicans imported to fill those Dunlop
slots the next time an irreconcilable dispute arises? Public
dole-provided career counseling will not create 1,500
positions for those workers to fill. I'd like to see some
economic data of the rate at which such factories American,
and foreign-owned with American employees, are succumbing to
foreign labor practices. (Did you also know that huge
corporate profit figures from going to offshore manufacturing
are included in export figures as well?) I'd like to see
explicit data from Alabama State reports of the types of jobs
which are said to be created from all this positive NAFTA
spin-off. It is clear that PACs who desire the currently-
proposed GATT legislation are trying to ultimately promote
lower-cost labor for little benefit to U.S. worker-displaced
citizenry (the bulk of their ``customers'') as a whole. How
will congressional elected officials answer to the apparent
failure to nurture a vital technically skilled labor force,
and the extraordinary negative social and economic
consequences that will continue to ensue?
NAFTA's passage hugely-increased illicit drug traffic
volume from Central America . . . . One can easily project
what will happen under GATT.
Please feel free to offer us a detailed, within budget
solution to the rampant unemployment we are already
suffering. Insiders at our local Alabama unemployment office
declare that it is a blatant manipulation of figures which is
creating the myth of a rebounding economy. Namely, unemployed
persons not successful in getting a job after six months are
simply dropped from the rolls and are therefore not counted
as unemployed. I don't need to expound upon the intangible
(or tangible, depending upon one's perspective) effects such
as family and community deterioration under financial duress,
rising crime, and ripple effects to all other associated
businesses in unhealthy economic times. I do, however, expect
Congress to address these realities, for they are universal
concerns of increasing numbers of Americans--except perhaps
the small percentage of powerful groups whose interests lie
foremostly in immediate cheap labor.
We and our community of working middle-class parents are
increasingly stressed about our abilities to offer an optimal
upbringing for children who hopefully will be able to obtain
a quality high-skill oriented education. The cost of higher
education is obviously an issue as inflation rages on. It
will really be an awful issue when GATT-induced inflation
removes this dream even further from us. As you know, since
the days you enjoyed in your parents' lifetime, the tax (and
``fees'') levied were the negligible 8% of total
income--quite different from the 60% we struggle
under today. We watch the trends of rising numbers of random
crimes, company layoffs, the absurd GATT notion of an
American consumer-driven economy in a global economy when
jobs and net incomes are evaporating, grossly inadequate
public school systems with their poor academic performance
standards, and their lack of discipline and instruction void
of any values. We stay concerned that people like us are not
too far removed from crumbling under bleak financial
pressures. We and many families we know have already
eliminated from our budgets the vacation extras, dining-out
expenses, many other discretionary entertainment or household
expenses, and even more retail purchases (I consistently go
the second-hand shop or garage sale route for complete
clothing and educational toy needs--at least 95% of all such
purchases), and some acquaintances have completely eliminated
savings for retirement provisions. Footing this GATT/WTO bill
will wreak financial havoc. While you're at it, for your
information, look at some industry statistics of just how
well these second-hand institutions are faring and
flourishing! And then figure out just how much money American
consumers and displaced workers will be spending on the flood
of imports to the U.S. (or the pitiful few pennies of
savings on the influx of foreign-manufactured goods passed
on to the consumer enclosed in a `Made in the U.S.A.'
box)?
To further endorse this bill or worse, vote to pass it, is
foolish and deceptive unless you are remarkably well informed
(Can you look into your crystal ball with no trepidation and
in good conscience if this is passed?) You and your
constituents should have promoted better public access to
more detailed information of its specific nature and
ramifications. It is certainly egregious that status-quo
media are grossly neglecting to cover this issue, and
scantily offer slanted glamorizing views (5 favorable
articles to 1 negative article by analysis cited in an early
October Congressional committee hearing, despite renouncing
negative challenge on the part of numerous congressional
committee participants) on GATT/WTO legislation (e.g.
Washington Post and its covert pork payoffs for licensing
fees). To implement such a pervasive agreement at a time of
already perilous domestic manufacturing woes is
irresponsible: I implore you to vote to delay passing this
agreement as it is now and plan to more carefully evaluate
and rewrite it, work to deem it treaty status or implement
whatever framework it would take to give the U.S. more voting
power as disputes arise. I might remind you that your
position exists due to the taxes my family and I pay to
employ you (albeit we watch with great disgust the increasing
percent financing of public officials' campaigns by way of
PACs and wonder to what extent a pro GATT vote represents the
myopic interests of multi-national CEOs). I am college-
degreed, learned a foreign language, studied abroad six
years, and formed my views from an international perspective
but also as a patriotic American. The current debate
surrounding GATT/WTO will hugely define institutions of the
next century as we continue well on the road in this post
Cold War Era. I'm trying very not to be overly trade
projectionist, and fundamentally firmly believe that global
trade is a good thing, and that free and fair enterprise is
best--if that and self determination in a post Cold War Era
that has evolved into a Trade War Era are not mutually
incompatible. Even though NAFTA is insignificant compared to
GATT, it, however, is the only model we can look to for
projecting the ensuing effects of an implemented GATT. . . .
It indeed appears to be catastrophic. Please be honest when
you interpret the resultant findings thus far, and convince
the taxpayers otherwise if that is the case.
Again, as one of you constituents, I implore you to vote no
on GATT/WTO.
Carol E. Johnson.
P.S. By the way, because I so highly value the C-SPAN
information I regularly enjoy, and would like to see that my
tax dollars support this network if the cable companies'
public service broadcasts of congressional hearings and other
pertinent events were ever to be threatened. It is one way I
experience a sense of empowerment of what our public servants
do in Washington. A C-SPAN journalist round of media pundits
recently predicted it will eventually be discontinued due to
lack of revenues generated--such as the ever-expanding
shopping channels generate! If C-SPAN is discontinued, I will
be outraged at the default message that what goes on in
Washington is rendered deliberately less accessible to the
rest of the nation.
Exhibit 2
Out of the Hands of Babes
[From the Times Daily, Nov. 26, 1994]
(By Anna Quindlen)
Would you buy a rug if you knew that it had been woven in
India by 10-year-olds beaten if they didn't work fast enough?
Would you wear a shirt if it had been sewn by a 9-year-old
locked into a factory in Bangladesh until production quotas
for the day had been met?
Would you eat sardines if the cans had been filled by 12-
year-old Filipino children sold into bonded servitude?
The General Agreement on Tariffs and Trade, known as GATT,
is the most sweeping free-trade pact in history. But like
many agreements among different nations with different
agendas, much has been lost in the translation. One of the
losses in the GATT negotiations was the right of children not
to be exploited, overworked and underpaid as a source of
cheap labor around the world.
From the children who make carpets in India, sometimes 16
hours a day, seven days a week, to those who sew in
Bangladesh for as little as five cents an hour, the
International Labor Organization estimates that there may be
as many as 200 million child laborers worldwide. Some are
working in sweatshops that contract to make American goods.
In testimony before the Senate earlier this year, a 15-
year-old from Honduras told of girls working up to 80 hours a
week at a factory manufacturing Liz Claiborne sweaters.
Child labor is the dirty little secret of foreign imports.
Sen. Tom Harkin, who wants to outlaw U.S. imports of all
products made by children under age 15, says the problem is
that Americans don't know that some of what they buy,
including toys for their own kids, has been manufactured by
children working the kind of hours, under the kind of
conditions, that many still associate with the darkest days
of the Industrial Revolution.
``You give me any cross-section of 100 Americans,'' says
the senator, ``people from any income level, any area of the
country, and I think the reaction would be overwhelmingly
against buying the products.''
Harkin is a voice crying in the wilderness, and the
wilderness is the guided thicket of free trade.
Harkin's bill to keep products made with child labor out of
the United States would probably be a violation of GATT,
which provides only for those restrictions spelled out in the
trade pact.
During various GATT negotiations, developing countries
successfully argued against child labor provisions, insisting
that children have always worked in their cultures, that to
try to interfere with child labor is protectionist and
punitive when a child may be the only wage-earner in a
desperately poor family.
But the tradition of children helping on small farms and
the innovation of locking them into a hotbox of a factory for
14 hours a day are worlds apart.The reason they may be the
only wage-earner in some areas is because adult workers have
been laid off in favor of children, who are infinitely more
exploitable and provide bigger profits for prosperous factory
owners. And nations that really want to compete in a global
economy will educate their kids, not work them half to death
before they've even reached puberty.
After the bad publicity of the Senate hearings, Liz
Claiborne announced that it was ditching the Honduran
contractor, then decided instead it would ``work with the
facility'' to ``meet our human rights standards.''
A few American companies have been ahead of the curve; Levi
Strauss and Reebok, for instance, had already demanded that
their contractors overseas hire only workers over age 14. In
India a consortium of carpet makers has started an industry
campaign that tags those products made without child labor.
That's the least Americans deserve, some assurance that
what they buy has not been manufactured by kids.
Amid attempts to protect elephants from ivory poachers and
dolphins from tuna nets, the rights of children go remarkably
unremarked. ``This is the last vestige of slavery sanctioned
in the world today,'' said Harkin.
If GATT passes, an opportunity to end these children's
servitude will have been shunted aside for the alleged
bonanza of free trade. But consumers can vote with their
credit cards only if products are labeled.
At the very least the slogan ``Not Manufactured with Child
Labor'' should shame those companies not in a position to
affix it to their products.
Mr. CHAFEE. Mr. President, I yield 15 minutes to the distinguished
Senator from Oklahoma.
Mr. INHOFE. I thank the Senator very much for yielding. Let me
respectfully say to the distinguished Senator from Alabama that I agree
with many of his conclusions, however, for different reasons. I might
also respectfully suggest a second viewpoint that our rising deficits
were due not to the reduction in the income tax rates but instead to a
Congress that spends too much money.
Mr. President, our Nation's decision on the GATT agreement is too
important to be decided by a lame duck Congress. The GATT accord, along
with implementing legislation, will affect economic and foreign policy
not just for another year or another 2 or 3 years, but for decades to
come. We should postpone this vote until next year and let the newly-
elected Congress, the Congress which by definition is closer to the
people, make this decision. This is what the people want. This is what
common sense dictates.
There is a point that really has not been addressed here. If we are
serious about ending public cynicism in Government, we should stop the
practice of railroading through complicated legislation which few, if
any, read and probably fewer understand. We can begin by taking the
time to allow the new Congress to carefully consider all the
ramifications of the GATT agreement.
I do not mean to be presumptuous, Mr. President, but as the newest
Member of this body, I am in a unique position. I come here with the
winds of public opinion behind me. The public clearly does not have a
formed consensus on GATT because many questions are still to be
answered. I think the general public does have an opinion on free
trade, and I agree with that opinion, as I am a free trader. But they
have not been convinced that this GATT legislation is the best way to
serve this cause. What the public wants is an end to the power plays,
the back room deals, and an end to business as usual, where legislation
is passed sight unseen on the basis of pleasing labels, fancy photo
ops, and soothing speeches. The crime bill is a good recent example. I
was serving in the other body when that came up for consideration. It
was August 21, on a Sunday afternoon, and this bill that was 2 inches
thick had been printed only for 2 hours and it passed and there was not
one Member of Congress that had read that bill, and I suspect the same
thing was true over here.
The public wants major decisions like this to be made on the basis of
substance. They know that the devil is in the details. They expect
their representatives to exercise judgment based not just on labels but
on fine print as well. These were critical underlying issues in the
election campaign just concluded. I know this because I just concluded
a very active, aggressive, assertive and challenging race. The people
want open Government; the people want decisions to be made outside of
institutional barriers, institutional protections that protect the
people here, and let the people at home know exactly what is going on.
We had such an institutional problem in the other body, which we
corrected, and it is something that has had a major impact on the
elections of November 8. We truly had a wakeup call on November 8. I
think we need to be listening to that wakeup call.
Mr. President, we need more time to consider the GATT details and
make that judgment. Again, it should be voted on by the newly-elected
Congress which has been out there on the firing line talking not to
bureaucrats, not to the insiders, but to real people.
The process by which this GATT legislation was brought before this
body raises many questions. The administration was given fast-track
authority to submit an unamendable bill with two implicit
understandings. First, it was understood that the implementing bill
would contain only what was required by the GATT agreement. Second, it
was understood that Congress would have a full 45 days to consider the
bill. What actually happened? The administration did not submit this
bill until very shortly before the Congress' scheduled adjournment in
October. In fact, it was less than 10 days before, not 45 days.
Fortunately, that power play was rejected, forcing this lame duck
session. But the question is: Why did they want to rush the bill
through so fast? Are they afraid of more detailed scrutiny? It sounds
to me like the pork barrel crime bill. In fact, the administration
produced a much broader bill containing many provisions not directly
required by the GATT agreement.
These are among the provisions that have caused the most concern.
For example, as recently reported, two major media companies, the
Washington Post and the Atlanta Constitution, would receive special
benefits worth hundreds of millions of dollars as a result of the bill.
According to the Wall Street Journal a provision in the bill grants a
special discount to the Post and the Constitution on license fees owed
the Federal Government under the so-called pioneer preferences in the
telecommunications section.
This provision is totally nongermane to the GATT agreement and it has
nothing to do with free trade.
Another much more serious example is the provision that changes the
rules relating to patents and intellectual property rights.
I know something about property rights. I came back from a very
aggressive campaign, as I mentioned before, and when I talked to
farmers throughout America, they are as threatened, as farmers, about
the 1995 farm bill and all the price supports and these things as they
are to what is happening to property rights, the fact the bureaucracy
is taking away the value of these rights. Yes, these are property
rights but not intellectual property rights. They are all the same and
equally protected by the 14th amendment, or should be.
Do the new rules protect our people and private property rights? They
are taken for granted. The administration says yes, and inventors and
others concerned about the issue say no.
In fact, I had my first visitors as the newest Member of this body.
They came yesterday, and they are from Oklahoma. They were inventors,
and they came in very much concerned that the changes in this bill will
have the effect of undermining the rights to intellectual property
affecting billions of dollars in our ability to effectively compete in
the high-tech environment of the future.
They asked me, what do these patent changes have to do with enhancing
free trade anyway? What is in the GATT agreement itself that requires
these changes?
I cannot answer them. I do not know. I do not have the answer to
that. I believe there are serious problems with legislation and those
provisions which are not required by GATT. Some are little more than
apparent payoffs and sweetheart deals. Others are more sinister and may
serve to enrich multinational corporations at the expense of the
American people. But the bottom line is this: The train is going too
fast. Let us slow it down, weed out the sweetheart deals and debate
this in the new Congress with Representatives and Senators who are
accountable to the people. I do not think that is too much to ask.
The PRESIDING OFFICER (Mr. Bingaman). Who yields time?
Mr. MOYNIHAN. Mr. President, the distinguished and newly victorious
Senator from California would like 15 minutes, and I am happy to yield.
The PRESIDING OFFICER. The Senator from California is recognized.
Mrs. FEINSTEIN. Mr. President, thank you very much, and I thank the
distinguished Senator from New York for this opportunity.
Mr. President, I believe that GATT is a win for this nation. I
believe it is a win for manufacturing and agriculture, and I believe it
is a win for the State of California.
Tomorrow Congress has the chance to pass the equivalent of one of the
largest tax cuts in history. Many people do not realize this. GATT, the
General Agreement on Tariffs and Trade, reduces what are known as
border taxes, or tariffs, and they reduce them worldwide by one-third.
This amounts to a global tax or tariff cut of $744 billion.
GATT and the U.S. Economy
What does this mean for the U.S. economy? The economic benefits for
U.S. workers, consumers and businesses are many.
One, producers will benefit from cuts in foreign tariffs. They will
be able to sell more of their products abroad because these products
will no longer face a whole panoply of high tariffs, quotas, hidden and
not so hidden restrictions that they encounter in many countries today.
Two, despite having the lowest tariffs in the world, America still
has tariffs, and these will go down under GATT. So, many consumers will
benefit because of lower prices on imports which lower the costs of the
products they buy.
Three, the GATT agreement will increase the U.S. gross domestic
product by $150 billion when fully implemented. So, what we produce in
services and products today will increase by $150 billion over 10
years.
Four, GATT will open markets, foreign markets, that have been
effectively closed to U.S. exporters, such as rice, beef, citrus,
oilseeds, pharmaceuticals and construction equipment.
Five, GATT will protect those who innovate and take risks by
protecting their patents and copyrights abroad.
And, finally, GATT ensures that all 125 member countries obey the
same trade rules, even if they have not signed agreements from previous
rounds. This eliminates the tortuous ``free rider" problem, where a
nation gets the benefits but does not play by the same rules of open
trade.
GATT and the California Economy
Let me talk about GATT and California because no State stands to
benefit more from this accord than California.
Today California accounts for 15 percent of U.S. exports, and the
jobs and economic activity these exports create have grown
significantly over the past few years.
Nearly $70 billion worth of California goods were exported abroad
last year. That is an increase of 46 percent from just 5 years ago.
The manufacture, production, and transportation of California exports
accounts for 1.8 million jobs in the State today, nearly 13 percent of
California's total employment.
California's economic future is directly tied to increased foreign
trade. In 1987, the last year for which data are available, California
had 22,265 exporting establishments. In fact, we led the Nation in the
number of business establishments that export.
California's strong export-based economy demonstrates that it will
gain disproportionately from enactment of this trade agreement. If GATT
is rejected, it would cost literally hundreds of thousands of jobs in
California.
I would like to take a moment to read from an analysis by John O.
Wilson, Chief Economist for Bank of America, on the GATT agreement, and
I quote:
If it is not ratified, what would the absence of a GATT
accord have on trade development? Specifically for
California, we could anticipate the following developments:
(1) an increase in tariff and non-tariff barriers to
California exports to Asia, Latin America, and Europe;
(2) a reduction in California exports to those regions, and
particularly to Japan, China, Germany, and France;
(3) little impact on trade with Canada and Mexico which
would still be controlled by the [North American Free Trade
Agreement]; and,
(4) an immediate loss of 173,000 jobs in California (in
1995) growing to a loss of 252,000 jobs by 2000. This would
increase the unemployment rate by a full one percent.
This is not my analysis; this is an economist's analysis.
Let us take a brief look at how some of California's major industries
will most likely be affected by GATT.
Agriculture
In 1993, California's agricultural production amounted to almost $20
billion. In that year, we exported $1.4 billion in agricultural
products. Hence, almost 50 percent of what is produced in California is
exported, that is how big it is.
The GATT agreement will continue this growth by reducing agricultural
tariffs by 36 percent over 6 years, increasing market access for
agricultural exports and reducing anticompetitive agricultural
subsidies by foreign nations. Some even think we can reduce our
subsidies to American agricultural crops because they will no longer be
necessary.
I want to highlight a few examples from the California Farm Bureau of
how California agriculture will benefit.
Our No. 1 export commodity is beef. The GATT agreement will increase
California's beef exports by 10 to 14 percent. The reduction in Japan's
beef tariffs will be cut from 50 percent to 38.5 percent. This is a
huge reduction, and will result in the export of more California beef
to Japan.
The GATT will permanently open Japan's market to California rice by
establishing an import quota of 379,000 tons of rice in 1995. This
amount will be increased, almost doubled, to 758,000 tons in the year
2000. This market, as you know, was initially opened in 1993 because
Japan was unable to supply its own people with rice that year. But the
market has tightened again. So clearly, under GATT, Japan's market will
be opened once and for all for California rice.
Almonds are another example of expected export growth under GATT.
California produces up to 70 percent of the world's supply of almonds.
A reduction in the tariff on almonds, particularly in the European
Union, should result in increased sales and increased U.S. jobs. Blue
Diamond expects its growers will benefit immensely from the $21 million
reduction in almond tariffs to Europe.
The GATT agreement will also increase export sales of California
wine. One of California's largest wine customers, Japan, will reduce
its wine tariff from 21.3 percent to 15 percent. Furthermore, the GATT
will require the European community to substantially reduce its export
wine subsidies.
Tariffs for citrus are greatly reduced. Let me provide some examples.
The European Union's tariffs for orange juice--that is pure
concentrate--will be reduced from 19 percent to 12.1 percent. In Japan,
tariffs for oranges are down from 40 percent to 32 percent, and
grapefruit tariffs are down 10 percent.
In Korea, tariffs will drop for lemons, limes, and grapefruit by 40
percent. In Thailand, tariffs will drop for sweet oranges and
grapefruits by 50 percent. Think of the markets that then open for our
products.
In summary, for agriculture in California, GATT could mean 112,000
new jobs, $10 billion to $30 billion in related economic activity, and
an export boost of $5 billion to $14 billion. For the Nation, GATT
could mean a net gain in U.S. jobs of 300,000 to 700,000 over 10 years,
according to Citibank.
Let me talk for a moment about sanitary and phytosanitary policy.
This is a dull series of words for something that has become very
significant.
Exporters of California agricultural products have found that, as
tariffs and quotas are reduced, sanitary and phytosanitary barriers are
erected. For example, Mexico did this with plums. They just stopped
plums at the border and they said they had phytosanitary conditions and
the plums could not be sold in Mexico. Therefore, they could not be
returned because they would rot. And so they used phytosanitary
concerns as an actual barrier to exports from this country.
The GATT agreement establishes necessary rules and disciplines to
prevent the use of both sanitary and phytosanitary regulations as
disguised trade barriers by recognizing only scientifically sound
measures.
Manufacturing.
Let me speak for a moment about industrial machinery, computers, and
electronic equipment. California's biggest exports consist of
industrial machinery, computers, and electronic equipment. These
categories alone accounted for nearly half the State's exports last
year. When it comes to computer parts, the European Union will reduce
its tariffs by a whopping 87 percent. Korea would lower its tariffs by
40 percent and Japan would eliminate its tariffs altogether. Reduced
tariffs will increase sales of exports of these products and increase
job opportunities here at home.
Intellectual property.
The GATT agreement does something else. It guarantees the protection
of copyrights, patents, trademarks, industrial designs, and
semiconductors. American businesses lose an estimated $60 billion a
year--$60 billion--from piracy of intellectual property. People take
great risk as entrepreneurs, get a patent, feel they are protected,
export abroad, and then find out their patent is meaningless.
Environment.
Let me speak on the environment. I recognize the concerns raised by
some regarding environmental protection. I have great respect for my
friends in the environmental community. I was proud to work with them
in the last 2 years to help enact the California Desert Protection Act.
While the U.S. negotiators were successful in achieving some measure
of environmental protection, environmental groups advocated for more.
As a consequence, the GATT agreement calls for the establishment of an
environmental agenda to deal with unresolved environmental issues in
the future.
Some have stated the GATT would require the United States to lower
its environmental standards to those of developing countries, or to an
internationally harmonized level. The GATT agreement makes it clear
that the United States can maintain environmental standards which are
stricter than international standards if, one, the United States
decides that the international standards are not sufficient to achieve
its appropriate level of protection; and, two, the standard can be
justified on scientific principles. These rules work in our favor
because they will allow us to challenge blatantly protectionist ``food
safety'' claims that have been routinely used to bar the sale of our
products abroad.
The recent GATT panel decision rejecting a challenge to the United
States fuel economy laws demonstrates that the United States can have
stricter environmental standards than other countries and still be in
compliance with GATT. This case showed that the United States can enact
laws that further energy conservation goals and protect the
environment.
I ask unanimous consent to have printed in the Record a letter from
me to Ambassador Kantor in June, and his answer, on three other
environmental concerns.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, June 23, 1994.
Hon. Michael Kantor,
U.S. Trade Representative,
Washington, DC.
Dear Ambassador Kantor: Some serious concerns have been
raised by members of the environmental laws in California. As
you know, the European Union has published a target list of
U.S. environmental laws it believes it can successfully
challenge as illegal barriers to trade, if the Uruguay Round
agreement is adopted.
The European Union's ``Report of United States barriers to
Trade and Investment'' targets specific California laws as
well as federal laws that are important to California. Those
laws include:
The Safe Drinking Water and Toxic Enforcement Act (Proposition 65).
This law requires warning labels on all products containing
substances known to cause cancer or reproductive harm. The
Europeans contend that this law ``imposes stricter California
standards in place of federal standards.'' They also object
to requirements imposed by the California Attorney General
under Proposition 65 to participate in the financing of a $1
million lead safety information campaign for consumers.
Glass Recycling
California requires recycled material to be used in
imported and domestic glass food and beverage containers. The
minimum percentage is scheduled to rise from 15 percent in
1992 to 55 percent in 2002. This law applies to all glass
containers produced or sold in California and thus affects
European Union exports to California. The Europeans object to
the law because it imposes requirements and therefore
restrictions on their imports.
Lead in Wine
California recently set tolerance levels for lead in wine
that are higher than the federal standard. The European Union
opposes states being allowed to set higher than federal
standards.
These are the specific California laws that the European
Union has identified for GATT action. Many other California
and U.S. environmental and food safety laws also appear to be
vulnerable to GATT challenges.
I would appreciate your views regarding whether these laws
would be endangered if the GATT implementation bill is passed
by Congress. Are these laws violations of GATT? If they are,
could California be required by the federal government to
change them?
This is a very important matter. I would like to give you
the opportunity to separate fact from fiction in this debate.
I look forward to hearing from you on this important matter.
Sincerely,
Dianne Feinstein,
U.S. Senate.
____
U.S. Trade Representative,
Executive Office of the President,
Washington, DC, July 27, 1994.
Hon. Dianne Feinstein,
U.S. Senate, Washington, DC.
Dear Senator Feinstein: Thank you for your letter of June
23, 1994, concerning the impact of the Uruguay Round
Agreement on environmental laws in California. I welcome the
opportunity ``to separate fact from fiction in this debate.''
I will address each of the points in your letter in turn.
The Uruguay Round Agreement is good for the United States,
and the State of California, because it will generate
economic growth and good jobs. I suspect that some of the
opposition to the Uruguay Round Agreement may in fact reflect
a more fundamental apprehension about economic growth. We do
not share this apprehension. We want instead to promote
responsible economic growth, and believe firmly that trade
can and does play an important role in growing the U.S.
economy.
As you state in your letter, some serious concerns have
been raised by members of the environmental community
regarding the potential impact of the Uruguay Round Agreement
on environmental laws in California. I want to assure you
that these concerns are unfounded. One important point to
keep in mind is that while most environmental organizations
are concerned about trade, many are working with us to make
the trading system more compatible with environmental and
conservation measures. Unfortunately, a few groups have
chosen to take the alarmist path, frequently making claims
based on misinformation and highly exaggerated speculation.
The European Union's Report on U.S. Trade Barriers is, as
you mention, cited by certain environmental groups as proof
that specific California laws are being targeted by our
trading partners and that these laws can be successfully
challenged under the General Agreement on Tariffs and Trade
(GATT). This misreads the EU's report and is completely
speculative. The European Union has been preparing its annual
report for years. If they really thought they had good cases
under the GATT, they could have filed them long ago.
This year's report, like previous ones, is basically a
political document in which the EU points to laws and
policies in the United States that they would like to see
changed. It does not claim that each U.S. or state law cited
is inconsistent with the GATT. Nor is it a legal treatise; it
should not be seen as carrying any legal weight in
interpreting the GATT even in the relatively few instances
where the report actually does suggest an alleged GATT
inconsistency.
In general, we find nothing in the EU's report that is
persuasive with respect to any of the measures referred to in
your letter. Any challenge by the EU is completely
speculative at this point in time. Needless to say, the
United States has never proposed that any changes to these
laws were needed in order to conform them to U.S. obligations
under the GATT, nor is the Administration proposing any
changes to any of these laws in order to implement the new
Uruguay Round Agreement.
Let me now discuss briefly each of the measures mentioned
in your letter:
Proposition 65. The EU's report does not even hint at a
GATT inconsistency with respect to Proposition 65. We would
note that the law is not discriminatory, and States have the
right to establish their own requirements to protect against
cancer or reproductive harm.
Glass Recycling. The EU claims this law is not in
conformity with the GATT because ``any environmental damage
caused in California by the import of glass containers is in
no way related to the amount of recycled glass used when the
product was manufactured in a third country.'' However, the
EU's ``jurisdictional'' approach has already been discredited
once in the GATT when they tried to convince a dispute
settlement panel to adopt it. Furthermore, the EU ignores the
fact that the governments negotiating the Uruguay Round
Agreement have recognized that this is an area needing
additional work under the new World Trade Organization, so
they are trying to prejudge the results of that work.
Lead in Wine. The EU does not even claim that this measure
is inconsistent with the GATT. Lead is recognized as posing a
health hazard which our laws are addressing in a
nondiscriminatory way.
Consequently, among the three laws you cite, the EU
actually claims that only one is inconsistent with the GATT,
and they have not pointed to anything in the GATT to support
their claim. This is particularly ironic since many European
countries have their own recycling requirements as part of
their programs to deal with solid waste problems.
On a more general level, we have a system that mediates
against discrimination, the core objective of many of the
disciplines of the GATT. On the other hand, the same cannot
be said with as much confidence about all other countries.
And this underlines the importance of having international
rules: we want a level playing field which can be used to
root out discrimination while fully preserving the right of
governments to protect the environment and the health and
safety of their citizens.
The Uruguay Round Agreement takes important steps in the
right direction. Of course, it is not perfect. Environmental
considerations have only become a trade issue in recent
years. However, I think we should all be encouraged by the
fact that we were able to persuade all of our trading
partners to launch an important new work program within the
WTO to find ways to ensure greater compatibility between the
evolution of the trading system and environmental measures.
We are committed to this project and are working closely with
our environmental community to make sure it addresses their
concerns.
Thank you again for giving me the opportunity to correct
some of the misimpressions created by some groups to derail
the Uruguay Round Agreement.
Sincerely,
Michael Kantor.
Mrs. FEINSTEIN. Thank you, Mr. President.
Sovereignty
Let me touch on what is perhaps the most emotional element of this
debate, and that is the argument the GATT in some way, shape, or form
harm's America's sovereignty. Many have raised questions concerning
whether the World Trade Organization, WTO, could undermine this
sovereignty. In my opinion, much rhetoric and misinformation have
clouded the facts about the WTO.
Earlier today, Senator Bradley pointed out that America wins 80
percent of the decisions made by GATT. What he did not say was that
many panel decisions are blocked by the losing nations under the
present dispute settlement procedure, so they never go into effect, or
they are delayed. So America's victories mean little.
Under the new procedure, a country cannot block a panel decision.
This, more times than not, works in favor of the United States.
Even if a GATT panel finds that a country has not lived up to its
commitments, all the panel can do is recommend that the country begin
observing its obligations. The defending country may choose to change
its law, it may decide to offer trade compensation, such as lower
tariffs. At worst, if a negotiated resolution is not reached, the
country that lodged the complaint may respond by suspending trade
concessions equal to the injured amount.
GATT panel decisions cannot change United States law. Section 102(a)
of the GATT bill makes it clear that, ``no provision of the Uruguay
round agreement, nor the application of any such provision to any
person or circumstance, that is inconsistent with any law of the United
States, shall have effect .''
Congress passed legislation in 1988 establishing our objectives for
this round of the GATT talks. Principal among those objectives was
strengthening the dispute settlement process. The United States has
been frustrated in international trade disputes because, while we have
maintained the world's most open market, panel decisions we have won
against illegal foreign trade practices have been blocked by the losing
country.
While the United States interests are fully protected, the World
Trade Organization agreement permits the United States to withdraw from
the organization with 6 months notice.
Further mechanisms have been put in place to quell concerns about
U.S. sovereignty. Section 125 of the GATT will allow Congress to review
its membership in the WTO every 5 years. At that time, Congress will
have the opportunity, if it wishes, to cast a vote to pull out of the
WTO.
Next year, Senator Dole will propose legislation that would allow
Congress to vote to withdraw from the WTO if the United States is on
the losing side of three WTO decisions within a 5-year period.
budget waiver
Congress has made great strides in reducing the growth of the Federal
deficit. The budget deficit for fiscal year 1994 was $203 billion--
approximately $100 billion less than it otherwise would have been if we
did not enact the Budget Reconciliation Act in 1993.
Tariff reductions in the GATT bill require approximately $11.9
billion in offsets over 5 years. This bill includes $10.3 in deficit
reduction measures and $1.6 billion in previously enacted budget
savings, known as pay-go balances.
Because the Congressional Budget Act does not allow pay-go balances
to be used as an offset, the budget point of order must be waived by 60
votes. And we will face that tomorrow.
I believe that there is precedent for using pay-go balances to offset
revenue measures. It was used five times in the Bush administration,
most recently with the Emergency Unemployment Extension Compensation
Act of 1992.
conclusion
There is no disagreement among mainstream economists that the GATT
trade agreement will increase U.S. exports and job opportunities in the
United States.
To be sure, GATT is not perfect. Some of the protections are phased
in over too long a period, and some of the tariff cuts and protections
are not as extensive as they might be. In particular, I would like to
have altered the European Union's cultural exemption provisions to
create freer trade in movies, television programs and recordings. I
also would have phased out the multi-fiber agreement differently.
Nonetheless, there is no question that this agreement is still a win-
win for the United States, and especially for California.
Trade agreements always seem difficult to understand, even mind
numbing. Not only does this agreement help large industry, it also
assists small businesses. I would like to give two small business
examples of how GATT will help two small businesses in the State of
California.
One is a company called Applause, a Los Angeles area distributor of
children's toys and gifts. They told me that lower tariffs will allow
them to increase their sales by 12 percent to other countries. The
upshot? They plan to hire 150 to 275 workers in California.
A second company, Blue Leaf Design, in Monterey, manufactures outdoor
recreational equipment. This company has been hesitant to market
overseas because of the lack of patent protection. Under the new
agreement that would change. Consequently, the company expects to
triple its sales and double its work force over the next 10 years. So,
not only are larger businesses benefiting, but small ones are as well.
Mr. President, in summary I would like to indicate my strong support
for the passage of the General Agreement on Tariffs and Trade.
I thank the President, I thank the Senator from New York.
The PRESIDING OFFICER. Senator from New York is recognized.
Mr. MOYNIHAN. Mr. President, may I thank, might the Senate thank the
Senator from California, for a wide ranging and concrete description of
what we have here. Just to help, for the record, sanitary refers to
animals; phytosanitary, to plants. The Senator mentioned rice. We have
three large rice producing States. I bet California produces some, but
certainly Louisiana, Arkansas, and Texas do.
On the front page of today's Washington Times there is a large
photograph from Seoul, Korea. It says, ``Fired Up Farmers. South Korean
farmers demonstrate in downtown Seoul yesterday against the GATT
provisions opening rice markets.''
This is a pattern we see all over the world. One of the great
innovations, and after so much effort in this GATT agreement, is that
agricultural products are finally involved.
A year ago I was in Geneva, going around in the last week of the
negotiations, making points at various ministries. All that time, the
streets of cities all over France were blocked by farmers saying what
do you mean, American food products can come here?
The answer is yes, now. And about time, too.
Well done.
I thank my colleague very much, and yield the floor.
The PRESIDING OFFICER (Mr. Exon). The Senator from Rhode Island is
recognized.
Mr. CHAFEE. Mr. President, by any measurement, the trade legislation
we are considering today represents a monumental achievement. After
seven years work, the U.S. and 122 other nations have reached an
agreement on new international trading rules.
These rules cover subjects that previous agreements failed to cover:
for example, agriculture and textiles. Likewise, for the first time,
the rules have been expanded to deal not only with tangible goods, but
with services and with intellectual property.
The Uruguay Round takes its place as the eighth--and most far-
reaching--of the consecutive negotiating ``Rounds'' that have occurred
in the nearly 50 years since the establishment of the original GATT in
1947. Begun in Uruguay, under the Reagan Administration, continued in
the Bush Administration, and concluded by the Clinton Administration,
the Uruguay Round Agreements represent seven years of exceedingly
arduous negotiation. The negotiations had their share of highs and
lows, and at times seemed dangerously close to breaking down
altogether. But they did not; and that they did not is a testament to
the skill and patience of our trade negotiators and to the commitment
of these three Presidents. I want to salute Presidents Reagan, Bush,
and Clinton, and U.S. Trade Representatives Yeutter, Hills, and Kantor,
for what may be called, without hyperbole, a truly unprecedented and
historic agreement.
impact on the united states
What will the Uruguay Round mean to the United States, which exports
some $660 billion (more than 10 percent of our GDP!) in goods and
services annually? How will it affect our consumers, our manufacturers,
and our economy?
As I think the endorsement of the Uruguay Round Agreements by the
organization Consumers Union demonstrates, American consumers and their
families can expect to see benefits of increased choice and lower
prices. Consumers Union says that the Agreement ``will eliminate or
reduce a variety of costly barriers that artificially increase consumer
prices and reduce consumer choice.'' With the Agreements in place,
goods that we purchase every week will be more varied, more plentiful,
and more affordable. Indeed, the Department of Treasury estimates that
the Uruguay Round, once implemented, every year will bring an
additional $1,700 in benefits to each American family of four. That is
good news indeed. Mr. President, I ask unanimous consent that the
letter from the Consumers Union be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. CHAFEE. Manufacturers will see their market access increased as
global tariffs are slashed by one-third (or $744 billion); and many of
these tariff cuts come in areas in which the U.S. is particularly
competitive--such as scientific and medical equipment, chemicals, and
electric machinery.
U.S. service providers--and here I mean telecommunications, financial
services, and professional services--will reap new benefits from the
Round. Rules regarding services are set forth in the Agreements, and
these will serve as a framework for further liberalization. Clearly,
more remains to be done in the area of services, as not all the U.S.
negotiating objectives were achieved. But as the President's Advisory
Committee on Trade Policy and Negotiations noted, the new agreement is
an important achievement because it includes services in the world
trading system for the first time and has resulted in some substantial
market access offers. Moreover, the Services Agreement itself provides
for continued negotiation in basic telecommunications, financial
services, and maritime transport.
Intellectual property--such as computer software, film, television
programs, pharmaceutical formulas, semiconductor and jewelry designs--
all of these product areas where the U.S. stands virtually unrivalled
will gain new protections under the intellectual property Agreement.
How will the Uruguay Round affect our economy overall? We will see
more trade, more sales--and more well-paying jobs. Our products will be
sold more easily and less expensively all over the world. The GATT
Secretariat has projected that the Uruguay Round Agreements will add
some $127 billion annually to the U.S. economy. Our own Council of
Economic Advisors has estimated that the Uruguay Round, once
implemented, will add from $100-200 billion to the U.S. economy each
year. I think these phenomenal figures speak for themselves.
impact on the textile industry
What about the U.S. textile industry? We in Rhode Island have a long
history in textiles, and the industry continues to be an important
contributor to the Rhode Island economy. It has not been easy, as we
have faced serious competition not only from overseas, but from
southern states. But this experience has toughened our industry; and
today, we make a high-quality, top-notch product that can and does
compete against products from anywhere else.
There is no question that the Uruguay Round Agreement on Textiles and
Clothing will bring about significant changes in the industry here at
home (and indeed, worldwide). Under the Agreement, the Multi-Fiber
Arrangement--the formal name for the international quotas now in place
on textiles and textile products--will be phased out over a ten-year
period, and no new quotas will be allowed. Once that period is over,
textile products will be fully integrated into the world trading system
and will be treated no differently from other goods.
The quota phase-out will be a change. But U.S. industry has been
preparing for this eventuality since the Uruguay Round negotiations
started in 1986, at which time it was made clear that textiles were to
be brought into the trading system. And, to ensure that the transition
period progresses smoothly, with as much predictability as possible, I
offered a series of amendments to the implementing bill. These
amendments, now part of the bill before us, helped win the support of
major textile associations--including the American Textile
Manufacturers Institute and the Northern Textile Association--for the
legislation before us today.
I believe that the U.S. and Rhode Island textile industry can
withstand foreign competition, and can continue to produce and sell
quality product. We will need to continue to pursue greater market
access overseas. I am confident that our negotiators will do so, and
indeed, I am gratified by their recent success with Pakistan.
the multilateral trading system
Let us pause for a moment and consider the importance of the world
trading system.
The U.S. has been a participant in formal global trading agreements
for the past 47 years. After the disastrous tariff policies of the
1930s, we joined with 22 other nations in 1947 to draft the original
General Agreement on Tariffs and Trade. We helped found the GATT
because we--and the other 22 original ``Contracting Parties'' to the
GATT--believed that expanding trade would cause all those participating
to prosper and grow. [And it has: the rising tide has lifted all of our
boats.]
The United States government has believed that there is more to be
gained than lost by setting up international rules for trading among
nations. The 1947 GATT not only established tariff concessions, but
also a basic set of principles meant to guide how trade was to be
conducted. And we--the most powerful economy in the world then, as
now--made the decision that participating in trade under a set of
rules, brought more benefit to us than competing without rules in the
law-of-the-jungle situation. Thus we entered into this ``contract''
with our trading partners; and we, like they, have reaped the benefits
of this mutual contract ever since.
The Uruguay Round Agreements that will be implemented by the
legislation before us stand as a reaffirmation of our belief in the
value of the global trading system and its rules of play. And, as
history has shown us. these expanded rules will promote the free flow
of trade, and thus prosperity.
I want to emphasize that our participation in the world trading
system is best described as a contract: the United States, a sovereign
nation, agrees to abide by certain rules and guidelines, rules that we,
in fact helped draft. But we remain a sovereign nation which has the
right to withdraw from the contract at any point in time should we find
that the contract is no longer beneficial. The GATT is not a world
government that holds absolute power over members, but rather a
voluntary association made up of sovereign members; indeed, GATT
members are known as ``Contracting Parties!''
the world trade organization
That leads me directly to a topic that has received an overwhelming
amount of attention in recent months: the creation of the World Trade
Organization (WTO).
First and foremost, let me emphasize that the WTO is not some brand
new organization that suddenly has appeared on the scene. Rather, the
WTO is a formal--and yes, more effective--version of what we already
have is place in Geneva. The WTO will replace the ad hoc organization
that has administered the GATT rules since 1947. It is not a super-
government bent on controlling sovereign nations; the WTO's sole job is
to administer the global trade rules--just like its predecessor. It
cannot make changes in nations' domestic laws.
This is particularly true for the United States. When the Uruguay
Round Agreements go into effect, they will not nullify U.S. law. Only
Congress has the power to change U.S. law. Indeed, as the Senator from
California mentioned, the first substantive line (Section 102) of the
legislation before us explicitly states that no provision of the
Agreements that is inconsistent with U.S. law shall have effect.
Thanks to the new Dispute Settlement Understanding, the WTO will be
better able to referee international trade disputes and bring about
their resolution.
This is an objective for which we in the United States have been
pushing for years--and indeed, in 1988 Congress explicitly directed
USTR to negotiate more effective and expeditious dispute settlement
mechanisms. Why? Because we, as a nation who often brought trade
problems to the international forum, were perennially frustrated with
the procedures that allowed for endless delay and no finality. The
Europeans limited our soybean exports with complete impunity. The
Japanese kept our beef out without cause. The French banned our fish
exports out-of-the-blue. In each of these cases, the U.S. was
frustrated by an inability to resolved these cases through the
multilateral system because the GATT dispute settlement mechanisms were
too weak.
But now, we will be able to win effective relief. Let me take an
example that strikes close to home for most of us in New England. Last
March, after French fishermen rioted and burned down a town hall, the
French government suddenly--and for the flimsiest of reasons--banned
imports of foreign fish. This hit us in Rhode Island pretty hard. There
was nothing wrong with the fish whatsoever--it was clear that the
French took this action solely to appease their fishermen. Under the
old GATT dispute resolution, it would have taken years before a
decision was reached. But under the new system, the U.S. will be able
to take the French to dispute resolution immediately (with expedited
procedures for perishable products), avoid unfair delays, and win a
decision that would force the French to cease and desist, or else face
retaliation on their fish products (or ``cross retaliation'' on their
wines). If you want fair trade--this is it!
Now, some will say: But this powerful system will be used against the
U.S.! After all, what is good for the goose is good for the gander.
Granted--but look at the record. Who has the most open market in the
world? The U.S. Whom has history shown to be more often a plaintiff
than a defendant in Geneva? The U.S. Who has an impressive record in
winning complaints in Geneva? The U.S. It is safe to say that stronger
dispute settlement plays to our advantage.
Some say: in the WTO every nation--including tiny nations--will have
a vote, and they will outvote the U.S. every time. However, this
argument ignores the way the system works. Under the WTO--just like its
predecessor--each nation technically will have one vote. But does that
not mean we will be outvoted. Why?
(1) Because the WTO is directed to operate by consensus first and
foremost; (2) Because unlike the United Nations, there rarely is a vote
taken in the GATT. (In fact the last substantive vote was in 1959, 35
years ago. And (3) Because due to its size and impact on the world
economy, the U.S. plays a leading role in world trade matters, and its
view often carries the day.
The WTO is an integral part of the Uruguay Round Agreements. A nation
may not choose to join, say, the Agreement on Agriculture but not the
WTO. It is a package deal: join the WTO and gain all the benefits of
the updated GATT--or don't join and get nothing. As must every other
signatory nation, the U.S. must sign onto all the Agreements, including
the WTO, or forget the benefits of the Round altogether.
What if, however, at the end of the day the new WTO and Dispute
Settlement procedures just are not beneficial to the United States?
Simple: we get out. The Uruguay Round Agreements themselves allow any
nation to get out of the package upon a mere 6 months' notice.
Moreover, the implementing legislation explicitly calls for a review of
the WTO every five years, and if Congress so decides, it can vote to
take the U.S. out. And Senator Dole has worked with the Administration
on a plan to ensure that should WTO panels exceed their authority,
Congress can remove the U.S. from the WTO. It could not be any clearer:
if we don't like it, we can leave it.
closing
I believe we will find that the Uruguay Round will bring to this
nation great benefits that will increase our prosperity. I believe that
this Round will take its place in history as one of the most important
global agreements--both in terms of its size and in terms of its
impact--ever fashioned. And it is our leadership that has brought it
this far.
More than 30 countries already have given it their stamp of approval,
with 50 others expected to do so shortly. The European Union and Japan
are watching us closely to see what action we take. The future
stability and growth of the global trading system is in our hands.
Without the U.S., there will be no such trading system. A YES vote
advances our nation's and the world's prosperity. I shall vote for the
budget waiver and for approval of the Uruguay Round and urge my
colleagues to do likewise.
Exhibit 7
Consumers Union,
Publisher of Consumer Reports,
Washington, DC, September 28, 1994.
Hon. John H. Chafee,
U.S. Senate, Washington, DC.
Dear Senator Chafee: In the next few days, you will vote on
legislation that would approve and implement the GATT Uruguay
Round Agreement. Consumers Union urges you to vote ``YES''.
Through increased competition and economic expansion, this
agreement will benefit American consumers. We urge the
Congress to approve the Agreement this year, so that on
January 1, 1995, consumers can begin to realize its benefits.
The Agreement is a crucial first step in the continuing
effort to make the rules of world trade more consumer
friendly. It will eliminate or reduce a variety of barriers
that artificially increase consumer prices and reduce
consumer choice. While additional improvements to the world's
trading rules are needed and must follow the implementation
of the Uruguay Round, the first step, implementation, is
needed now.
Consumers Union has reviewed the issues relating to
protection of U.S. health, safety and environmental
standards. We believe that the Agreement is appropriately
written to protect these standards.
Your ``yes'' vote to ratify the GATT Uruguay Round
Agreement will be a ``yes'' vote for consumers.
Sincerely,
Mark Silbergeld,
Director, Washington Office.
Mr. SPECTER addressed the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. SPECTER. Mr. President, I ask for 20 minutes from the
distinguished Senator from Rhode Island.
Mr. CHAFEE. That will be fine.
The PRESIDING OFFICER. The Senator from Pennsylvania is recognized
for 20 minutes.
Mr. STEVENS. Will the Senator yield to me for just a moment?
Mr. SPECTER. Yes.
Privilege of the Floor
Mr. STEVENS. Mr. President, I ask unanimous consent that an intern
working on my staff at the present time, Dana Quam, be admitted for
floor privileges.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I support the General Agreement on
Tariffs and Trade, commonly known as GATT, because I am convinced that
it will help the American worker by creating many high-paying jobs,
that it will help the American consumer by bringing in locally priced
goods, and because it will be beneficial generally worldwide. History
favors free trade. In the long run, elimination of tariffs and trade
restrictions promotes commerce and leads to a higher standard of living
for all involved. The rising tide lifts all the boats.
In an era when so many say that the next generation will have a
lesser standard of living than the past generation, I think it is
incumbent on government to do everything we can to promote trade and to
promote a higher standard of living.
It is my view, Mr. President, that the American worker can compete
very well in worldwide markets notwithstanding any restrictions which
may be imposed on the United States in terms of wages, in terms of
environmental controls or whatever additional impediments there may be
because of the competitive force of the American worker.
So I am confident that in the long run we will be able to compete
very, very effectively providing there is reciprocity. And when we
lower tariffs and lower trade barriers, it is in effect a tax break and
a tax reduction for the American consumer.
The issue has been raised repeatedly about the question of loss of
sovereignty. I take a position second to none, Mr. President, on
insisting that American national sovereignty be maintained. But there
is no realistic issue about loss of American sovereignty in the so-
called GATT agreement. The basic protection on this critical issue is
our right to withdraw at any time from GATT on 6 months' notice.
The concern about potential unfairness to the United States is one
which I share. I have long urged, on legislation which I have
introduced in the course of the past decade, that there be a private
right of action to guarantee that U.S. industry would not be unfairly
impacted by subsidies or by dumping. And the arrangements which have
been worked out, with the leadership of the distinguished Senator from
Kansas, Senator Dole, I think, go a long way in guaranteeing that if
there is any unfairness to American industry or to the American worker,
it would be rectified by having a panel of Federal judges who will
review the decisions of the World Trade Organization to be sure that
there is no unfairness. This kind of review, which is in effect
appellate review, I think, is a very, very excellent remedy to
guarantee against unfairness to the United States. There are a series
of standards set out that if the World Trade Organization has three
decisions, according to the panel of United States judges, which are
unfair, arbitrary or capricious, or by misconduct, or by other
standards which are set forth explicitly, then a resolution of
withdrawal can be brought in the Congress of the United States and can
lead to immediate notification of the intention of the United States to
withdraw which will protect our interests if in fact we are treated
unfairly by the World Trade Organization.
There is no doubt, Mr. President, about the complexity of the pending
agreement and about the many provisions which will have to be
experienced to really understand exactly how they will work out. But
that happens any time any law is enacted in the United States or any
complex provisions are put into place to govern conduct in trade or
criminal law or from any sort of change in regulations governing our
conduct. If we find as a matter of trial and correction that it does
not work out, there can be a modification, or if it is onerous, we can
withdraw from the entire arrangement.
A question has been raised about the proceedings as to due process
and whether the decisions of the World Trade Organization will really
be fair. I think that this concern has been allayed by a number of
comments from Senators who have spoken to the fact that so much of what
is done in GATT is done by consensus. When you talk about due process
of law, we ought to note that in the United States there has been a
lengthy development as to what is due process in our own courts, and
those standards are changing with many, many modifications as to what
constitutes due process of law. Here again, I think in due course, if
we find that the procedures are insufficient, they can be changed; or
again, if they become very onerous or are deemed unfair to the United
States in the careful procedures worked out, we can withdraw from GATT.
As I view the current trade restrictions in the trade laws, I have
expressed on the floor of this Senate many times my dissatisfaction
with the way the International Trade Commission works when there is
some basic unfairness alleged by an American company, which injures an
American company or American workers; and when a complaint is taken
under current law to the International Trade Commission, it takes a
long period of time before there is a decision. There has been no
injunctive relief stopping the unfair trade practice. When the decision
is handed down, the damages are prospective only, meaning it applies
only to the future; so that if an American company or American workers
are injured, it is just too bad as to what happened in the past. If
under some circumstances there is a surge or an increase in imports as
a result of the complaint filed by an American company, there can be
some remedy for past conduct. But in decisions which frequently take
more than a year, that remedy is limited to a few months, so what we
have at the present time under the International Trade Commission
hardly compensates for existing unfair trade practices.
With the new arrangements under GATT, we find that many items will be
covered which have not been covered up to the present time, such as
intellectual property, services, and agriculture. Agriculture is the
leading industry in Pennsylvania, as it is a major industry in the
United States. GATT offers unique opportunities for increased exports
for the American farmer.
The steel industry which has been very hard hit by unfair imports, by
subsidies from foreign governments, and from dumping, is an industry
which will be very materially assisted by GATT, according to the
leading executives of the steel industry in Pennsylvania.
In supporting GATT, I express my concern about the impact in the
short run on the loss of jobs. That is a concern which I have had
during the course of the 14 years which I have been in the U.S. Senate.
When the American work force, especially the work force in a State like
Pennsylvania, has been so badly damaged by unfair imports and by
dislocations in the work force, to the extent that this occurs, I think
we will have to take action in the U.S. Congress to make sure that
there is adequate compensation for workers who are injured in the short
run.
The industrial organizations have been very, very strong in their
support of GATT. In a State like Pennsylvania, with very strong labor
interests, I have had some constituent objections, but some of the
labor groups think in the long run GATT will provide more jobs. That is
certainly my conclusion. So that looking on GATT as a whole, I think it
offers a really great promise for the future. It is by no means a
certainty, but there are escape clauses and escape valves, so that if
the U.S. is not treated fairly, or if it does not work out for the
benefit of the U.S., we have ample opportunity to protect U.S.
interests by withdrawing.
With respect to the waiver of the Budget Act, Mr. President, I
propose to support that. The Congressional Budget Office, I think, too
often in making the estimates for revenue loss does only for the very
short run. I believe that in the longrun GATT will provide very, very
substantial increases in revenue to the U.S. Treasury because of the
increased trade, increased wages, higher paying jobs, leading to
greater revenues.
Mr. President, I have sought recognition during this debate of the
Uruguay Round of the General Agreement on Tariffs and Trade, commonly
known as GATT, because in my view we are looking at a tremendous
opportunity--not frequently seen in my 14 years here in the Senate--to
create many, many high-wage jobs in this country as a direct result of
reduced tariffs and trade barriers that have impaired the ability of
U.S. companies to effectively sell their products abroad. While
concerns exist with certain aspects of the Agreement, I believe on
balance we should pass the GATT.
The GATT promises to cut tariffs on average by one-third on
manufactured products and will eliminate tariffs in ten sectors that
the United States is particularly competitive. For the first time, it
will cover intellectual property, services, and agriculture--all of
which are major exporting sectors of the U.S. economy. According to the
General Accounting Office the GATT is projected to produce $100 to $200
billion a year in added income by 2004. The GATT also promises
important export opportunities for U.S. concerns as it will remove many
trade barriers that they currently face. This opening of new markets
for U.S. industries competing overseas like, agriculture, steel, glass,
chemicals, and pharmaceuticals will, in my judgment, increase jobs
significantly in this country.
My home State of Pennsylvania, like the United States as a whole, is
vitally dependent on foreign trade for its economic health.
Pennsylvania's trade with countries all around the globe is worth
billions of dollars. According to the International Trade
Administration, in 1993 Pennsylvania was ranked 10th out of all 50
States in exports. In 1992, Pennsylvania's 10.6 billion dollars' worth
of exports was comparable to the entire gross domestic product of
countries like Cameroon, Ecuador, and Tunisia. According to the
International Trade Administration, some of the Pennsylvania sectors
that will benefit from the implementation of the GATT are: steel mill
products, industrial and analytical instruments, computer equipment,
construction machinery, household glassware and pottery, and
pharmaceuticals.
There is strong constituent support in my State for GATT. There will
be new high paying jobs for many people from increased export
opportunities and additional revenues according to data supplied to me
from many key Pennsylvania companies including Armstrong World
Industries, Bethlehem Steel, Hershey Foods, Rohm & Haas, Unisys
Corporation, and U.S. Steel.
The employees of Grove Worldwide which is based in Shady Grove, PA,
and manufactures construction equipment, sent me pages of petitions
urging me to vote for the GATT. PPG Industries, wrote with their
comments in support of the legislation. For them, the GATT will provide
guidelines for the protection of intellectual property, trade in
chemicals and will open markets, besides being a tremendous benefit to
consumers. Warner Lambert, in Lititz, PA, stated similar reasons for
supporting the GATT.
According to Mr. Jim Unruh, chairman and CEO of Unisys Corp. in Blue
Bell, PA, U.S. computer industry exports to the European Union exceeded
$10 billion in 1993. Under the GATT, the European Union, which is the
largest market for U.S. computer exports, will reduce tariffs by nearly
80 percent. While difficult to quantify, it seems clear that industry
revenues will increase as a result of reduced tariffs. Mr. Unruh goes
on to inform me that requirements to set up local assembly or research
facilities as a precondition to doing business in certain markets will
be reduced or eliminated under GATT thereby increasing U.S. job
opportunities. U.S. Steel, based in Pittsburgh, urges me to support the
agreement because it, and I quote, ``will assist domestic manufacturing
in its ability to compete internationally.'' In addition to that,
numerous employees of the steel industry have recently written to me
urging me to vote for GATT. They recognize the benefits of lower
tariffs which leads to a better trading environment, fostering economic
growth and good jobs.
The support for this agreement continues: General Electric, which has
a significant presence in my State, informs me that almost 40 percent
of their total revenue comes from international activity. The GATT
would assist them in opening global markets and level the playing field
in European trade. Miles, Inc., which employs 1,700 in Pennsylvania and
plays a vital role in the Pittsburgh economy, urges me to support the
GATT because it would protect their copyrights and patents, and lower
the costs on almost all their raw materials. Procter & Gamble, which
also has several facilities in my State, estimates that more than
10,000 jobs will be created for Procter & Gamble and their suppliers in
the United States over the next 10 years.
Again and again, the message is the same: It is important to pass the
GATT so that U.S. businesses can remain competitive worldwide.
As was the case during our consideration of NAFTA--the North American
Free-Trade Agreement--in the first session of this Congress, my main
worry in supporting GATT is the potential loss of jobs in the short
run. No one can question my consistent support of the interests of
working men and women be it supporting increases of minimum wage,
extending unemployment benefits, expanding job training or increasing
funding for displaced workers. In balancing the short term job loss
with the anticipated long-term job gains, however, my sense is that we
should proceed with GATT and make sure that the Federal Government
takes all appropriate steps to assist workers displaced by the effects
of GATT.
While it is clear that this agreement is not perfect, I know of no
trade agreement that is. There are those that urge us to reject this
agreement, however, there is no guarantee that doing so will net a
better agreement. Many businesses and industries have had to accept
compromises, but they believe that this agreement is the best one that
can be secured. The United States is a global trading partner and
leader. Delaying passage of this agreement will likely send a dangerous
message to the world marketplace. In my view, it is unwise to delay or
prevent passage when we stand to gain so much in terms of jobs and
increased revenues.
Legitimate concerns regarding U.S. sovereignty and fairness have been
raised about the new World Trade Organization, the new international
agency authorized under the GATT to enforce the provisions of the
agreement. But I believe that we can deal with these. We in Congress
must and will closely monitor the actions of the World Trade
Organization as it concerns our interests.
In this regard, it is important to note that there are several checks
on the ability of member countries to negate the U.S. influence within
the WTO. First, member countries are expected to continue the GATT
tradition and practice of reaching a decision by consensus. In fact,
article IX of the World Trade Organization Agreement makes it clear
that the practice of consensus is the primary means by which WTO
members will seek to make decisions.
Second, within the legal framework of the agreement, voting
safeguards are included in the event that a WTO vote should be
required. These include unanimity in certain instances and super-
majority in others. Moreover, super-majority votes will apply only to
those countries voting in favor of them. Under this framework,
therefore, it seems that the WTO cannot force the United States to do
something that is against its national interest. Nor can it overturn
our laws; that remains the sole jurisdiction of our legislative bodies,
both State and Federal.
This is particularly important as it concerns our antidumping and
countervailing duty laws and other trade laws such as Super 301 that
allow us to redress unfair trading practices. I have constantly fought
any weakening of these trade laws and in fact have sought to strengthen
them. When the so-called Dunkel draft of the GATT was made available in
December 1991, I wrote to then U.S. Trade Representative Carla Hills
strongly objecting to it because it would weaken U.S. trade laws with
regard to dumping and subsidized imports. In my extensive travels
through Pennsylvania's 67 counties, I have seen the problems of
Pennsylvania's working men and women including the injury caused by
dumping and subsidized imports which violate the principles of free
trade--which means cost of production plus a reasonable profit, free of
foreign governmental subsidies, or dumping. Additionally, since 1982, I
have sponsored and pushed legislation which would create a private
right of action in the Federal courts to enjoin dumped an subsidized
imports and to compensate workers and companies which have sustained
serious damages from such imports. As I have frequently stated, there
is nothing like the vigor of private plaintiffs when it comes to the
enforcement of our trade laws. Fortunately under the GATT implementing
language, our antidumping and countervailing duty laws remain intact
and the President still has the Super 301 powers at his disposal.
Third, an additional safeguard is the option to withdraw from the WTO
on 6 months notice as determined by the President or, importantly, by
the Congress, in the event of three adverse WTO decisions within a 5-
year period as was recently agreed to by the administration.
It should be mentioned that in other areas the United States would
benefit from the WTO. The WTO would provide oversight functions and
would subject member nations to GATT disciplines and rules of conduct.
We will also benefit from a better written set of principles for
dispute resolution which have been noticeably absent in the past, and
has caused harm to the United States.
There is also concern regarding the deficit and waiving the budget
rules in favor of the GATT. While there is no doubt that this agreement
will reduce tariff rates and subsequent revenue, I think it is
important to look at the long-term benefits of the agreement.
As former U.S. Trade Representative Carla Hills pointed out in her
November 22, 1994, Washington Post op-ed such benefits are
extraordinary. Citing economic projections, she states the GATT will
give us nearly $1 trillion in new economic growth in the next 10 years.
Unfortunately, the budget rules do not allow us to take that estimate
into consideration. While we must fund future revenue losses, we cannot
use future benefits to account for them.
As an economic fiscal conservative, I, too, believe that the
Government must live within its means. But there are times when the
needs of the country are such that we must spend a little to get a lot.
And I believe that this is one of those rare instances when a waiver is
in our best interest. Waiving the budget rules for the GATT is a wise
investment. By providing a more open trading environment for U.S.
businesses, we gain business growth which leads to greater revenue and
the creation of more jobs and better opportunities in the long run.
In sum, Mr. President, this agreement is about jobs and the long-term
economic growth of the United States. More and more, jobs in this
country are dependent on the international economy. We have a
responsibility to strengthen those positions and expand the
opportunities for American economic growth. This agreement is also
about strengthening bonds and enhancing global peace and security by
bringing the economies of the world closer together. With this
agreement, the United States will be sending the message that we will
continue our commitment to global economic partnerships in the post-
Cold War era. For these reasons, I urge my colleagues to support this
legislation.
Mr. HOLLINGS. Mr. President, I understand, having talked to our
distinguished chairman on this side, that I have just a few minutes
remaining, in order to reserve the 2 hours for tomorrow. I understand
that is their intent also.
With that understanding, I can make a few comments; is that correct?
Mr. MOYNIHAN. That is correct, sir.
Mr. HOLLINGS. Mr. President, I ask unanimous consent that an article
by Lars-Erik Nelson, ``The Victims of Free Trade,'' be printed in the
Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Washington Post, Nov. 26, 1994]
The Victims of Free Trade
For its next disaster, the Clinton administration is making
another one of those blunders that make ordinary Americans
wonder, ``Whose side are these guys on?''
In blind devotion to a perpetually disappointing economic
theory, President Clinton and his aides are fighting for
swift passage of the GATT, the general agreement on tariffs
and trade. Sure, free trade will cost us some jobs in the
short run, its advocates admit. But Vice President Al Gore
promises that the GATT will be the biggest tax cut in history
and ``will lower prices for consumers.''
Has it not dawned on these folks that America's most
burning problem is not that consumer prices are too high? It
is that our cities--once the joy of human civilization--are
ever more dangerous slums, filled with the unskilled and
unemployable victims of what economists celebrate as
``progress.''
America has not yet solved the social upheaval of the Great
Migration of southern farm workers to the North, yet it is
ready to dislocate millions more of its workers in the name
of economic efficiency.
``The economists never want to talk about the social costs
of free trade,'' complains a Senate Democratic source.
``Urban decay is by far the most important problem in the
country.''
It is particularly mindless for the Clinton administration
to press for the GATT now. Its own welfare reform plan--and a
far more Draconian one being pushed by Republicans--would
force welfare recipients into the job market at the same time
that GATT would kill the kind of low-wage, industrial jobs--
in the garment industry, for example--that traditionally are
the first step up the job ladder.
To the economists, these are ``bad jobs,'' better shipped
to low-wage countries. But if you're trying to end welfare,
there is no such thing as a bad job. Any job is better than
perpetuating welfare handouts, generation after generation.
Second, previous trade agreements have come with the
promise of aid to workers who lose out. The new Republican-
controlled Congress, however, regards such programs,
especially those aimed at inner cities, as ``pork-barrel
spending.'' The Republicans would far sooner spend $3 billion
for prisons to hold the dislocated than $3 billion for job
training.
Resisting free trade is a tricky business. You find
yourself on the same side as the paranoid yahoos who opposed
fluoridation of water 40 years ago--and for the same
reason: They saw the whole thing as an international
conspiracy to deprive Americans of their freedom.
But for millions of Americans, free trade has not lived up
to its promise. We are the freest-trading country in the
world, and our incomes have stagnated for the past 20 years.
once-secure employees live in dread of being laid off in the
name of ``global competition.''
And the argument that free trade creates even better jobs
for those who educate themselves is belied by the unending
stream of middle-management layoffs and the spectacle of
college graduates managing all-night grocery stores.
Yet the economists keep foisting their theory on the
Clinton administration. ``No proposition enjoys greater
unanimity among economists than the idea that free-trade
will, on net, be a win-win situation,'' says Rob Shapiro, a
non-dogmatic economist at the Progressive Policy Institute.
``At the same time, we are seeing something we have never
seen before--relatively backward countries producing advanced
products. Koreans and Mexicans producing automobiles. We have
figured out how to export our high-tech factories to low-wage
countries--and we have not figured out how to deal with the
consequences.''
This is why, Shapiro says, economists close their eyes to
the social costs of free trade. ``They don't know how to deal
with the problem--but they can't give up the economics of
free trade,'' he says. ``The fact is, there are significant
social costs.''
With the economists--and politicians--ducking the question,
it has been left to a maverick Anglo-French businessman, Sir
James Goldsmith, to raise the alarm about free trade's
downside. In a current book, ``The Trap,'' he makes this
simple argument:
``The real cost to consumers of cheaper goods will be that
they will lose their jobs, get paid less for their work and
have to face higher taxes to cover the social cost of
increased unemployment * * *. As unemployment rises and
poverty increases, towns and cities will grow even more
unstable. So the benefits of cheap imported products will be
heavily outweighed by the social and economic costs. * * *.''
Yes, I like my VCR. But it wasn't worth losing Brooklyn.
Mr. HOLLINGS. Mr. President, I ask unanimous consent that a list of
the organizations in opposition to GATT be printed in the Record at
this point.
There being no objection, the list was ordered to be printed in the
Record, as follows:
For more information on these issues:
Environmental
Friends of the Earth (202) 783-7400
Greenpeace (202) 462-1177
National Wildlife Federation (202) 797-6800
Sierra Club (202) 547-1141
LABOR
AFL-CIO Trade Task Force (202) 637-5000
Amalgamated Clothing and Textile Workers Union (ACTWU)
(202) 628-0214
International Brotherhood of Teamsters (202) 624-6800
International Ladies Garment Workers Union (202) 347-7417
International Union of Electronic, Electrical, Salaried,
Machine and Furniture Workers (IUE) (202) 296-1200
CONSERVATIVE
The American Cause (703) 827-9200
Coalition for Americas (202) 546-3003
The Eagle Forum (202) 544-0353
U.S. Business and Industrial Council (202) 628-2211
Citizen
Citizen Action (202) 775-1580
Citizens Trade Campaign (202) 879-4297
Government Accountability Project (202) 408-0034
National Rainbow Coalition (202) 728-1180
Ross Perot's United We Stand America (214) 450-8803
Farm
American Corngrowers Association (202) 835-0330
Institute for Agriculture and Trade Policy (612) 379-5980
National Family Farm Coalition (202) 543-5675
National Farmers Union (202) 554-1600
Rural Coalition (703) 534-1845
Consumer
Community Nutrition Institute (202) 462-4700
Public Citizen (202) 546-4996
Public Interest Research Group (PIRG) (202) 546-9707
National Consumers League (202) 639-8140
Humane and Animal welfare
Animal Welfare Institute (202) 337-2332
American Humane Association (202) 543-7780
American Society for the Prevention of Cruelty to Animals
(ASPCA) (202) 232-5020
Humane Society of the United States (202) 452-1100
American Humane Association, Animal Protection Institute,
Center for International Environmental Law, Community
Nutrition Institute, Defenders of Wildlife, Earth Island
Institute, EarthKind, Environmental and Energy Study
Institute, Friends of the Earth, and Fund for Animals.
Greenpeace, Humane Society of the United States, Human
Society International, International Fund for Animal Welfare,
National Wildlife Federation, Sierra Club, Society for Animal
Protective Legislation, US PIRG, World Society for the
Protection of Animals, and World Wildlife Fund.
california
Ban Waste Coalition and West Valley Coalition--Phil Klasky,
Director
Bob Benson, Professor, Loyola University Law School*
California Citizen Action--Daniel Lambe, Director
California Communities Against Toxics--Stormy Williams,
President
California Network for a New Economy--Carol Webb, Labor
Representative
Center for Community Action and Environmental Justice--
Penny Newman, Director
Center on Race, Poverty and the Environment--Luke Cole,
Director
Citizens for a Better Environment--Mike Belliveau,
Executive Director
Citizens for the Chuckawalla Valley--Donna Charpied,
Director
Citizens Clearinghouse for Hazardous Waste--Annamarie
Stenberg, Director
Clean Water Action--Bruce Lee Livingston, California
Director
Community Alliance with Family Farmers--Thomas Haller,
Executive Director
Concerned Residents of Commerce--Anthony Thorpe, Director
Concerned Citizens of Pico Rivera--Ophelia Rodriguez,
President
Concerned Citizens of South Central Los Angeles--Kathleen
Allen, Coordinator
Contra Costa County Central Labor Council--Steve Robeiti,
Executive Secretary-Treasurer
Desert Citizens Against Pollution--Jane Williams, Director
Desert Environmental Response Team--Ray Kirkham, Director
Earth Island Institute--Dave Phillips, Co-Executive
Director
Eddie Wong, Regional Director, Rainbow Coalition*
Environmental Coalition of UCLA
Greenpeace--David Chatfield, Regional Director
International Ladies Garment Workers Union Pacific Coast
Division--Katie Quan, Manager
Jobs and the Environment Campaign--Jon Mayer, California
Director
Labor/Community Strategy Center--Eric Mann
L.A. Rainforest Action Project--Atosa Soltani, Director
Mendocino Environmental Center--Gary and Betty Bail, Co-
Directors
Mothers of East Los Angeles/Santa Isabel--Juan Gutierrez,
President
Northern California Interfaith Council on Economic
Justice--Sydney Brown, President
Northern California Labor Council for Latin American
Advancement--Frank Martin del Campo, President
Pacific Advocates--Patricia Schifferle
People for Clean Air and Water of Kettleman City, CA--Mary
Lou Mares, President
Peninsula Peace and Justice Center--Paul George, Director
Pesticide Action Network--Monica Moore, Program Director
Rainforest Action Network--Randall Hayes, Executive
Director
Robert McAfee Brown, Professor Emeritus, Pacific School of
Religion*
Sacramento Valley Toxics Campaign--Mark Fleming, Executive
Director
Sam Schuchal, Executive Director, California League of
Conservation Voters*
San Diego Environmental Health Coalition--Diane Takvorian,
Executive Director
Sheldon Plotkin, Coordinator, Southern California
Federation of Scientists
Sierra Club Southern California--Larry Freilich, Director
Sierra Club--Carl Pope, Executive Director
Sierra Club--Barbara Boyle, Regional Director
Sonoma County Conservation Action--Mark Green
South Bay Labor Council--Amy Dean, Business Manager
San Mateo Central Labor Council--Art Pulaski, Business
Manager
Southwest Witness for Peace--Lynne Halpin, Grassroots
Coordinator
Southern Kern Residents Against Pollution
Student Environmental Action Coalition--Abdi Soltani,
Coordinator
Ted Smith, Executive Director, Silicon Valley Toxics
Coalition*
Urban Habitat Program--Carl Anthony, Executive Director
connecticut
American Friends Service Committee
Connecticut Citizen Action Group
Connecticut Occupational and Safety Hazards
Connecticut State Federation of Teachers
Environmentalists to Elect Legislators (ELECT)
Greenpeace New Haven
International Association of Machinists
Labor Party Advocates
Legislative Education Action Program
New England Health Care Workers, 1199
Sierra Club
United Auto Workers
United We Stand
We the People
Georgia
AFL-CIO Region V
Amalgamated Clothing and Textile Workers Union
Communication Workers of America
ECO Action
Georgia Citizen Action
Georgia State Employees Union
Graphics Communications International Union
Greenpeace
International Brotherhood of Electrical Workers
International Ladies Garment Workers Union
Public Citizen
Sierra Club
Southern Organizing Committee for Economic and Social
Justice
United Food and Commercial Workers Union
Illinois
African American Citizen Coalition of Regional Development
(AACCORD)
Amalgamated Clothing and Textile Organization of Retirees
(ACTOR)
Amalgamated Clothing and Textile Workers Union--Chicago and
Central States Joint Board
American Federation of State, County and Municipal
Employees Council 31
American Friends Service Committee Great Lakes Region
American Income Life Insurance Company
Bensenville Senior Citizens Club
Broken Arrow
Diocese of Joliet Peace and Social Justice Ministry
Chicago Federation of Labor
Chicago Greens
Chicago Journeyman Plumbers Local 130
Chicago Recycling Coalition
Chicago Senior Senate
Coalition of Labor Union Women-Chicago Chapter
Colombia J/Human Rights Committee
Congregation of Alexian Brothers, Elk Grove Village
Congregation of Sisters of Saint Francis of Mary
Immaculate, Joliet, Illinois
Democratic Socialists of America-Illinois
Diocese of Joliet Peace and Social Justice Ministry
Federation for Industrial Retention and Renewal
Greater Chicago Council of Senior Citizens
Greenpeace
Holy Cross/Immaculate Heart of Mary Parish Social Action
Committee
Illinois Public Action
Illinois State Council of Carpenters
Illinois State Council of Machinists
Illinois State Council of Senior Citizens
Illinois Stewardship Alliance
Independent Voters of Illinois/Independent Precinct
Organization (IVI-IPO)
International Association of Machinists Automobile
Mechanics Local 701
International Association of Machinists Retirees Local 1487
International Association of Machinists Retirees Local 353
International Association of Machinists Local 113
International Brotherhood of Teamsters Local 706
International Brotherhood of Teamsters Local 743
International Brotherhood of Teamsters Local 714
International Ladies Garment Workers Union--Midwest Region
Joliet Franciscan Sisters
Lake Michigan Federation
Metro Seniors in Action
Midwest Center for Labor Research
Monsignor John Egan, DePaul University*
Motion Picture Projectionists, Operators and Video
Technicians Local 110
National Coalition of American Nuns
National Farmers Organization
Nigaragua Solidarity Committee
Our Lady of the Ridge Parish Family
Palos Hills Seniors
Peoria Environmental Action Committee for the Earth
Prairie Preservation Society of Ogle County
Regional Association of Concerned Environmentalists
Samuel Levin Retirement Centre
Samuel S. Epstien, MD, Chairman Cancer Prevention Committee
University of Illinois at Chicago School of Public Health
Save our Jobs Committee--Chicago
Schools Sisters of St. Francis
Service Employees International Union Illinois Council
Service Employees International Union Local 46
Service Employees International Union Local 73
Sheet Metal Workers Local 115
Sierra Club
SOAR Steelworkers Retirees
St. Nicholas of Tolentine Church, Chicago
St. Pius V Parish
Synapses
The Womens Office--Sisters of Charity, BVM
Thorium Action Group
United Auto Workers Union Region 4
United Auto Workers Retirees Local 59
United Auto Workers Retirees Local 152
United Auto Workers Retirees Local 588
United Food and Commercial Workers Union Local 546
United Food and Commercial Workers Local 881 Retirees
University Professional of Illinois Local 4100 IFT, AFT
U.S. Guatemala Labor Education Project
Viet Nam Veterans Against the War
Wellington Avenue United Church of Christ Outreach
Committee
Women for Economic Justice
Women for Economic Security
Women for Guatemala
8th Day Center for Justice
Iowa
Catholic Rural Lie, Sioux City Diocese
Iowa Citizen Action Network
Iowa Family Farm Coalition
Iowa Farmers Union
Iowa Federation of Labor
Iowa Peace Network
Iowa National Farmers Organization
PrairieFire Rural Action
Rick Avery, United Auto Workers Local 997, Newton, Iowa*
Margaret Vernon, Des Moines Presbytery*
Jay Howe, Rural Caucus, Greenfield, Iowa*
Fr. John Cain, Coalition to Preserve the Family Farm*
massachusetts
ACORN
American Friends Service Committee
Boston Committee in Solidarity with the People of El
Salvador
Boston Mobilization for Survival
Central America Solidarity Association
Citizen Action of Massachusetts
Citizens for Participation in Political Action
Clean Water Action
Communications Workers of America, District One
Community Church of Boston
Democratic Socialists of America (Boston)
Gay and Lesbian Labor Activist Network
Grassroots International
Greater Roxbury Workers' Association
International Brotherhood of Teamsters Local 122
International Brotherhood of Teamsters Local 504
IUE Local 201
Jobs and Environment Campaign
Jobs with Justice
Lawrence Grassroots Initiative
Merrimac Valley Greens
Massachusetts Public Interest Research Group (PIRG)
Massachusetts Senior Action Council
Massachusetts Teachers Association
Massachusetts Toxics Campaign
Neighbor to Neighbor
Service Employees International Union Local 285
Service Employees International Union Local 509
United Electrical, Radio and Machine Workers, District
Council Two
United Electrical, Radio and Machine Workers Local 204
United Electrical, Radio and Machine Workers Local 262
United Electrical, Radio and Machine Workers Local 271
United Steel Workers of America Local 12003 (Gas workers)
Western Massachusetts Coalition for Occupational Safety and
Health
Women's Action Coalition
minnesota
Amalgamated Clothing and Textile Workers Northern District
Joint Board
American Federation of Television and Radio Artists--Twin
Cities Local
American Federation of Grain Millers Local 118
American Federation of Grain Millers Local 264
American Federation of State County and Municipal Workers
Carpenter Local 1644
Catholic/Lutheran Northwestern Minnesota Rural Life
Commission
Central Minnesota AFL-CIO Trades and Labor Assembly
Clean Water Action Alliance
Communications Workers of America Local 7200
Communist Party of Minnesota
Duluth AFL-CIO Central Body
Fair Trade Campaign
Guatemala Solidarity Committee
Institute for Agriculture and Trade Policy
International Association of Machinists Lodge 459
International Association of Machinists Air Transport
District 143
International Association of Machinists Airline Local 1833
International Brotherhood of Teamsters Local 792
International Union of Electrical Workers Local 1140
International Woodworkers of America Local III-33
Justlife, Minnesota
League of Rural Voters
Millrights and Machinery Erectors Local 548
Minneapolis Central Labor Union Council
Minnesota Coalition of Labor Union Women
Minnesota Farmers Union
Minnesota Green Party
Minnesota Safe Food Link
Minnesota Women's Political Alliance
Minnesotans for Safe Food
National Organization of Women--Minnesota Chapter
Oil, Chemical and Atomic Workers Local 6-662
Oil, Chemical and Atomic Workers Local 6-75
Oil, Chemical and Atomic Workers Local 6-418
Oil, Chemical and Atomic Workers Local 6-409
Red Wing Area AFL-CIO Council
Resource Center of the Americas
St. Croix Valley Central Labor Union
St. Joan of Arc Catholic Church Peace and Justice Committee
St. Paul Trades and Labor Assembly
The Working Group on Economic Dislocation
United Church of Christ, Minnesota Conference
United Electrical, Radio and Machine Workers Local 1139
United Paperworkers International Union Local 264
United Steel Workers of America District 33
United Steel Workers of America Local 7263
Veterans for Peace, Minnesota Chapter
Women Against Military Madness
Women Religious for Justice
Mississippi
Jesus People Against Pollution, Marion County
Chisholm Community Improvement Project, Lincoln County
Tallahatchie County Union for Progress
MS Environmental Networking Group
Southern Echo
MS Association of Cooperatives
Federation of Southern Cooperatives (Regional)
Montana
Alternative Energy Resources Organization
International Brotherhood of Teamsters Local 2
International Brotherhood of Teamsters Local 190
Montana Audobon Society
Montana Farmers Union
Northern Plains Resource Council
Operating Engineers Local 400
New Jersey
New Jersey Environmental Federation
Chemical Workers Association
Burlington Central Labor Council
Mercer Central Labor Council
South Jersey Work On Waste
Coalition of Union Retirees Organization
New Jersey Citizen Action
New York
Albany Public School Teachers Association
Albany Typographical Union
ACCESS/Attorney--Peter Hill, Oneonta
Amalgamated Clothing and Textile Workers Union, Glove
Cities Area District, NY-NJ Regional Joint Board
American Lung Association of New York State
Americans Removing Injustice, Suppression and Exploitation
(ARISE)
Animal Rights Action
Babylon Environmental Education Seminar
Capital District Labor and Religion Coalition
Central New York Labor Agency
Citizen Action of New York
Citizens Against Radioactive Dumping
Citizens' Environmental Coalition
Citizens of Wyoming County
Coalition on West Valley Nuclear Wastes
Communication Workers of America Local 14164/Tri County
Labor Council--Elsa McDonald, Business Agent
Communication Workers of America Local 1118
Communication Workers of America Local 1127
Cornerstone Project for Sustainable Agriculture
Don't Waste Connecticut
Don't Waste New York
Earth Island Institute
Environmental Research Foundation
Farmworker Legal Services of New York
Five Towns Forum
Fort Crailo Neighborhood Association
Great Neck SANE/ Peace Action
Greenworking
Huntington Peace Center
Industrial Workers of the World
Injured Workers of New York
International Association of Machinists and Aerospace
Workers--William Sparro, Business Rep., Elmira
International Association of Machinists and Aerospace
Workers District 58
International Brotherhood of Electrical Workers/Binghamton
Long Island Alliance for Peaceful Alternatives
Long Island Progressive Coalition
Marxist Forum of Great Neck
Nassau Democratic Socialists of America
New York Coalition for Alternatives to Pesticides
New York State Grange
New York State Greens
New York State Labor and Environment Network
New York State Sustainable Agriculture Working Group
Oil, Chemical and Atomic Workers International Union
Protect a Clean Environment (PACE)
Radioactive Waste Campaign
Rainbow Alliance for a Clean Environment
Research and Education Project of Long Island
Rural Opportunities, Inc., Safety and Health Unit
Scenic Hudson, Inc.
Security and Law Enforcement Employees Council 82, American
Federation of State, County and Municipal Employees, AFL-CIO
Service Employees International Union Local 200D
Sierra Club Atlantic Chapter
South Shore Citizens for Survival
Syracuse Peace Council
Syracuse Real Food Coop--Larry Rutledge, President
Transport Workers Union Local 100
United Auto Workers Local 624
United Auto Workers Local 1686
United Electrical, Radio and Machine Workers of America
United Paperworkers International Union Region II
United Steelworkers of America
United We Stand America--Vincent Stark, Gilbertsville
United We Stand America--Vincent Stark, Gilbertsville
United We Stand America--James A. Zuch, Syracuse
Work and Environment Initiative
Oklahoma
Oklahoma Organic Association--Gordon Graham, President
Oklahoma Toxics Campaign--Earl Hatley, Director
Sierra Club--Mike Arnett, Regional Chair Oklahoma City
Oregon
Amalgamated Clothing and Textile Workers Union
Central America Task Force
Central Oregon Forest Issues Committee
Committee in Solidarity with the Central American People
Friends of British Columbia Forests
International Association of Machinists and Aerospace
Workers
International Chemical Workers Union, Local 109
Labor-Environment Solidarity Network
Kalmiopsis Audubon Society
Native Forest Council
Northwest Coalition for Alternatives to Pesticides
Northwest Environmental Advocates
Northwest Farmers Union
Northwest Oregon Local Council
Oil, Chemical and Atomic Workers International Union
Oregon AFL-CIO
Oregon Grassroots
Oregon League of Conservation Voters
Oregon Natural Desert Association
Oregon Natural Resources Council
Oregon Peaceworks
Oregon Tilth
Oregon Wildlife Federation
Pacific Party
Portland Central American Solidarity Committee
Portland Jobs with Justice
Portland Peace Works
Portland Rainbow Coalition
Sierra Club, Oregon Chapter
United Consumers of Oregon
United Steelworkers of America District 38
Women's International League for Peace and Freedom
Woodworkers Division, International Association of
Machinists
Vermont
Food & Water, Inc.
International Brotherhood of Teamsters
Peace and Justice Coalition
Rural Vermont
Sierra Club
United Electrical, Radio, and Machine Workers of America
Vermont Jobs with Justice Coalition
Vermont Natural Organic Farmers Association
Vermont Public Interest Research Group
Vermont State Labor Council, AFL-CIO
Washington
Friends of the Earth
Northwest Office
Northwest Sierra Club
Washington Toxics Coalition
Washington State Rainbow Coalition
Washington Biotechnology Action Council
Wisconsin
Allied Council of Senior Citizens of Wisconsin
Amalgamated Clothing and Textile Workers Union Wisconsin
District
A.O. Smith Steelworkers DALU Local 19806
Citizens for Fairness to U.S. & Mexico Workers
HONOR, Inc.--Honor Our Neighbors Original Rights
International Ladies Garment Workers Union District 3
Jobs with Peace
League of Rural Voters
Milwaukee County Labor Council
United Electrical, Radio, and Machine Workers of America.
Wisconsin
University of Wisconsin Greens
University of Wisconsin at Milwaukee Latino Student
Association
University of Wisconsin at Milwaukee Student Association
United Paperworkers International Union Local 7232
Wisconsin Citizen Action
Wisconsin Family Farm Defense Fund
Wisconsin Farmers Union
Wisconsin Farmland Conservancy
Wisconsin Greens
Wisconsin Injured Workers Vocational Rehabilitation Center
Wisconsin Milk Marketing Cooperative
Wisconsin Public Interest Research Group (WISPIRG)
Wisconsin Sierra Club
Wisconsin United We stand America
Wisconsin for Peace
*Organization listed for identification purposes only.
Mr. HOLLINGS. Mr. President, I ask unanimous consent that an article
by Edward Luttwak in the Sunday Washington Post, ``Will Success Spoil
America?'' be printed in the Record at this point.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Washington Post, Nov. 27, 1994]
Will Success Spoil America?--Why the Pols Don't Get Our Real Crisis of
Values
(By Edward N. Luttwak)
Having tried George Bush, who showed himself blithely
unaware of the very existence of the problem, and having
tried Bill Clinton, who spoke as if he knew all about it but
failed to act, the American electorate has now given a two-
year opportunity to the congressional Republicans to show
that they can understand the problem and also come up with
valid remedies.
The problem in question is the unprecedented sense of
personal economic insecurity that has rather suddenly become
the central phenomenon of life in America, not only for the
notoriously endangered species of corporate middle managers,
prime targets of today's fashionable ``downsizing'' and
``reengineering,'' but for virtually all working Americans
except tenured civil servants--whose security is duly
resented.
Individual Americans who are neither economists nor
statisticians do not focus on the economy's overall rate of
growth, but rather on the security of their own jobs. Hence
the vigorous recovery that provoked the Federal Reserve's
anti-inflationary crusade cannot assuage personal fears. And
the source of these fears is obvious: The once highly
regulated and internationally dominant U.S. economic system
has given way to a far more dynamic but also much more
unstable turbo-charged capitalism open to the world's
competition, in which no single firm, no particular industry
and certainly no job or self-employment niche can be secure
any longer. However tiny its effect, the General Agreement on
Tariffs and Trade (GATT) Treaty now before this lame-duck
Democratic Congress, can only add to those worries.
There is nothing new about the ``creative destruction'' of
free competition. Only if outdated economic structures and
obsolete working methods are first swept away, freeing up
their human and material resources, can more efficient
structures and methods arise in their place. What is new is
only a matter of degree, a mere acceleration in the pace of
structural change at any given rate of economic growth. But
that, as it turns out, is quite enough to make all the
difference.
The rise and decline of skills, firms and entire industries
is now quite rapid even when there is zero growth, becoming
that much faster when the economy does grow. In the process,
the most enterprising or most fortunate individuals are
offered more opportunities for rapid enrichment than ever
before, and even tiny firms can aspire to fabulous growth.
(Microsoft, born 1975, is the classic example). At the same
time, however, the great majority of individuals has
experienced not only unprecedented job upheavals, but also an
absolute 20-year decline in personal earnings.
Republicans of the ``family values'' persuasion should have
been the first to recognize that more disruptive change has
been inflicted on working lives and entire industries than
the connective tissue of many families and communities has
been able to withstand. As it is, only a few paleo-
conservatives of Pat Buchanan's persuasion have recognized
the far-from-mysterious economy-society connection. Hence in
the standard two-part Republican political speech, Part I
still celebrates the virtues of dynamic economic growth,
propelled by technological progress, deregulation and free
trade, while Part II mourns the decline of the family and
community ``values'' eroded precisely by the constant
dislocations caused by our turbo-charged economy.
So far, the blatant contradiction at the very core of what
has become mainstream Republican ideology (``family values''
and dynamic economic growth) has gone mostly unremarked. And
in any case it is not the Democratic Party as it now defines
itself that can benefit from the Republican contradiction.
Americans who work and earn but who fear for their economic
future cannot benefit from what the Democrats have to offer:
more taxes, more redistribution and more favors for any group
that can claim victim status.
Both political parties promise more growth through the
magic of an unfettered economy. But what most working
Americans now seem to want is not the possibility of better
jobs or higher incomes through growth, (because they have
seen that it need not increase their earnings) but rather
security for the jobs and income they already have.
A vast segment of the political spectrum is thus left
vacant by the mainstream Republican contradiction on the one
hand, and by mainstream Democratic ``assistentialism'' on the
other. That was the space briefly occupied during the 1992
election year by the caprices of Ross Perot, who burdened his
core message of personal economic security with strange
preoccupations. And that is the space that the Republicans
will leave vacant for another third-party candidate if they
do not address the problem of personal economic security by
1996.
Perhaps the most obvious cause of accelerated structure
change is the retreat of government regulatory controls.
(Actually the totality of regulations continue to increase,
but commercial as opposed to health, environmental and anti-
discriminatory regulation has certainly diminished, and
continues to do so.) With that, competition and efficiency
both increase and once secure enterprises must face the full
perils of the market.
The airline industry is the exemplary case. When still
highly regulated, the moderately inefficient airlines were
consistently profitable, commonly offering lifetime jobs for
all their employees. While their profits were not
spectacular, they earned enough to pay both rank-and-file and
management employees rather well, and to serve as a stable
and rich customer base for the aircraft industry.
Today's deregulated industry by contrast, consists largely
of airlines perpetually within sight of bankruptcy, which
they try to avert by extreme cost-cutting (service standards
have notoriously collapsed) and desperate marketing
maneuvers. Almost all have imposed serious wage reductions,
layoffs or both. By contrast, almost all now pay much, much
more to their top managers. And all surviving airlines offer
such low domestic fares that, unlike the days of regulation,
even Americans with ample free time and/or low income now
habitually travel by air.
Airline deregulation has also destabilized the aircraft
industry. Domestic airlines fly more aircraft than before,
but tend to keep them until they are worn out. Lockheed has
stopped manufacturing airliners altogether; McDonnell Douglas
is too weak financially to develop any new airlines on its
own (and seeks Asian risk-sharing partners at the price of
sharing its key technologies); and Boeing's future is secure
only because of sales to foreign airlines--most of which are
still highly regulated.
Overall, airline regulation served the interests of
Americans-as-producers, at the expense of Americans-as-
consumers. Now it is the other way around. From a strictly
economic point of view, the greater efficiency brought about
by cut-throat competition may justify all. But from a social
point of view there is no such compensation.
With its stable, well-paid jobs the regulated airline
industry of the past obviously contributed to family and
social stability. By contrast, today's chaotically unstable
airlines are very disruptive for families and communities, as
they rapidly expand or drastically shrink over a matter of
months or even weeks, as they shift hubs and maintenance
bases, each time hiring and firing employees in their
constant maneuvering for market survival. It would be a nice
bit of sociological research to calculate the number of
divorces and problem children caused by deregulation-induced
economic stresses on the families of airline employees.
Partly because there are no such statistics, we are
accustomed to simply ignore the non-economic consequences of
de-regulation, not just in the airline industry but in all
industries. Yet it is intuitively obvious that social losses
must outweigh economic gains in many cases.
Another obvious cause of accelerated structural change in
the U.S. economy is the rather sudden computerization of
office work. After being long delayed, the increased
efficiencies that electronic computation, data storage,
reproduction and internal communication machines were
supposed to achieve bit by bit, finally arrived in bulk
during the 1980s. Partly because even senior managers can now
work these machines; partly because junior managers are
increasingly compelled to use those machines in place of
clerical help; and partly because ``local-area networks''
allow managers at the next level up literally to oversee the
work that their subordinates are doing or not doing--for all
these reasons the computerization of office-work has suddenly
become a near-universal reality. With that, white-collar
workers too are now exposed to the mass firings and
diminishing employment prospects that have long been the lot
of blue-collar workers in mature industries.
Management consultants prattle about ``re-engineering the
corporation,'' but the very real economies that Wall Street
anticipates by bidding up the shares, thereby enriching top
executives with stock options, come not from the background
music of management-consulting jargon but rather from the
firing of telephone-answering secretaries replaced by voice-
mail systems,of letter-writing secretaries replaced by word-
processing and fax-boards, and of filing secretaries replaced
by electronic memories, with the resulting elimination of
their clerical supervisors, and the middle managers who used
to supervise those supervisors.
That is why businesses whose revenues and profits are
increasing nicely in the present recovery are nevertheless
not adding white-collar or middle management positions; why
businesses whose revenues and profits are stable are
eliminating quite a few of those positions; and why
businesses in decline are drastically reducing both white
collar and management positions.
To be sure, technological progress also allows many new
jobs to emerge, often very good ones. Unfortunately, as the
continuing decline in the average hourly earnings of all
employed Americans proves beyond a doubt, the loss of a great
many so-so white collar jobs continues to outweigh increases
in exciting new-technology jobs. A recent highly optimistic
column by Robert J. Samuelson inadvertently showed why the
totality of new jobs is not a satisfactory replacement for
the old white collar jobs that have been lost.
The Samuelson list included such classic new-tech companies
as Intel, Microsoft, Apple Computer and Genentech. Simple
arithmetic, though, showed that all the companies in the list
employed a grand total of 62,500 people--only 500 more than
Home Depot alone, a retail chain that offers mostly low-paid
and part-time jobs.
That indeed is the true destination of most fired white-
collar workers; lower-status jobs in retail sales or other
cheap services, with diminished earnings, smaller fringe
benefits, and scant if any job security. (Since the table was
published there have been mass firings at Apple). It is
interesting to note that the table also included Nike, which
manufactures mostly outside the United States, and Southwest
Airlines, a non-union company that pays the lowest wages in
the industry, forcing competing airlines to do the same in
each regional market it moves into.
Once again, as with deregulation, structural changes
induced by the arrival of new technologies are undoubtedly
increasing the total efficiency of the U.S. economy. The
trouble is that they are enriching only the architects of
change and those who can invest in their ventures, while
impoverishing a net majority of all working Americans.
The most blatantly obvious (if not most important) cause of
structural change is the so-called ``globalization'' of the
U.S. economy. Negotiated trade agreements, including the new
GATT Treaty have been only one factor in increasing the
exposure of the economy to the competitive pressures and
opportunities of the global marketplace. Other factors
include cheap and instant telecommunications that ease the
formation of new commercial relationships; the diminishing
incidence of transport costs and the hammering down of once
diverse consumer preferences into uniformity by trans-
national mass media imagery and advertising.
Globalization means that U.S. sales of goods or services
can expand far beyond the limits of the domestic market--and
of course that the U.S. production of many kinds of goods and
services, and the related employment, can be displaced at any
time by cheaper production from someplace else in the world.
True, globalization as such does not determine U.S. wage
levels. Even the U.S. worker who happens to be competing
head-on with an Indian counterpart is paid according to the
supply and demand for his skills in the U.S. labor market,
and not the Indian market. But life for the vast number of
Americans who now participate in the global economy,
wittingly or unwittingly, is full of exciting surprises and
catastrophic downfalls.
Viewed in the very narrow national-accounting perspective
of all our globalization debates, whether NAFTA last year or
the GATT Treaty now, any increase in the combined income of
all Americans--no matter how unevenly distributed--fully
justifies going ahead to globalize some more. On that there
seems to be a perfect consensus between mainstream Democrats
and mainstream Republicans. Both take it for granted that
globalization has increased and can continue to increase the
country's total GNP (true), that it must therefore increase
the income of all Americans or at least most of them (false),
and that because protectionism is always bad for U.S.
consumers (true), it must always be bad for the country
(false).
What is missing is anything resembling a social
perspective. In fact it is simply taken for granted that
economic efficiency must never be compromised in the
slightest to suit the needs of society. That would make
perfect sense if the United States were a very poor country
with a perfectly peaceful and tranquil society. As it is, the
United States has much more wealth than social tranquility
and would benefit much more from economic stability than from
further economic growth, inevitably achieved by disruptive
structural changes of one kind or another.
If one does take into account the psychological and
practical need of families and communities for a reasonable
degree of stability, very different criteria apply to
globalization as well as to deregulation.
Those are the very criteria that have shaped Japan's
protracted resistance to the globalization of its own
economy, as well as to deregulation. U.S. trade negotiators
are forever arguing the merits of free markets, but the
overall purpose of Japan's many overt and covert trade
barriers and domestic regulations is precisely to protect
Japanese society from the disruptive effects of any
competition, foreign or domestic. Small shopkeepers are
protected by a Large-Scale Retail Law that greatly restricts
the spread of chain stores, supermarkets and department
stores. Craftsmen threatened by cheaper imports are protected
by unwritten customs house conspiracies as well as overt
barriers. And many industries, including low-tech paper and
plywood, have their own informal protective arrangements,
while high-tech industries are officially assisted as well as
protected. As a result, Japanese-as-consumers must pay very
high prices, but Japanese-as-producers enjoy all the benefits
of personal economic security.
American visitors immediately notice the tranquility of
Japanese crowds, and the conspicuous absence of the free-
floating anger that has become a sinister feature of American
life, and a deadly one at time. They must attribute all this
calm to the homogeneity of Japan's population, or its
ancestral discipline. But they would be wrong: Before its all
powerful bureaucracy stabilized Japan's economy with its
regulations and protectionism, the country witnessed a great
many very violent strikes, any number of political
assassinations and frequent mass demonstrations that often
degenerated into outright street fighting.
To be sure, the Japanese system sacrifices economic
efficiency at every turn, and the consumer pays the price
every time. It is a fact that the actual Japanese standard of
living is on average much lower than the American, even
though average Japanese money incomes are now substantially
higher.
But that is a very incomplete truth, for it only includes
purely material factors, overlooking society-wide
considerations that count for much more--even in purely
monetary terms.
When I drive into a gas station in Japan, three or four
clearly underemployed young men leap into action to wash and
wipe the leadlights and windows as well as the windscreen,
check tire pressures and all the different oils, in addition
to dispensing the fuel. For that excellent service, I have to
pay a very high price for the gasoline. The Japanese
bureaucracy, determined to protect those low-end jobs for
youths who lack the talent for better employment, as well as
small gas stations in rural areas, flatly prohibits self-
service gas pumps, and in any case forces all gas stations to
compete by offering lavish service because fuel prices are
fixed by the government and price-cutting is banned.
Back in America, I fill my own tank much more cheaply from
a self-service pump, but there also three or four young men
are waiting--sometimes in person but certainly by
implication. But because they are not employed by the gas
station, or by anybody else, I do not have to pay their wages
through government-imposed high prices for my gas. That is
where U.S.-style economic analysis stops: Japanese consumers
are being exploited, while the free market provides American
consumers with cheap gas.
But in reality, I still have to pay for those young men who
are not employed by the gas station. My car insurance rates
are higher because of their vandalism and thefts, my taxes
must be higher to pay for police, court and prison costs and
even a little by way of welfare benefits. If I am very
unlucky, I may have to pay in blood. In a recent article on a
Washington youth who killed a Korean immigrant at the age of
17, while absent from a psychiatric clinic where he had been
sent for killing a taxi driver at the age of 15, it was
parenthetically noted that more than $100,000 had been spent
on his psychiatric treatment; his 30-year prison term will
cost another $750,000 or so.
Not counting two deaths and his trial costs, the cost of
not employing that one youth would pay for at least 37,777
gallons of gasoline--even at very high Japanese prices.
American free-market gasoline is thus very expensively cheap,
as compared to Japan's employment-generating, cheaply
expensive gasoline.
There is no assurance of course that those young men whom I
see loitering would actually take gas station jobs if any
were available for them. But what is certain is that in Japan
the government acts to ensure that there are job openings for
youths incapable of more demanding employment, while in the
United States, nothing must stand in the way of free-market
efficiency, very narrowly defined to exclude any and all
social consequences.
As it happens, in Japan even the bureaucracy is now
beginning to discuss deregulation. But the currently
victorious Republicans might still benefit from glancing over
at the Japanese model. As of now, we have not only unemployed
youths but also a great many small-town shop-keepers facing
the relentless spread of Wal-Mart and its ilk; textile
workers imminently threatened by imports and employees
everywhere caged with corporate tigers out to fire them if
they possibly can.
If the Republicans too only offer more economic growth and
yet more social disruption, by 1996 the electorate will be
ready to try out whatever third party comes along--or lacking
that it may even vote for the Democrats if only to show its
displeasure once again.
Mr. HOLLINGS. Mr. President, I ask unanimous consent that a letter
from Public Citizen to Ambassador Kantor be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
August 3, 1994.
Hon. Michael Kantor,
600 17th Street N.W.,
Washington, DC.
Dear Ambassador Kantor: Critics and supporters of the
Uruguay Round GATT agreements agree that they are far-
reaching in their impact. The decision about whether the
agreements should be approved in their present form and
whether the United States should enter the World Trade
Organization (WTO) should be made carefully and cautiously,
after full and informed debate and discussion among the
American people.
As the negotiator and prime supporter of the trade pact,
you wish to emphasize what you believe to be the positive
features of the agreements and the WTO. As a government
official, however, you have an obligation also to honestly
and reasonably report on--and at least acknowledge--
ambiguities or drawbacks contained in the agreements you are
advocating.
As the debate over the WTO and the new GATT has proceeded,
you and your deputies have increasingly slighted this public
official duty. Your response to detailed criticisms or
carefully expressed concerns has been to dismiss the critics
as ill-informed or to answer them with misleading statements,
distortions and deceptions.
The purpose of this letter is to rebut, for the public
record, a number of your long list of erroneous statements,
and to urge you to reconsider your approach to the WTO-GATT
debate and to give the American people a decent interval of
time to digest the WTO-GATT proposal.
Erroneous Statement Number 1: The World Trade Organization
is not much different than the existing GATT, thus fears
about sovereignty are misplaced.\1\
---------------------------------------------------------------------------
Footnotes at end of letter.
---------------------------------------------------------------------------
Correction: The existing GATT is an international business
contract between nations (like NAFTA) who are called
contracting parties. Congressional approval of the Uruguay
Round would make the United States a member of a permanent
new global trade agency, the World Trade Organization (WTO).
The WTO would: maintain an international ``legal
personality'' akin to the United Nations;\2\ possess on-going
rule making capacity;\3\ and operate a binding dispute
resolution system whose decisions would be enforced with
trade sanctions and fines.\4\
The creation of a new standing organization has great
significance. As a contractual arrangement rather than an
independent actor, GATT has owed its political legitimacy to
the consent of the GATT contracting parties. GATT has been
cautious in taking actions without express authorization,
and, because signatories to GATT did not cede any power to a
standing organization, has operated almost exclusively by
consensus.
A vote for the Uruguay Round would dramatically alter both
the political and legal status of the GATT/WTO. Reflecting
the WTO's legal status and enhanced political authority,
important decisions under the WTO regime would be made by
one-country, one-vote voting.\5\
Unlike GATT, the World Trade Organization includes an
affirmative international obligation to ``ensure the
conformity of [a country's] laws, regulations and
administrative procedures'' with the WTO rules.\6\ In its
April 1994 report on U.S. laws that allegedly violate the WTO
mandate, the European Union lays out the U.S. obligation
clearly: ``The comprehensive multilateral dispute settlement
mechanism which has been agreed upon in the framework of the
World Trade Organization will ... oblige [countries] to bring
their domestic legislation into conformity with all of the
Uruguay Round agreements.\7\
Erroneous Statement Number 2: The WTO will operate by
consensus; ``[in] fact, Article IX of the WTO Agreement
codifies what was merely a custom in the GATT. It makes
consensus the governing principle for WTO for decision-
making.''\8\
Correction: The Administration has regularly cited only a
portion of the relevant WTO agreement provision on decision-
making. Administration officials refer to the first sentence
of Article IX-1 of the Agreement Establishing the WTO. ``The
WTO shall continue the practice of decision-making by
consensus followed under the GATT,...'' But Administration
officials consistently fail, in Congressional testimony and
otherwise, to cite the next sentence, which reads, ``Except
as otherwise provided, where a decision cannot be arrived
at by consensus, the matter at issue shall be decided by
voting--each member of the WTO shall have one vote.''\9\
Important decisions that would be made by majority and
supermajority voting, instead of consensus, include:
decisions to amend the WTO rules;\10\ interpretations of the
WTO rules;\11\ decisions to allow additional countries to
become WTO Members;\12\ and decisions to start new
negotiations and implement the results of such
negotiations.\13\ Decisions to adopt the ruling of WTO
dispute resolution panels would be taken by reverse
consensus, requiring all countries to agree not to adopt a
panel ruling.\14\
Indeed, rather than consensus decision-making being the
rule under the proposed WTO, it is the specifically cited
exception, and is only specifically cited in the WTO
Agreement in the context of amendments to five specific WTO
or GATT articles.\15\
Erroneous Statement Number 3: Under the WTO, no substantive
change in the rights and obligations of the United States can
occur under any of its provisions unless the United States
agrees to it.\16\
Correction: USTR's claim that no decisions affecting U.S.
``rights and obligations'' under the WTO can be taken without
its agreement is clearly undermined by the provisions on
initiating and implementing new negotiations by a majority
vote of the Ministerial Conference.\17\ However, even under
Article X of the Agreement Establishing the WTO, which
provides special procedures for amending provisions that
would alter a WTO Member's rights and obligations, the
decision about whether a proposed amendment does alter such
rights and obligations is taken by a three-fourths vote.\18\
If a three-fourths majority agrees that such rights and
obligations are not affected, then amendments can be voted by
a two-thirds majority with the results binding on all
Members.\19\ Even if three-fourths of the WTO Members decide
that a proposed amendment does alter rights and obligations
and the amendment is adopted by a two-thirds vote and only
applies to the members voting for it, a three-fourths vote of
the WTO Members can decide whether the Members who do not
accept the amendment shall still be allowed to remain
Members.\20\
Erroneous Statement Number 4: The existing GATT provides
for majority voting, thus the Uruguay Round is ``much more
protective of U.S. sovereignty'' by moving decision-making
from majority to supermajority voting.\21\
Correction: Because the International Trade Organization
(ITO) proposed in 1947 was not approved by the U.S. Senate,
GATT has never had the political legitimacy to activate its
voting rules. GATT virtually never operated by any voting.
The last GATT vote was in 1959. In fact, as USTR regularly
emphasizes in other contexts, GATT decisions are made by
consensus. Thus, the real change with the establishment of
the WTO is the switch from consensus decision-making to one-
nation, one-vote voting.
This change effectively eliminates the veto the United
States has enjoyed as a sovereignty safeguard under the
existing GATT. Under the WTO, the United States would not
maintain the effective veto now provided by consensus
decision-making in dispute resolution and other decisions
under the current GATT.
In the context of dispute resolution, the United States
would specifically lose a veto which it has had available
under the existing GATT and used to stop the 1991 tuna-
dolphin ruling. The WTO's proposed dispute settlement process
would be unique among international organizations in
requiring consensus to stop action rather than consensus to
commit a sovereign nation to international action. The
rulings of the WTO's dispute resolution tribunals would be
automatically adopted 60 days after publication, unless every
WTO Member, including the victorious plaintiff nation,
opposes adoption.\22\ (An internal appeal is provided with a
similar negative veto which would be required to stop
adoption for its ruling.\23\) Similarly, if the United Stats
refused or failed to repeal or revise a law held to be an
illegal trade barrier, after a set number of days, the WTO
would automatically authorize trade sanctions unless every
WTO Member including the complaining nation opposed
sanctions.\24\
In non-dispute resolution contexts, there is no veto
because there is no consensus decision-making either, except
for five WTO or GATT articles specifically listed under
Article X-2 of the Agreement Establishing the WTO for which
consensus is required to approve an amendment.
In sum, not only does the United States lose the veto it
now has under the current requirement of consensus to adopt a
panel ruling and consensus to authorize sanctions, it would
now (after an unfavorable WTO tribunal ruling) have to build
a unanimous consensus just to stop WTO action against it.
Erroneous Statement Number 5: Congress maintains full
control over the passage, maintenance and repeal of U.S. laws
under the World Trade Organization's regime.\25\ ``A WTO
dispute settlement panel recommendation has no effect on U.S.
law.''\26\
Correction: While it is true that only Congress can
establish, alter or repeal a federal law, WTO tribunals would
have the authority to determine the WTO-legality of U.S. laws
and to exert enormous pressure on the United States to alter
laws found ``WTO-illegal.'' The WTO could force Congress into
making a cruel choice: either alter or repeal a law
determined to be WTO-illegal or face perpetual trade
sanctions against any U.S. industry the winning country
chooses.\27\ Moreover, the threat of such challenges and the
ensuring no-win dilemma would have a chilling effect on
Congress, deterring the legislature from passing laws that
are claimed by opponents in the United States and in other
WTO nations to be WTO-illegal; and the threats would also
have a chilling effect on proposals by both agencies and
citizen groups.
Erroneous Statement Number 6: Countries won't follow
through in using WTO-authorized sanctions against the United
States because the United States is the largest trading
nation in the world and other countries would be reluctant to
run the risk of closing themselves off from U.S. markets.\28\
Correction: Logically, the administration cannot have it
both ways. The WTO cannot be a big stick to open markets when
wielded by the United States, yet a limp reed when held by
others over the United States. Either no WTO Members--
including the United States--will use the powerful new
dispute resolution mechanism, or the United States and other
countries will use it.
The WTO--with its automatic imposition of perpetual fines
or perpetual cross-sector retaliatory sanctions in cases
where a domestic law that if found to be WTO-illegal is not
altered or eliminated--would give foreign countries enormous
leverage over the United States. Moreover, unlike NAFTA, the
WTO member countries would include two major trading powers:
Japan and the European Union. Both have threatened trade
measures against the United States when displeased by U.S.
trade behavior before, as has Canada. Under the WTO, these
countries would be authorized to take such actions against
the United States with full approval and support of a global
agency and its Members.
Finally, it is peculiarly reprehensible to state, as the
Administration prepares to enter the United States into a
powerful new international organization with a vast array of
attendant obligations, that the United States does not intend
to respect its international commitments.
Erroneous Statement Number 7: WTO dispute settlement panels
do not have the power to make ``decisions'' or impose
solutions. Panels will issue reports containing their views
on the dispute and a recommendation to the dispute
parties.\29\
Correction: The actual language of the Dispute Settlement
Understanding paints quite a different picture. It reads,
``Within sixty days of issuance of a panel report to the
Members, the report shall be adopted at a DSB (Dispute
Settlement Body) meeting unless one of the parties to the
dispute formally notifies the DSB of its decision to appeal
or the DSB decides by consensus not to adopt the
report.''\30\ Appeals are limited to a review of the
application of GATT rules to the facts and must be completed
in 60 days.\31\ ``An appellate report shall be adopted by the
DSB and unconditionally accepted by the parties to the
dispute unless the DSB decides by consensus not to adopt the
appellate report within thirty days following its issuance to
the Members.''\32\ ``Where a Panel or Appellate Body
concludes that a measure is inconsistent with a covered
agreement, it shall recommend that the Member concerned bring
the measure into conformity with that Agreement''.\33\
``Compensation and the suspension of concessions or other
obligations are temporary measures available in the event
that the recommendations and rulings are not implemented
within a reasonable period of time.''\34\
In summary, once a three-person tribunal rules and its
decision is approved by the internal WTO appellate body (if
an appeals is even taken), the decision is final, unless all
members of the WTO arrive at a consensus to reject the
tribunal decision. Then a country must change its law or face
sanctions.
Erroneous Statement Number 8: The United States can
maintain any food safety or environmental standard as long as
it based on science.\37\
Correction: ``Based on science'' is only one of a series of
tests in the Uruguay Round food standards that U.S. food laws
must pass to avoid being labelled an unfair trade barrier
that must be eliminated.\38\ In fact, even supporters of the
Uruguay Round have admitted to the National Journal that many
U.S. laws would not meet some of the proposed WTO
requirements.\39\
The most worrisoms tests are those specifying the means a
country may use to obtain even a WTO-legal objective. Two
such ``means'' tests are the ``least trade restrictive''
means test and a rule prohibiting countries from
distinguishing products on the basis of how they were
produced. (For instance, protecting dolphins by
distinguishing between fishing techniques that are dolphin
safe and those that kill large numbers of dolphins.)
Under the least trade restrictive rule, a U.S. law would
fail to pass WTO muster--no matter how acceptable the law's
goal might be in WTO terms--if the means used to accomplish
that goal is not the least trade restrictive.\40\ Congress
would have to repeal or alter any law found to have failed
this test by a WTO tribunal, or the United States would face
perpetual fines or trade sanctions. Indeed, in our February
1993 meeting, you acknowledged your own concern about the
``least trade restrictive'' test, which you said you were
able to limit somewhat in NAFTA.
As for the prohibition on distinction based on ``process
standards,'' in early 1993, you expressed dismay to a large
gathering of environmental and consumer representatives about
the application of this rule to the U.S. Marine Mammal
Protection Act in the successful 1991 Mexican challenge of
that U.S. law. As applied in the GATT tuna-dolphin cases,
this rule required the United States to treat tuna caught
with methods that result in high dolphin-kill rates and that
caught with dolphin-safe methods the same. Applied in another
context, it could require the United States to treat goods
made with ozone-depleting processes and those made with other
methods in the same fashion if the goods were physically the
same.
The least trade restrictive means test and process-
distinction tests have been the basis of the two recent GATT
challenges to U.S. environmental laws, and that was before
those rules were specifically enumerated in the test, as they
are in the Uruguay Round proposal. In the tuna-dolphin
challenge, the United States lost the case because it
distinguished on the basis of process--not because of any
purported failure to base the law on science. In the European
Union challenge to the U.S. CAFE and gas guzzler fuel
efficiency standards (a challenge which the United States has
been widely predicted to lose), the challenging parties
agreed that the U.S. goal of fuel efficiency is allowable and
do not question the scientific justification of the goal or
the scientific efficacy of the United States means to achieve
it; the dispute is over the political issue of how the goal
should be achieved, including whether it is through minimum
automobile miles-per-gallon standards or a carbon tax.
Finally, as an aside, it important to note that the ``based
on science'' test itself is neither as simple or objective as
you imply. Application of the test will be made by the secret
WTO tribunals, whose members are trade experts, not
scientists or even lawyers or officials with a background in
consumer, environmental or related matters. This method
itself, especially the secrecy, is quite an unscientific
way to proceed.
Erroneous Statement Number 9: The Uruguay Round rules do
not require downward harmonization.\41\
Correction: While harmonization is required in both the
food and technical standards chapters,\42\ it is not
specifically labelled as upwards or downwards harmonization.
However, the rules that make up those chapters will result in
downward harmonization of strong U.S. standards.
First, under the WTO's two standards chapters, a domestic
law can be found to be a trade barrier because it is stronger
than international standards, but not because it is too weak.
Only laws that are stronger than named international
standards will be subject to a battery of tests in order to
establish that they are not illegal trade barriers that must
be eliminated. Meanwhile, with the exception of prison
labor,\43\ no country's law can be attacked as WTO-illegal
because it provides too weak protection to the environment or
to consumer or worker safety and health.
Second, both the food and technical standards texts require
countries to base their standards on specified international
standards. Standards issued by several of the international
standard-setting bodies are weaker than current U.S. domestic
laws and regulations require. For technical standards--all
non-food standards such as product safety or environmental
rules ``where technical regulations are required and relevant
international standards exist or their completion is
imminent. Members shall use them, or the relevant parts of
them, as a basis for their technical regulations, except when
such international standards * * * would be an ineffective or
inappropriate means for the fulfillment of the legitimate
objectives pursued, for instance because of fundamental
climatic or geographical factors or fundamental technological
problems.''\44\ In the food area, domestic standards also
must be ``based on'' the named international food standards
of the Codex Alimentarius Commission.\45\ According to the
General Accounting Office (GAO), the United States
established more health protective pesticide standards in 66
percent of the cases where the comparison could be made.\46\
Erroneous Statement Number 10: It is unlikely that there
will be many challenges brought under the Uruguay Round
agreements against U.S. Laws.\47\
Correction: Although the United States has often been a
plaintiff in past GATT challenges, that will change under the
WTO. The Uruguay Round would expand trade disciplines beyond
the traditional trade matters in which the United States is
situated to be a plaintiff and into non-tariff issues--namely
the many standards setting environmental, health, labor and
other requirements for products sold in the United States. In
these areas, the United States is likely to be a defendant
because of its more advanced health and safety protections.
Moreover, the change to binding GATT dispute resolution (that
would require a country to change laws found to be GATT-
illegal, or accept sanctions or pay fines) from a system with
largely advisory dispute resolution (a panel suggested a
course of action that a country had to agree to) will in
itself stimulate more cases. The long lists published in 1994
by the European Union, Canada, and Japan of laws they and
their motivated domestic corporate interests consider to
violate the new rules illustrate the magnitude of the risk to
domestic U.S. federal and state laws and standards.
Erroneous Statement Number 11: It is very unlikely that
there will be many challenges brought under the Uruguay Round
agreements against state laws.\48\
Correction: In addition to the general incentives the
Uruguay Round presents to foreign countries to challenge many
U.S. laws, the proposed new substantive trade rules--such as
those requiring consistency of level of risk--provide many
new tools for challenges of state laws merely because they
are different than federal laws.\49\ While the European
Union, Canada and Japan have published lists of laws they
consider to violate GATT in previous years, this year's
reports, which are based on the proposed new Uruguay Round
rules, contain extensive new lists of state environmental,
health, tax and other laws.
The European Union's ``Report on United States Barriers to
Trade and Investment, 1994'' goes so far as to attack the
U.S. federalist system, and the diversity of rules and
standards it encourages, as a trade barrier in itself.
``There are more than 2,700 State and municipal authorities
in the United States which require particular safety
certifications for products sold or installed within their
jurisdiction,'' the EU report complains. And it alleges,
``Even if, in general, not intentionally discriminatory, the
complexity of U.S. regulatory systems in this domain
[technical regulations regarding consumer, health, safety and
environmental protection] can represent a very important
structural impediment to market access'' (emphasis in
original).\50\
Erroneous Statement Number 12: GATT rules will fully
protect the right of any state to impose stringent health or
environmental standards, including those more protective than
federal standards.\51\
Correction: GATT's two standards chapters both directly
threaten strong state environmental and consumer laws. For
instance, the Technical Barriers chapter requires domestic
standards to be based on international standards that are
complete or near completion unless there are fundamental
climatic, geographic or technological reasons not to use
them.\52\ That a state believes such international standards
do not provide sufficient health or environmental protection
is not a WTO-legitimate justification for departing from the
international standard, much less a federal standard. The
food standards contained in the Sanitary and Phytosanitary
chapter specifically require domestic laws to avoid
distinctions in the level of protection provided. ``With the
objective of achieving consistency in the application of the
concept of appropriate level of sanitary and phytosanitary
protection . . . each member shall avoid arbitrary or
unjustifiable distinctions in the levels it considers to be
appropriate in different situations . . .''\53\ Although
these rules also apply to federal law, as noted by the
Attorneys General, state laws are especially at risk because
of the very difference between federal and state standards
that is the cornerstone of federalism. The WTO does not
provide a federalism exception for such differences, nor does
it limit the definitions of ``arbitrary'' or
``unjustifiable'' to allow differences between federal and
state decision-makers facing the same data and risks in
making different political decisions about how much risk to
accept.
In our nation's history, the very absence of an
international uniformity straitjacket (and the allowance for
state diversity, within the limits of not arbitrarily
burdening interstate commerce) has freed our country to lead
the world rather than follow a lower common denominator.
Erroneous Statement Number 13: The unilateral trade
measures of Section 301 remain usable under GATT.\54\
Correction: As virtually all commentators outside of the
U.S. Trade Representative's office agree, the unilateral
action provisions of Section 301 and its hybrids will not
survive the WTO's Dispute Resolution Article 23. The
Congressional Research Service's American Legal Division
issued an opinion memo to Representative Cardiss Collins
about Section 301 being effectively gutted by Article 23's
ban on ``unilateralism.'' Representative Richard Gephardt's
office, having admitted that Section 301 would be
unenforceable under the new rules for most uses, has tried
unsuccessfully to find alternatives to trade sanctions to
enforce some sort of unilateral trade measure. With regard to
Section 301 and other U.S. unilateral measures, the
government of Japan has written, ``The United States'
attitude of pursuing market opening in bilateral negotiations
backed by the threat of sanctions is not compatible with the
multilateral trade system of the GATT/WTO.''\55\ The European
Union has also objected to the U.S. use of Section 301, as
well as other unilateral trade measures, including those
contained in environmental laws.\56\
With the debate over the WTO and the new GATT clouded by
these and other erroneous USTR statements, it is difficult
for citizens, the media or Representatives and Senators to
make a reasoned assessment of the WTO-GATT proposals.
It is not too late to provide Congress and the American
people with a full assessment of the impact on our democracy
and standards of domestic justice posed by the WTO and the
new GATT. Deferring the Congressional consideration of the
WTO and the new GATT until next year would give the American
democratic process a chance to work properly.
Sincerely,
Ralph Nader, Lori Wallach.
footnotes
\1\Written testimony of USTR Mickey Kantor before the Senate
Commerce Committee, June 16, 1994; written testimony of
Deputy USTR Rufus Yerxa before the Senate Foreign Relations
Committee, June 14, 1994.
\2\Agreement Establishing the WTO, Article VIII-1 (to which
treaty practice under the Vienna Convention would apply,
according to Note to the Final Act Embodying the Results of
the Uruguay Round of the Multilateral Trade Negotiations).
\3\Id, Article III-2; Agreement on Sanitary and Phytosanitary
Measures, Articles 38-39 (establishing a Committee on
Sanitary and Phytosanitary Measures, etc.).
\4\Dispute Settlement Understanding, Article 22.
\5\Agreement Establishing the WTO, Article IX-1 (describing
voting procedures for amendments); Article III-2 (providing
for anew negotiations upon simple majority voting of the
``Ministerial Conference'' of all WTO Members).
\6\Id. Article XVI-4.
\7\Services of the European Commission, Report on United
States Barriers to Trade and Investment, p. 7.
\8\USTR Fact Sheet, U.S. Sovereignty Under the World Trade
Agreement; Debunking the Myths, 1994; See also oral testimony
of Deputy USTR Rufus Yerxa before the Senate Foreign
Relations Committee, June 14, 1994, as transcribed by Federal
News Service.
\9\Agreement Establishing the WTO, Article IX-1.
\10\Id. Article X (providing for assorted two-thirds and
three-fourths supermajority voting rules).
\11\Id. Article IX-2 (providing for interpretations on three-
fourths vote).
\12\Id. Article XII (providing for two-thirds votes on
accessions).
\13\Id Article III-2 (providing for simple majority voting of
the Ministerial Conference).
\14\Dispute Settlement Understanding, 16.4 (for panel
rulings) and 17.14 (for appellate reports).
\15\Agreement Establishing the WTO, Article X-2.
\16\Oral testimony of Deputy USTR Rufus Yerxa before the
Senate Foreign Relations Committee, June 14, 1994, as
transcribed by Federal News Service; Oral testimony of USTR
Mickey Kantor before the Senate Commerce Committee, June 16,
1994, June 14, 1994, as transcribed by the Federal News
Service; USTR Fact Sheet, U.S. Sovereignty Under the World
Trade Agreement; Debunking the Myths, 1994 (``The WTO
Amendment provisions in Article X state that any substantive
amendment takes effect for a member only if the country
consent to it.'').
\17\Agreement Establishing the WTO, Article III-2.
\18\Id. Article X-1.
\19\Id.Article X-4.
\20\Id. Article X-3.
\21\Oral Testimony of USTR Mickey Kantor before the Ways and
Means Committee, June 10, 1994, as transcribed by the Federal
News Service (``In many cases, decisions under the GATT could
be made by a majority vote''). See also written testimony of
USTR Mickey Kantor before the Senate Commerce Committee, June
16, 1994.
\22\Dispute Settlement Understanding, 16.4.
\23\Id. 17.
\24\Id. 22.6.
\25\This assertion has been made throughout testimony and
other public statements. See e.g. written testimony of USTR
Mickey Kantor before the House Ways and Means Committee, June
10, 1994; and written testimony of Deputy USTR Rufus Yerxa
before the Senate foreign relations, June 14, 1994.
\26\Memo to Congress, Nancy A. LeaMond, Assistant USTR for
Congressional Affairs, July 19, 1994.
\27\Dispute Settlement Understanding, Article 22.
\28\Oral testimony of USTR Mickey Kantor before the House
Ways and Means Committee, June 10, 1994, as transcribed by
the Federal News Service, answering a question asked by
Representative Newt Gingrich.
\29\USTR Fact Sheet, U.S. sovereignty Under the World Trade
Organization: Debunking the Myths, 1994.
\30\Dispute Settlement Understanding, 16.4.
\31\Id. 17.6, 17.5.
\32\Id. 17.14.
\33\Id. 19.1.
\34\Id. 22.1.
\37\USTR Fact Sheet, Questions and Answers for the State
Attorneys General, 1994.
\38\Agreement on Sanitary and Phytosanitary Measures.
\39\National Journal, July 16, 1994, p. 1686.
\40\Agreement on Technical Barriers to Trade, Article 2.2.
\41\Written testimony of USTR Mickey Kantor before the Senate
Commerce Committee, June 16, 1994.
\42\Agreement on Sanitary and Phytosanitary Measures, Article
9-13; Agreement on Technical Barriers to Trade, Articles 2.4
and 2.6.
\43\GATT, Article XX-e.
\44\Agreement on Technical Barriers to Trade, Article 2.4.
\45\Agreement on Sanitary and Phytosanitary Standards,
Article 9.
\46\General Accounting Office, International Food Safety:
Comparison of U.S. and Codex Pesticide Standards, August,
1991, p.28.
\47\Oral testimony of USTR Mickey Kantor before the Senate
Commerce Committee, June 16, 1994, as transcribed by Federal
News Service.
\48\USTR Fact Sheet, Questions and Answers for State
Attorneys General, July 1994.
\49\Agreement on Sanitary and Phytosanitary Measures, Article
20.
\50\Services of the European Commission, Report on United
States Barriers to Trade and Investment, 1994, p.55.
\51\USTR Fact Sheet, Questions and Answers for State
Attorneys General, July 1994.
\52\Agreement on Technical Barriers to Trade, Article 2.4.
\53\Agreement on Sanitary and Phytosanitary Measures, Article
20.
\54\Written testimony of USTR Mickey Kantor before the House
Ways and Means Committee June 10, 1994; Written testimony of
Rufus Yerxa before the Senate Foreign Relations Committee,
June 14, 1994. See also, Memo to Congress, Nancy A. LeaMond,
Assistant USTR for Congressional Affairs, July 19, 1994.
\55\Government of Japan, 1994 Report on Unfair Trade Policies
by Major Trading Partners, 1994, p.259.
\56\Services of the European Commission, Report on the United
States Barriers to Trade and Investment, 1994, p.7 (``[T]he
new World Trade Organization will restrain the Contracting
Parties from further having to resort to unilateral
determinations in trade disputes, ``and will oblige them to
bring their domestic legislation in conformity with all of
the Uruguay Round Agreements.'' The report then labels United
States efforts to renew Super 301 as ``contrary to this.'').
Mr. HOLLINGS. Mr. President, the comment was made--I cannot keep up
with all the comments but right to the point--by my distinguished
colleague from Pennsylvania about the reservations and the laws, and we
continually hear that, specifically, we do not have a veto. We have the
virtual veto now, but under the GATT agreement we lose that veto. And
working against our interests we have from bitter experience in the
United Nations time and again had to use that veto. Were it not for the
veto, there would be no country of Israel. Everyone in this U.S.
Congress understands the wonderful emanation here of a nation-state,
Israel, in the Mideast never would have occurred had we not had that
veto. And a world power like the United States has to act like a world
power and use that veto because 90 percent of those in the 117
membership of GATT have voted against us as small countries and have
voted against us over 50 percent, the majority of the times.
The best of allies, France and Mexico, have voted against us in the
United Nations 79.9 percent of the time.
With respect to textiles, because we heard from the distinguished
Senator from Rhode Island, let me just go right to the point. I ask
unanimous consent that an article ``Japan Moves to Protect its
Textiles'' be printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Herald Tribune, Nov. 23, 1994]
Japan Moves to Protect Its Textiles
Tokyo.--Japan, flooded with cheap textiles mainly from
other Asian nations, is poised to write rules that would let
it restrict imports if there were evidence of damage to its
domestic industry, government officials said Tuesday.
Japan's textile industry has been seeking import curbs
under the Multi-Fiber Arrangement, an international agreement
that permits nations to restrict imports if they disrupt
their domestic textile industries.
The guidelines, drawn up by the Ministry of International
Trade and Industry, will take effect Dec. 5.
Cotton textile imports rose to a high of 804 million square
meters (961 million square yards) in 1993, up 21.4 percent
from a year earlier.
Ryutaro Hashimoto, the minister of international trade and
industry, said the guidelines would help clarify how
safeguards for textiles operate. ``Talking only about import
restrictions is misleading. The guidelines are denying
comprehensive and semipermanent restrictions,'' he said.
Trade ministry officials have said that Japan was sending
missions to Pakistan in November and December to investigate
dumping charges and probably would come up with a final
decision by February.
The Japan Spinners' Association and Japan Cotton and Stable
Fiber Weavers' Association have asked for curbs on imports of
poplin and broad textiles from China and Indonesia.
Under the guidelines, if the Trade and Industry Ministry
felt action was necessary, it would start investigations
within two months after a claim was made by the textile
industry and conclude them within a year.
If Tokyo decided emergency trade restrictions were needed,
a study group would examine each case before a final decision
by the minister. Japan would then start talks with the
country whose imports were deemed damaging to the domestic
industry. If the two sides failed to reach an accord, the
ministry would then use emergency trade restrictions.
Mr. HOLLINGS. That is dated here the 23d of this month, just last
week. Here in Japan moving where we are moving here not to integrate
the textile industry, as the expression was used, but to eliminate it.
Mr. President, I ask unanimous consent that ``The Impact of
Eliminating the Multi-Fiber Arrangement on the U.S. Economy'' by the
Wharton Economic Finance Group be printed in the Record at this
particular point.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Impact of Eliminating the Multi-Fiber Arrangement on the U.S.
Economy
Isolating the Textile and Apparel Components of GATT
In manufacturing, the expenditure-induced impacts on
durable goods amount to $2.55 billion 1982 dollars or 0.1
percent of the average 1993-2002 baseline output forecast.
The change is durable goods output reflects both reduced
spending for automobiles, appliances, furniture, and so on,
as well as lower investment demand for machinery and
equipment to produce these goods as business respond to lower
demand for their products. The expenditure-induced impacts on
nondurables production is $2.72 billion 1982 dollars, or 0.2
percent of the baseline output forecast.
The impacts accrued in manufacturing have counterparts in
other sectors of the economy. A reduction of $.014 billion
1982 dollars is observed in construction, reflecting reduced
demand in both the residential and nonresidential sectors,
while the impact on the regulated industries will be $0.75
billion.
Likewise, the continual declines in income generated by
this process leads to lower wholesale and retail activity.
Sales margins are reduced $1.44 billion 1982 dollars in the
wholesale and retail trade sector. This represents 0.14
percent of the ten-year average baseline output from 1993-
2002.
impact on manhours
Because the level of employment and manhours in most
industries is generally a function of their output, the
impact on manhours closely mirrors output effects, unless
other inputs have substantially higher costs per unit. These
effects are summarized in Table 4B.
In the direct and indirect industries, on average 179
million manhours are lost in the manufacturing sectors due to
the proposed new trade policy. The vast majority of these
manhours, 172 million hours, are in the nondurables sector.
The durable industries are impacted by 6.2 million hours on
average.
In the nonmanufacturing sectors, 17 million manhours are
lost on average in the regulated industries, or 0.12 percent
of the average baseline manhours over the next ten years. In
wholesale and retail trade 24 million manhours or 0.05
percent of the baseline average are lost. Finally, in the
service sectors 17 million hours, or 0.04 percent, are lost
an average due to increases in textile and apparel imports.
The expenditure-induced employment impacts likewise reflect
the induced gross output impact. For example, within
manufacturing, 68 million hours of work are lost on average
due to the assumed trade policy changes. Of these, 32 million
hours are lost in durable goods industries, and 68 million
hours are lost in nondurable goods industries. Also 14
million manhours are lost on average in the regulated
industries. 53 million hours in wholesale and retail trade,
and 23 million hours in the narrowly-defined service sector
between 1993 and 2002.
impact on employment
As might be expected, the employment impact of the new
proposed trade policy on the textile and apparel sectors is
severe. Table 4.5 shows the direct and indirect impact on
employment for all of the two digit SIC industries, and Table
4.6 summarizes the induced impact. The WEFA Group baseline
(with MFA) forecasts a job loss of 392.000 in the textile and
apparel industries during the 1993-2002 period, based on
expected productivity increases as well as the domestic
industries' competitive disadvantages.
Under the new proposed policy (GATT) the employment
declines will be much more severe. The direct and indirect
impact on the textile and apparel industries is estimates to
be job loss of 647,000, and the induced effect is an
additional 98,000, during 1993-2002.
Under the new proposed policy (GATT) the direct and
indirect impact on total establishment employment is
estimated at 970,000, including 210,000 jobs lost in the non-
manufacturing sectors. The induced impact is estimated to be
an additional 420,000 job loss in total, of which 150,000 is
in the non-manufacturing sectors.
The WEFA Group employed the Industrial Analysis Service
Model to trace and measure the impact of the proposed new
trade policy for textile and apparel on industrial output and
manhours for the period 1993-2002. This model uses a
combination of input/output and statistical techniques to
estimate the impact of the new trade assumptions on textile
and apparel manufacturers and all related industries.
In input/output analysis, the production of a commodity
like apparel starts a chain reaction of transactions through
the economy. Demand for apparel prompts its manufacture, and
this production in turn generates a need for inputs, such as
fabrics, buttons, paper, advertising and trade services.
These are referred to as direct industries. These suppliers
to the apparel core sectors will in turn need inputs for
their own production. For example, in order to meet demand
coming from the apparel industry, textile manufacturers will
require inputs of cotton, synthetic fibers, electricity, and
so on. Likewise, the second-round suppliers to the apparel
industry will require inputs for their production processes,
with the cycle continuing. The sum of all these transactions
are referred to as indirect supplier contributions. In
addition, the income earned by employees in these industries,
as production and sales transactions occur, will in turn be
spent on goods and services, creating additional demand and
production requirements throughout the economy. This is the
familiar income multiplier concept, referred to as
``expenditure-induced'' impacts.
impact on production
Direct requirements by the textile and apparel
manufacturers are those inputs purchased by these two
industries for the final production of textile and apparel
products. These industries demand materials (referred to as
intermediate demand) and add value to produce their own
products.
An examination of the direct and indirect impact of the
proposed trade policy (Table 4A) shows that the linkages of
the textile and apparel industries are diverse, with almost
every U.S. industry affected to some degree. Due to the
concentration of textile and apparel inputs in nondurable
goods, the nondurable industries are impacted the most. On
average over the next ten years the total impact on these
industries amount to $10.64 billion 1982 dollars or 0.34
percent of baseline output. Sectors which are significantly
affected are chemicals ($1.64 billion 1982 dollars or 0.8
percent of the baseline), paper ($0.52 billion 1982 dollars
or 0.45 percent), and miscellaneous manufacturing ($0.08
billion 1982 dollars 0.25 percent). Agriculture and regulated
industries show large impacts in percentage terms from
baseline levels despite small dollar figures. The direct and
indirect impact to the agriculture sector is $0.3 billion in
real terms, or 0.18 percent of the actual on average between
1993-2002. Regulated industries, which consist of electric
utilities, transportation services, and telecommunications
services, are also affected by the assumed change in trade
policy. Around $0.97 billion 1982 dollars or 0.11 percent of
the baseline output result from the indirect feedbacks from
the assumed changes in trade policy. Around $0.97 billion
1982 dollars or 0.11 percent of the baseline output result
from the indirect feedbacks from the assumed changes in trade
in the textile and apparel industries.
When the induced spending effects generated by the change
in textile and apparel trade are considered, further impacts
associated with the proposed new trade policy are implied for
U.S. industries. Our methodology allows prices to respond to
demand changes, and at the same time income is reduced due to
employment loses. These two phenomena have offsetting
influences on demand and supply.
Induced impacts reflect lower income for employees in the
textile and apparel industries, which in turn cause reduced
spending on a wide array of goods and services. New cars,
furniture, clothing, food, vacations, housing, and other
goods and services are all affected. As can be seen from
Table 4A, the expenditure--induced impacts are quite apparent
in virtually every industry.
Mr. HOLLINGS. Then, Mr. President, with respect to the industries
that the Senator from California said we are going to pick up business
in Europe. Not at all. I remember our former colleague and then later
Vice President Mondale talking and trying to get domestic content. I
tried to include domestic content in the telecommunications bill.
We got a rough letter from Ambassador Kantor that it was GATT
illegal. So I read from the exact release in the Journal of Commerce on
February 7, 1989, to the European Commission Monday announced tough
local content rules covering import of integrated circuits that will
force leading Japanese and U.S. chip suppliers to build expensive new
plants in the communities to ensure free market access.
Mr. President, the electronics industry has already moved there, so
has the IBM downsized as the nice expression for firing 60,000 last
year. They have already moved to Europe, and everything else, to get
the benefit of the European subsidies and the European protection. GATT
does not change that entry provision in there, and go right to the New
York Times here in July ``U.S. Corporations Expanding Abroad at a
Quicker Pace.'' I ask unanimous consent that this be printed in the
Record.
There being no objection, the article was ordered to be printed in
the Record.
[From the New York Times, July 25, 1994]
U.S. Corporations Expanding Abroad at a Quicker Pace
(By Louis Uchitelle)
American companies are once again rapidly expanding their
operations abroad--demonstrating that no matter what the
incentives for keeping business in the United States, the
urge to spread factories, offices, stores and jobs overseas
is irresistible.
The surge in these investments and the jobs they create
overseas comes just when exports should be climbing more
rapidly than investment abroad. A weak dollar and falling
labor costs have made American products increasingly
competitive. Yet overseas investment is rising at twice the
rate of exports. And for each dollar earned from exports,
American companies take in nearly $2 from the sale of what
they produce abroad.
``If you are going to be really important in the world
market, you are going to grow by producing in many countries,
and not by exporting, which has its limits,'' said Robert E.
Lipsey, an expert on overseas investment at the National
Bureau of Economic Research. ``There are circumstances where
this might not be the case, but by and large that is the
story.''
The issue, of course, is jobs, and who will hold them.
American companies employ 5.4 million people abroad, 80
percent of them in manufacturing, and the hot issue in the
late 1980's, during a similar surge in overseas investment,
was this: Why can't the goods and services that these foreign
workers produce be supplied from the United States? Why must
companies migrate abroad, shedding some of their national
identity and loyalty?
Now that debate is likely to revive, although perhaps with
less intensity. American investment overseas remains
concentrated in manufacturing, particularly in Europe, Canada
and Japan, but manufacturing was an area of more rapid growth
in the 1980's than it is today. This time companies like Wal-
Mart and Morgan Stanley & Company are leaders--and that tones
down the job issue.
Opening a factory in Europe or Mexico or East Asia often
suggests that one in the United States may be closed. Wal-
Mart's new retail investments in Canada, Brazil and Mexico,
on the other hand, or Morgan Stanley's eight offices in East
Asia do not suggest cutbacks at home.
``What we are sending abroad, apart from money, is our
skill and experience as investment bankers, and you really
have to be on site to do this sort of thing,'' said Stephen
S. Roach, a senior economist at Morgan Stanley, in a
telephone interview from Hong Kong, where he was helping his
local colleagues advise the Chinese Government on the
privatization of an airline.
Morgan Stanley employs 410 people in Hong Kong, and expects
to increase that to 500 by year's end, Mr. Roach said. Most
of the firm's Asia offices, including two in China, have
opened since the late 1980's.
The new surge in investment, in all types of businesses,
showed up in recently released Commerce Department data. This
investment by American companies in overseas operations rose
last year to $716.2 billion, when measured as the cost of
replacing the buildings and equipment. The 7.2 percent
increase, coming after two years of much less growth, matched
some of the better years of the 1980's. In the first quarter
of 1994, investment increased even more quickly.
manufacturing lags behind
But while manufacturing still dominates the numbers,
representing nearly 40 percent of the total, manufacturing
investment rose by only 7 percent last year. Outlays for
retail, finance and the like went up by twice that percentage
or more.
``It is our belief that, with trade barriers coming down,
the world is going to be one great big marketplace, and he
who gets there first does the best,'' said Donald Shinkel, a
spokesman at Wal-Mart, which had no stores overseas in the
1980's.
The investment surge, after two years of relatively little
growth, coincides with incipient recoveries in Europe and
Japan after periods of recession. As business has picked up,
sales and profits have risen at American operations abroad,
making more money available for investment. These reinvested
profits accounted for more than half the outlays last year,
the Commerce Department reports.
Booming economies in East Asia, particularly China,
Singapore and Hong Kong, also drew investment, and so did
nearly every Western Hemisphere country, with Canada, Mexico,
Argentina and Bermuda among the leaders--Bermuda being an
offshore haven for American banking and insurance companies,
while Canada, Mexico and Argentina attracted mainly
manufacturing investment.
But the European nations and Japan attracted the biggest
share of the manufacturing investment. They almost always do,
although they are industrial countries with stronger
currencies and higher average labor costs than in the United
States.
American manufacturing companies engage in three types of
overseas investment, and the one involving the industrial
countries is perhaps the most difficult to justify--given
that exporting from the United States can be less expensive,
said Raymond Vernon, an economist at the Kennedy School of
Government at Harvard University.
Still this investment does not draw the greatest criticism,
which has been reserved for companies that relocate labor-
intensive operations, like auto assembly, or apparel
manufacturing, or the assembly of some electronics products,
to low-wage countries like Mexico or Thailand. ``The United
States is simply not the lowest-cost producer in the world,
and moving abroad to these countries is inevitable,'' Mr.
Vernon said.
Then there are the Wal-Marts and Morgan Stanleys trying to
penetrate new markets in the only way possible, by putting a
store or an investment house on site. Since these companies
do not hold back operations at home to expand abroad, their
tactics are seldom criticized.
Finally there are the situations in which a company can
export its product inexpensively enough, particularly when
the dollar is weak, but chooses instead to manufacture
abroad, mainly for ``insurance,'' as Mr. Vernon puts it. Of
course, foreign companies, particularly the Japanese, adopt
the same strategy for the United States, establishing many
factories here that create jobs for Americans. But they
employ 4.9 million Americans, which is 500,000 fewer than the
American corporate payroll abroad.
Jobs are also created in the United States when American
companies, investing abroad, export parts or machinery to
help make their products overseas. But this ``American
content'' makes up only 9 percent, on average, of the
merchandise produced, the Commerce Department says. The rest
is obtained overseas.
The Gillette Company embraces the strategy of manufacturing
abroad rather than exporting, generating jobs overseas rather
than in the United States. That has happened most recently in
the case of Gillette's new Sensor XL razor blade cartridge.
The cartridge, simple for consumers to use, is difficult to
manufacture, involving 10 welds with high-technology laser
machines. Production started nearly two years ago at
Gillette's main plant, in Boston, but all the output was
exported to Europe. We introduced the product in Europe
because razor blade sales there are greater than in the
United States,'' said Thomas Skelly, a Gillette senior vice
president.
The new Sensor model is to be sold in the United States
starting this year. But rather than expand the Boston
operation to handle the additional production--and add jobs,
perhaps--Gillette is adding the extra capacity to its Berlin
plant, a high-technology factory that will take over the
European market.
Currency Issues Discounted
Cost is not the issue; blades are small and not difficult
to ship, and the weak dollar gives the United States an
advantage--but one that Mr. Skelly, and other corporate
executives, dismiss as insignificant. ``In the long run,
these currency fluctuations, up and down, don't mean a whit
in the decision where to manufacture,'' he said.
Over the years, Gillette has put 62 factories in 28
countries and each tries to operate as if it were a regional
company, adjusting as quickly as possible to local
competitors. Being close to a market is a priority, promising
better returns than exporting from the United States, Mr.
Skelly says.
``We are also concerned about having only one place where a
product is made,'' he said. ``There could be an explosion, or
labor problems.'' If the Boston workers struck, for example,
Gillette would supply the Sensor XL to Europe and the United
States from the Berlin plant, and vice versa.
The upshot of this approach is that Gillette employs 2,300
people in the manufacture of razors and blades in the United
States and 7,700--more than three times as many--abroad.
Some of those workers are making blades at Gillette plants
in Poland, Russia and China, where production costs are less
than in the United States. But that is not the case in
Germany. ``You could ship the blades from here, but you set
up there for insurance,'' Mr. Vernon said. ``And the
justifications for this approach are not so clear cut.''
Mr. HOLLINGS. It reads:
American companies are once again rapidly expanding their
operations abroad--demonstrating that no matter what the
incentives for keeping business in the United States, the
urge to spread factories, offices, stores and jobs overseas
is irresistible.
The entire article, of course, is included. But down at the bottom it
says the Gillette Company, a typical example, embraces the strategy of
manufacturing abroad rather than exporting, generating jobs overseas
rather than in the United States.
The cartridge--talking about the Sensor XL razor blade cartridge--is
made at the main plant in Boston. Now if we have to strike we have the
exact language in here. We just get it from the overseas plant.
The upshot of this approach is that Gillette employs 2,300
people in the manufacture of razors and blades in the United
States and 7,700--more than 3 times as many--abroad.
Some of these workers are making blades at Gillette plants
in Poland, Russia, and China . . . But that is not the case
in Germany. ``You could ship the blades from here, but you
set up there for insurance.''
But, Mr. President, it uses that expression that if they went and
tried to strike that would be gone.
Then, Mr. President, I want everyone to really hear this one because
we have the article that appeared in the Washington Post and the Roll
Call. Mr. President, I ask unanimous consent that whatever--I know we
cannot have the picture of Smoot and Hawley --but whatever account of
this ad be printed in the Record.
There being no objection, the ad was ordered to be printed in the
Record, as follows:
Remember These Fellas When You Vote on GATT
Remember these fellas? Senator Smoot & Congressman Hawley?
They're the people who tried to put a wall up around America.
It was 1931. The country faced economic uncertainty. Fear
was everywhere.
Congress' reaction? Protectionism. The Smoot-Hawley Act.
The Members of Congress who supported that bill attached
their names to one of the most infamous--and destructive--
pieces of legislation ever passed by the United States
Congress.
Now, it's 1994. The country faces economic uncertainty.
What will Congress do?
With GATT, Congress has an historic opportunity to open
foreign markets to American products and services and reject
protectionism. A vote for GATT will add billions to the U.S.
economy and create new high-paying American jobs.
GATT gives us the largest global tax cut in history, stops
foreign countries from cheating on trade and makes over 120
nations play by the same rules we do.
So, when you vote on GATT, keep these two fellas in mind.
And remember: History has not been kind to those in
Congress who embrace protectionism.
Mr. HOLLINGS. Mr. President, ``Vote America's Future. Vote GATT''
Remember these fellas? Senator Smoot and Congressman
Hawley? They are the people who tried to put a wall up around
America.
It was 1931. Blah, blah, on and on.
False. It was 1930. It was in June 1930. The crash occurred in
October 29, and in June 1930 Smoot-Hawley was passed after the crash.
And the distinguished colleague from Pennsylvania, the late Senator
John Heinz, in ``The Myth of Smoot-Hawley'' contained in the
Congressional Record of May 9, 1983, and I ask unanimous that this
speech by the former John Heinz be printed in the Record at this point.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Myth of Smoot-Hawley
Mr. Heinz. Mr. President, every time someone in the
administration or the Congress gives a speech about a more
aggressive trade policy or the need to confront our trading
partners with their subsidies, barriers to imports and other
unfair practices, others, often in the academic community or
in the Congress immediately react with speeches on the return
of Smoot-Hawley and the dark days of blatant protectionism.
``Smoot-Hawley,'' for those uninitiated in this arcane field,
is the Tariff Act of 1930 (Public Law 71-361) which among
other things imposed significant increases on a large number
of items in the Tariff Schedules. The act has also been, for
a number of years, the basis of our countervailing duty law
and a number of other provisions relating to unfair trade
practices, a fact that tends to be ignored when people talk
about the evils of Smoot-Hawley.
A return to Smoot-Hawley, of course, is intended to mean a
return to depression, unemployment, poverty, misery, and even
war, all of which, apparently were directly caused by this
awful piece of legislation. Smoot-Hawley has thus become a
code word for protectionism, and in turn a code word for
depression and major economic disaster. Those who sometimes
wonder at the ability of Congress to change the country's
direction through legislation must marvel at the sea change
in our economy apparently wrought by this single bill in
1930.
Historians and economists, who usually view these things
objectively, realize that the truth is a good deal more
complicated, that the causes of the Depression were far
deeper, and that the link between high tariffs and economic
disaster is much more tenuous than is implied by this
simplistic linkage. Now, however, someone has dared to
explode this myth publicly through an economic analysis of
the actual tariff increases in the act and their effects in
the early years of the Depression. The study points out that
the increases in question affected only 231 million dollars'
worth of products in the second half of 1930, significantly
less than 1 percent of world trade; that in 1930-32 duty-free
imports into the United States dropped at virtually the same
percentage rate as dutiable imports; and that a 13.5 percent
drop in GNP in 1930 can hardly be blamed on a single piece of
legislation that was not even enacted until midyear.
This, of course, is not to suggest that high tariffs are
good or that Smoot-Hawley was a wise piece of legislation. It
was not. But it was also clearly not responsible for all the
ills of the 1930's that are habitually blamed on it by those
who fancy themselves defenders of free trade. While I believe
this study does have some policy implications, which I may
want to discuss at some future time, one of the most useful
things it may do is help us all clean up our rhetoric and
reflect a more sophisticated--and accurate--view of economic
history.
Mr. President, I ask that the study, by Don Bedell of
Bedell Associates, be printed in the Record.
The study follows:
Bedell Associates,
Palm Desert, Calif., April 1983.
Tariffs Miscast as Villain in Bearing Blame for Great Depression--
Smoot/Hawley Exonerated
(By Donald W. Bedell)
smoot/hawley, depression and world revolution
It has recently become fashionable for media reporters,
editorial writers here and abroad, economists, Members of
Congress, members of foreign governments, UN organizations
and a wide variety of scholars to express the conviction that
the United States, by the single act of causing the Tariff
Act of 1930 to become law (Public Law 361 of the 71st
Congress) plunged the world into an economic depression,
may well have prolonged it, led to Hitler and World War
II.
Smott/Hawley lifted import tariffs into the U.S. for a
cross section of products beginning mid-year 1930, or more
than 8 months following: the 1929 financial collapse. Many
observers are tempted simply to repeat ``free trade''
economic doctrine by claiming that this relatively
insignificant statute contained an inherent trigger mechanism
which upset a nearly functioning world trading system based
squarely on the theory of comparative economics, and which
propelled the world into a cataclysm of unmeasurable
proportions.
We believe that sound policy development in international
trade must be based solidly on facts as opposed to
suspicions, political or national bias, or ``off-the-cuff''
impressions 50 to 60 years later of how certain events may
have occurred.
When pertinent economic, statistical and trade data are
carefully examined will they show, on the basis of
preponderance of fact, that passage of the Act did in fact
trigger or prolong the Great Depression of the Thirties, that
it had nothing to do with the Great Depression, or that it
represented a minor response of a desperate nation to a giant
world-wide economic collapse already underway?
It should be recalled that by the time Smoot/Hawley was
passed 6 months had elapsed of 1930 and 8 months had gone by
since the economic collapse in October, 1920. Manufacturing
plants were already absorbing losses, agriculture surpluses
began to accumulate, the specter of homes being foreclosed
appeared, and unemployment showed ominous signs of a
precipitous rise.
The country was stunned, as was the rest of the world. All
nations sought very elusive solutions. Even by 1932, and the
Roosevelt election, improvisation and experiment described
government response and the technique of the New Deal, in the
words of Arthur Schlesinger, Jr. in a New York Times article
on April 10, 1983. President Roosevelt himself is quoted in
the article as saying in the 1932 campaign. ``It is common
sense to take a method and try it. If it fails, admit it
frankly and try another. But above all try something.''
The facts are that, rightly or wrongly, there were no major
Roosevelt Administration initiatives regarding foreign trade
until well into his Administration; thus clearly suggesting
that initiatives in that sector were not thought to be any
more important than the Hoover Administration thought them.
However, when all the numbers are examined we believe neither
President Hoover nor President Roosevelt can be faulted for
placing international trade's role in world economy near the
end of a long list of sectors of the economy that had caused
chaos and suffering and therefore needed major corrective
legislation.
How important was international trade to the U.S.? How
important was U.S. trade to its partners in the Twenties and
Thirties?
In 1919, 86% of U.S. Imports were duty free, or $2.9
Billion of a total of $4.3 Billion. Exports amounted to $5.2
Billion in that year making a total trade number of $9.6
Billion or about 14% of the world's total. See Chart I below.
CHART I.--U.S. GROSS NATIONAL PRODUCT, 1929-33
[Dollar amounts in billions]
------------------------------------------------------------------------
1929 1930 1931 1932 1933
------------------------------------------------------------------------
GNP........................ $103.4 $29.5 $75.3 $56.8 $55.4
U.S. international trade... $9.5 $6.8 $4.5 $2.9 $3.2
U.S. international trade
percent of GNP............ 1.3 7.6 5.9 5.1 \1\5.6
------------------------------------------------------------------------
\1\Series U.S. Department of Commerce of the United States, Bureau of
Economic Analysis.
Using the numbers in that same Chart I it can be seen that
U.S. imports amounted to $4.3 Billion or just slightly above
12% of total world trade. When account is taken of the fact
that only 33%, or $1.5 Billion, of U.S. imports was in the
Dutiable category, the entire impact of Smoot/Hawley has to
be focused on the $1.5 Billion number which is barely 1.5% of
U.S. GNP and 4% of world imports.
What was the impact? In dollars Dutiable imports fell by
$462 Million, or from $2.5 Billion to $1.0 Billion, during
1930. It's difficult to determine how much of that small
number occurred in the second half of 1930 but the
probability is that it was less than 50%. In any case, the
total impact of Smoot/Hawley in 1930 was limited to a
``damage'' number of $231 Million; spread over several
hundred products and several hundred countries!
A further analysis of imports into the U.S. discloses that
all European countries accounted for 30% or $1.3 Billion in
1929 divided as follows: U.K. at $330 Million or 7\1/2\%,
France at $171 Million or 3.9%, Germany at $255 Million or
5.9%, and some 15 other nations accounting for $578 Million
or 13.1% for an average of 1%.
These numbers suggest that U.S. imports were spread broadly
over a great array of products and countries, so that any
tariff action would by definition have only a quite modest
impact in any given year or could be projected to have any
important cumulative effect.
This same phenomenon is apparent for Asian countries which
accounted for 29% of U.S. imports divided as follows: China
at 3.8%, Japan at $432 Million and 9.8%, and with some 20
other countries sharing in 15% or less than 1% on average.
Australia's share was 1.3% and all African countries sold
2.5% of U.S. imports.
Western Hemisphere countries provided some 37% of U.S.
imports with Canada at 11.4%, Cuba at 4.7%, Mexico at 2.7%,
Brazil at 4.7% and all others accounting for 13.3% or about
1% each.
The conclusion appears inescapable on the basis of these
numbers: a potential adverse impact of $231 Million spread
over the great array of imported products which were Dutiable
in 1929 could not realistically have had any measureable
impact on America's trading partners.
Meanwhile, the Gross National Product (GNP) in the United
States had dropped an unprecedented 13.5% in 1930 alone, from
$103.4 Billion in 1929 to $89 Billion by the end of 1930. It
is unrealistic to expect that a shift in U.S. international
imports of just 1.6% of U.S. GNP in 1930 for example ($231
Million on $14.4 Billion) could be viewed as establishing a
``precedent'' for America's trading partners to follow, or
represented a ``model'' to follow.
Even more to the point an impact of just 1.6% could not
reasonably be expected to have any measurable effect on the
economic health of America's trading partners.
Note should be taken of the claim by those who repeat the
Smoot/Hawley ``villain'' theory that it set off a ``chain''
reaction around the world. While there is some eivdence that
certain of America's trading partners retaliated against the
U.S. there can be no reliance placed on the assertion that
those same trading partners retalliated against each other
by way of showing anger and frustration with the U.S.
Self-Interest alone would dictate otherwise, common sense
would intercede on the side of avoidance of ``shooting
oneself in the foot,'' and the facts disclose that world
trade declined by 18% by the end of 1930 while U.S. trade
declined by some 10% more or 28%. U.S. foreign trade
continued to decline by 10% more through 1931, or 53%
versus 43% for worldwide trade, but U.S. share of world
trade declined by only 18% from 14% to 11.3% by the end of
1931.
Reference was made earlier to the Duty Free category of
U.S. imports. What is especially significant about those
import numbers is the fact that they dropped in dollars by an
almost identical percentage as did Dutiable goods through
1931 and beyond: Duty Free imports declined by 29% in 1930
versus 27% for Dutiable goods, and by the end of 1931 the
numbers were 52% versus 51% respectively.
The only rational explanation for this phenomenon is that
Americans were buying less and prices were falling. No basis
exists for any claim that Smoot/Hawley had a distinctively
devastating effect on imports beyond and separate from the
economic impact of the economic collapse in 1929.
Based on the numbers examined so far, Smoot/Hawley is
clearly a mis-cast villian. Further, the numbers suggest the
clear possibility that when compared to the enormity of the
developing international economic crisis Smoot/Hawley had
only a minimal impact and international trade was a victim of
the Great Depression.
This possibility will become clear when the course of the
Gross National Produce (GNP) during 1929-1933 is examined and
when price behavior world-wide is reviewed, and when
particular Tariff Schedules of Manufacturers outlined in the
legislation are analyzed.
Before getting to that point another curious aspect of the
``villian'' theory is worthy of note. Without careful
recollection it is tempting to view a period of our history
some 50-60 years ago in terms of our present world. Such a
superficial view not only makes no contribution to
constructive policy-making. It overlooks several vital
considerations which characterized the Twenties and Thirties:
1. The international trading system of the Twenties bears
no relation to the interdependent world of the Eighties
commercially, industrially and financially in size or
complexity.
2. No effective international organization existed, similar
to the General Agreement for Tariffs and Trade (GATT) for
example for resolution of disputes. There were no trade
``leaders'' among the world's nations in part because most
merchantile nations felt more comfortable without dispute
settlement bodies.
3. Except for a few critical products foreign trade was not
generally viewed in the ``economic-critical'' context as
currently in the U.S. As indicated earlier either President
Hoover nor President Roosevelt viewed foreign trade as
crucial to the economy in general or recovery in particular.
4. U.S. foreign trade was reintively as an amorphous
phenomenon quite unlike the highly structured system of the
Eighties; characterized largely then by ``caveat empton'' and
a broadly laissez-faire philosophy generally unacceptable
presently.
These characteristics, together with the fact that 60
percent of U.S. imports were Duty Free in 1929 and beyond,
placed overall international trade for Americans in the
Twenties and Thirties on a very low level of priority
especially against the backdrop of world-wide depression.
Americans in the Twenties and Thirties could no more
visualize the world of the Eighties than we in the
Eighties can legitimately hold them responsible for
failure by viewing their world in other than the most
pragmatic and realistic way given those circumstances.
For those Americans then, and for us now, the numbers
remain the same. On the basis of sheer order of magnitude of
the numbers illustrated so far, the ``villian'' theory often
attributed to Smoot/Hawley is an incorrect reading of history
and a mis-understanding of the basic and incontrovertible law
of cause and effect.
It should also now be recalled that, despite heroic efforts
by U.S. policy-makers its GNP continued to slump year-by-year
and reached a total of just $55.4 billion in 1933 for a total
decline from 1929 levels of 46 percent. The financial
collapse of October, 1929 had indeed left its mark.
By 1933 the 1929 collapse had prompted formation in the
U.S. of the Reconstruction Finance Corporation, Federal Home
Loan Bank Board, brought in a Democrat President with a
program to take control of banking, provide credit to
property owners and corporations in financial difficulties,
relief to farmers, regulation a stimulation of business, new
labor laws and social security legislation.\3\
---------------------------------------------------------------------------
\3\Beard, Charles and Mary, New Basic History of the United
States.
---------------------------------------------------------------------------
So concerned were American citizens about domestic economic
affairs, including the Roosevelt Administration and the
Congress, that scant attention was paid to the solitary
figure of Secretary of State Cordell Hull. He, alone among
the Cabinet, was convinced that international trade had
material relevance to lifting the country back from
depression. His efforts to liberalize trade in general and to
find markets abroad for U.S. products in particular from
among representatives of economically stricken Europe, Asia
and Latin America were abruptly ended by the President and
the 1933 London Economic Conference collapsed without result.
The Secretary did manage to make modest contributions to
eventual trade recovery through the Most Favored Nation (MFN)
concept. But it would be left for the United States at the
end of World War II to undertake an economic and political
role of leadership in the world; a role which in the Twenties
and Thirties Americans in and out of government felt no need
to assume, and did not assume. Evidence that conditions in
the trade world would have been better, or even different,
had the U.S. attempted some leadership role can not
responsibly be assembled. Changing the course of past history
has always been less fruitful than applying perceptively
history's lessons.
The most frequently used numbers thrown out about Smoot/
Hawley's impact by those who believe in the ``villain''
theory are those which clearly establish that U.S. dollar
decline in foreign trade plummeted by 66 percent by the end
of 1933 from 1929 levels, $9.6 billion to $3.2 billion
annually.
Much is made of the co-incidence that world-wide trade also
sank about 66 percent for the period. Chart II summarizes the
numbers.
CHART II.--UNITED STATES AND WORLD TRADE, 1929-33
[In billions of U.S. dollars]
------------------------------------------------------------------------
1929 1930 1931 1932 1933
------------------------------------------------------------------------
United States:
Exports................ 5.2 3.8 2.4 1.6 1.7
Imports................ 4.4 3.0 2.1 1.3 1.5
Worldwide:
Exports................ 33.0 *26.5 18.9 12.9 11.7
Imports................ 35.0 29.1 20.8 14.0 *12.5
------------------------------------------------------------------------
*Series U Department of Commerce of the United States, League of
Nations, and International Monetary Fund.
The inference is that since Smoot/Hawley was the first
``protectionist'' legislation of the Twenties, and the end of
1933 saw an equal drop in trade that Smoot/Hawley must have
caused it. Even the data already presented suggest the
relative irrelevance of the tariff-raising act on a strictly
trade numbers basis. When we examine the role of a world-wide
price decline in the trade figures for almost every product
made or commodity grown the ``villain'' Smoot/Hawley's impact
will not be measurable.
It may be relevant to note here that the world's trading
``system'' paid as little attention to America's revival of
foreign trade beginning in 1934 as it did to American trade
policy in the early Thirties. From 1934 through 1939 U.S.
foreign trade rose in dollars by 80% compared to world-wide
growth of 15%. Imports grew by 68% and exports climbed by a
stunning 93%. U.S. GNP by 1939 had developed to $91 Billion,
to within 88% of its 1929 level.
Perhaps this suggests that America's trading partners were
more vulnerable to an economic collapse and thus much less
resilient than was the U.S. In any case the international
trade decline beginning as a result of the 1929 economic
collapse, and the subsequent return by the U.S. beginning in
1934 appear clearly to have been wholly unrelated to Smoot/
Hawley.
As we begin to analyze certain specific Schedules appearing
in the Tariff Act of 1930 it should be noted that sharp
erosion of prices world-wide caused dollar volumes in trade
statistics to drop rather more than unit volume thus
emphasizing the decline value. In addition, it must be
remembered that as the Great Depression wore on, people
simply bought less of everything increasing further price
pressure downward. All this wholly apart from Smoot/Hawley.
When considering specific Schedules, No. 5 which includes
Sugar, Molasses, and Manufactures Of, maple sugar cane,
sirups, adonite, dulcite, galactose, inulin, lactose and
sugar candy. Between 1929 and 1933 import volume into the
U.S. declined by about 40% in dollars. In price on a world
basis producers suffered a stunning 60% drop. Volume of sugar
imports declined by only 42% into the U.S. in tons. All these
changes lend no credibility to the ``villain'' theory unless
one assumes, erroneously, that the world price of sugar was
so delicately balanced that a 28% drop in sugar imports by
tons into the U.S. in 1930 destroyed the price structure and
that the decline was caused by tariffs and not at least
shared by decreased purchases by consumers in the U.S. and
around the world.
Schedule 4 describes Wood and Manufactures Of, timber hewn,
maple, brier root, cedar from Spain, wood veneer, hubs for
wheels, casks, boxes, reed and rattan, toothpicks, porch
furniture, blinds and clothespins among a great variety of
product categories. Dollar imports into the U.S. slipped by
52% from 1929 to 1933. By applying our own GNP as a
reasonable index of prices both at home and overseas, unit
volume decreased only 6% since GNP had dropped by 46% in
1933. The world-wide price decline did not help profitability
of wood product makers, but to tie that modest decline in
volume to a law affecting only 6\1/2\% of U.S. imports in
1929 puts great stress on credibility, in terms of harm
done to any one country or group of countries.
Schedule 9. Cotton Manufactures, a decline of 54% in
dollars is registered for the period, against a drop of 46%
in price as reflected in the GNP number. One the assumption
that U.S. GNP constituted a rough comparison to world prices,
and the fact that U.S. imports of these products was
infinitesimal. Smoot/Hawley was irrelevant. Further, the
price of raw cotton in the world plunged 50% from 1929 to
1933. U.S. growers had to suffer the consequences of that low
price but the price itself was set by world market prices,
and was totally unaffected by any tariff action by the U.S.
Schedual 12 deals with Silk Manufactures, a category which
decreased by some 60% in dollars. While the decrease amounted
to 14% more than the GNP drop, volume of product remained
nearly the same during the period. Assigning responsibility
to Smoot/Hawley for this very large decrease in price
beginning in 1930 stretches credibility beyond the breaking
point.
Several additional examples of price behavior are relevant.
One is Schedule 2 products which include brick and tile.
Another is Schedule 3 iron and steel products. One
outstanding casualty of the financial collapse in October,
1929 was the Gross Private Investment number. From $16.2
Billion annually in 1939 by 1933 it has fallen by 91% to just
$1.4 Billion. No tariff policy, in all candor, could have so
devastated an industry as did the economic collapse of 1929.
For all intents and purposes construction came to a halt and
markets for glass, brick and steel products with it.
Another example of price degradation world-wide completely
unrelated to tariff policy is Petroleum products. By 1933
these products had decreased in world price by 82% but Smoot/
Hawley had no Petroleum Schedule. The world market place set
the price.
Another example of price erosion in world market is
contained in the history of exported cotton goods from the
United States. Between 1929 and 1933 the volume of exported
goods actually increased by 13.5% while the dollar value
dropped 48%. This result was wholly unrelated to the tariff
policy of any country.
While these examples do not include all Schedules of Smoot/
Hawley they clearly suggest that overwhelming economic and
financial forces were at work affecting supply and demand and
hence on prices of all products and commodities and that
these forces simply obscured any measurable impact the Tariff
Act of 1930 might possibly have had under conditions of
several years earlier.
To assert otherwise puts on those proponents of the Smoot/
Hawley ``villian'' theory a formidable challenge to explain
the following questions:
1. What was the nature of the ``trigger'' mechanism in the
Act that set off the alleged domino phenomenon in 1930 that
began or prolonged the Great Depression when implementation
of the Act did not begin until mid-year?
2. In what ways was the size and nature of U.S. foreign
trade in 1929 so significant and critical to the world
economy's health that a less than 4% swing in U.S. imports
could be termed a crushing and devastating blow?
3. On the basis of what economic theory can the Act be said
to have caused the GNP drop of an astounding drop of 13.5% in
1930 when the Act was only passed in mid-1930? Did the entire
decline take place in the second half of 1930? Did world-
wide trade begin its decline of some $13 Billion only in
the second half of 1930?
3. Does the fact that duty free imports into the U.S.
dropped in 1930 and 1931 and in 1932 at the same percentage
rate as dutiable imports support the view that Smoot/Hawley
was the cause of the decline in U.S. imports?
4. Is the fact that world wide trade declined less rapidly
than did U.S. foreign trade prove the assertion that American
trading partners retaliated against each other as well as
against the U.S. because and subsequently held the U.S.
accountable for starting an international trade war?
5. Was the international trading system of the Twenties so
delicately balanced that a single hastily drawn tariff
increase bill affecting just $231 Million of dutiable
products in the second half of 1930 began a chain reaction
that scuttled the entire system? Percentage-wise $231 Million
is but 0.65% of all of 1929 world-wide trade and just half
that of world-wide imports:
The preponderance of history and facts of economic life in
the international area make an affirmative response by the
``villain'' proponents an intolerable burden.
It must be said that the U.S. does offer a tempting target
for Americans who incessantly cry ``mea culpa'' over all the
world's problems, and for many among our trading partners to
explain their problems in terms of perceived American
inability to solve those problems.
In the world of the Eighties U.S. has indeed very serious
and perhaps grave responsibility to assume leadership in
international trade and finance, and in politics as well.
On the record, the United States has met that challenge
beginning shortly after World War II.
The U.S. role in structuring the United Nations, the
General Agreement on Tariffs and Trade (GATT), the
International Monetary Fund, the Bretton Woods and Dumbarton
Oaks Conferences on monetary policy, the World Bank and
various Regional Development Banks, for example, is a record
unparalleled in the history of mankind.
But in the Twenties and Thirties there was no acknowledged
leader in international affairs. On the contrary, evidence
abounds that most nations preferred the centuries-old
patterns of international trade which emphasized pure
competition free from interference by any effective
international supervisory body such as GATT.
Even in the Eighties examples abound of trading nations
succumbing to nationalistic tendencies and ignoring signed
trade agreements. Yet the United States continues as the
bulwark in trade liberalization proposals within the GATT. It
does so not because it could not defend itself against any
kind of retaliation in a worst case scenario but because no
other nation is strong enough to support them successfully
without the United States.
The basic rules of GATT are primarily for all those
countries who can't protect themselves in the world of the
Eighties and beyond without rule of conduct and discipline.
The attempt to assign responsibility to the U.S. in the
Thirties for passing the Smoot/Hawley tariff act and thus set
off a chain reaction of international depression and war is
on the basis of a preponderance of fact, a serious mis-
reading of history, a repeat of the basic concept of cause
and effect and a disregard for the principle of proportion of
numbers.
It may constitute a fascinating theory for political
mischief-making but it is a cruel hoax on all those
responsible for developing new and imaginative measures
designed to liberalize international trade.
Such constructive development and growth is severely
impeded by perpetuating what is no more than a symbolic
economic myth.
Nothing is less worthwhile than attempting to re-write
history, not learning from it. Nothing is more worthwhile
than making careful and perceptive and objective analysis in
the hope that it may lead to an improved and liberalized
international trading system.
Mr. HOLLINGS. It affected less than 1.5 percent of our GNP. It
affects now world trade 18 percent of our GNP and only affected one-
third of the trade. The other two-thirds lost just as much rather than
unaffected part and then goes on that under our friend Cordell Hull and
reciprocal free trade we got into a positive balance in 1933. That is a
bum rap this wall where you can ship capital around the world on a
satellite technology and a computer clip. That is why they are all
moving. They give me that wall argument and Smoot and Hawley. We have
heard enough of it. I wanted to make sure we answered these particular
arguments and then we reserve our 2 hours for tomorrow. And I thank the
distinguished chairman, Senator Moynihan, for his courtesy.
Mr. MOYNIHAN. Yes. Mr. President, we are aware of some pressure of
time. The distinguished Senator from South Carolina has the better part
of 2 hours remaining and that will be for his disposition tomorrow.
Mr. HOLLINGS. Very good. I thank the Senator.
Mr. MOYNIHAN. The Senator from Alaska has to leave, we know.
The Senator from Washington is next. And I yield 10 minutes to the
Senator from Washington. And then I believe the Senator from Wyoming
will take whatever time he wants.
I yield to the distinguished Senator from Washington.
Mrs. MURRAY. Thank you.
Mr. President, I rise today in full support of the implementing
legislation to the Uruguay round of the GATT.
Two years ago, I first came to our Nation's Capital and to this
Capitol Building.
Two years ago, I vowed that I would look at every piece of
legislation that came before this body from the perspective of average
Americans.
And, I promised I would speak with the voice of common people. People
who worry about educating their kids, taking care of their parents,
paying their mortgage, and balancing their checkbooks.
Mr. President, from the first vote I cast in the 103d Congress on the
Family and Medical Leave Act to this one on the GATT, I have not lost
that vision.
That's why I can say this bill is important to average Americans like
the members of my family.
Mr. President, this bill is vital because this bill means more secure
and well-paying jobs.
The importance of trade is understood by families in my home State
from Seattle to Spokane. My friends and neighbors understand that
international commerce is the lifeblood of our economy.
Per capita, my home State is America's largest exporter. One in five
jobs in Washington is directly linked to trade.
Our State is home to the Nation's largest exporting company--the
Boeing Co.
Ours is the State of the Nation's most cutting-edge, innovative
industries of the future--software and biotechnology.
Washington State sends the fruits of our labors--our precious apples
and pears and wheat--to every corner of the globe.
We in the State of Washington know that expanding trade means more
goods jobs. It means more manufacturing jobs. More high-technology
jobs. More jobs at our Pacific Coast ports and more jobs in the
orchards and farmlands of our Inland Empire.
And, these family-wage jobs provide the economic stability and
economic diversity the citizens of the State of Washington have worked
so hard to achieve.
I have heard from many people in my trade-dependent state who
understand how important this vote is to their lives.
They know the global tax breaks in the GATT will save each American
family about $110 per year.
They know if we walk away from this deal which took more than 7 years
to negotiate and more than 120 countries to sign, Boeing will have a
more difficult time selling airplanes.
That our most innovative companies, like Microsoft and Nintendo, will
lose billions of dollars to foreign copyright privates.
That our apples--finally just reaching Japanese shores--will be
turned away. And, our wheat will sit in silos.
And, worst of all, if we walk away, we will return to those dark days
of the recession with long unemployment lines. And, declining family
incomes.
Mr. President, I have heard some of the arguments against this bill.
They are based more in misunderstanding of this agreement than they are
in solid economic analysis. I know how easy it is to score debating
points on issues like this. And, how easy it is to blow things out of
proportion, to scare rather than to educate.
I know how this works, because I understand the fear of economic
insecurity.
Mr. President, you have heard me say this before. The highest paying
job I had before I came here paid $23,000 per year. I am one of those
people who has spent years working hard and playing by the rules. And,
still being a pink slip away from economic disaster.
I know what all working families want--we want to get out of the
system what we put into it.
And, Mr. President, this is exactly what the GATT does. It gives us
an fair return for our hard work. It encourages and protects our
innovations.
It makes not only our country but all countries work better for
average Americans.
It gives our workers a step up against the unfair and high tariffs we
have had imposed on us for decades.
It levels the economic playing field, and it makes the world live up
to our rules. It opens foreign markets as wide as this great American
market is to foreign products.
And, it is a great deal for consumers. It is the largest global tax
cut in the history of civilization.
I have heard the arguments against the GATT. I share some of the
concerns of the opponents. But, I believe that economic growth and
expanded trade can exist and even encourage environmental protection.
I believe we can conclude a trade agreement and work toward improving
the quality of life of workers around the world.
I believe that we can pass this agreement and follow the hard work of
my good friend, Senator Harkin, to end the horrendous practices of some
of our trading partners in child and slave labor.
I say to these opponents, we cannot influence our trading partners by
imposing trade sanctions. We cannot make other countries live up to our
standards by ignoring them.
And, I say to my colleagues on the other side of this issue--once
again, we have a choice. We can face the challenges of the 21st century
and the international marketplace. Or, we can look backward, become
isolationist, and turn inward.
History will record what we do here. We are at a crossroads. For the
first time in the history of civilization, we have before us an
agreement which covers trade in services, a comprehensive agreement on
subsidies, trade-related aspects of intellectual property and foreign
investments.
This agreement is good for America. It is good for America's future
generations.
And it is a good example of what I hope will be a new era in American
politics.
I support the compromise President Clinton reached with Senator Dole
last week. They worked together in the best bipartisan way to clear up
some misunderstandings about sovereignty. They have illuminated for us
the best work of three administrations.
More than 120 countries agreed to a set of rules regarding trade.
And, we should, too.
I urge my fellow colleagues to swiftly pass this bill.
I thank the Chair and I yield back my time.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. May I congratulate the Senator from Washington on her
very thoughtful comments.
And might I particularly draw attention to her comment that she is
concerned, as are other Senators, about the problems of child labor in
the world, and properly so, in the world where population expansion has
been so demonic. But we will never be able to engage those countries if
we cut off trade with them. She is absolutely right in that regard, and
importantly so, and I want to thank her for her remarks.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. WALLOP. Mr. President, I yield 10 minutes to the Senator from
Alaska.
The PRESIDING OFFICER (Mr. Moynihan). The Senator from Alaska.
Mr. STEVENS. Mr. President, I thank the manager of the bill.
While I support the concept of the General Agreement on Tariffs and
Trade, I cannot support the bill that is before the Senate.
I have three basic reasons. I believe that the creation of the World
Trade Organization, as contained in the agreement and as would be
approved by this bill, infringes upon our sovereignty, not only of our
Nation but of our individual States.
Second, I believe that the procedure under which we are considering
this bill once again violates the Constitution of the United States.
Mr. President, I am compelled to say I think that in the last election
the public was telling us that we have a Constitution we should live up
to. We raise our hands and say we will support the Constitution. Then
we, once again, bring a trade agreement before this body under a
procedure which is unconstitutional--the fast track procedure.
The third reason I cannot support this agreement is that it requires
a waiver of the Budget Act. I do not believe we should vote to waive
the Budget Act in order to approve the General Agreement on Tariffs and
Trade. Particularly not with our current Federal budget deficits.
Mr. President, as one who supports the concept of free trade, I find
it very difficult, to come before the Senate and oppose the approval of
a trade agreement because of the procedures that have been followed. I
did that with regard to the North American Free Trade Agreement last
November. During the debate on the NAFTA agreement, I raised on the
Senate floor two constitutional points of order, two issues that affect
the rights of States and particularly the rights of small States.
The first issue related to the Senate's constitutional duty under
article II, section 2, clause 2 of the Constitution to ``advise and
consent'' to treaties negotiated by the President. Once again, we have
here before us now an executive agreement. It is an executive agreement
merely because the President designated it as such, notwithstanding the
fact that it is clearly one of the items that should have been within
the treaty clause of the Constitution. The President does have some
discretion to choose the type of instrument he will use, but I do
believe he must respect the confines of the instrument he chooses as he
puts before the Congress a particular new type of foreign agreement for
approval by the Congress.
The Constitution specifically refers to treaties, compacts, and
agreements as some of the choices that are available to the President.
But there are some parameters, I feel, that should be confining upon
any President as he exercises that discretion to choose the type of
agreement he will use.
This agreement clearly is a treaty, in my judgment. We had a
distinguished representative of Harvard Law School come before the
Commerce Committee who set forth why it is that. I regret to say he has
recanted his position at the last minute, as he started to count votes
because of the circumstance that he does support GATT, but he opposes
the process.
I believe that we should stand by the Constitution, rather than just
count votes, and the GATT Agreement should be submitted to the Senate
as a treaty because of the World Trade Organization concept that is
created by it. The WTO concept deals with issues of sovereignty. It
deals with the powers of government that particularly affect this
country and our system of government. I believe that the GATT Agreement
should be submitted to the Senate as a treaty because the World Trade
Organization Council and the dispute resolution mechanism diminish the
sovereignty of the individual states. I do not understand why we should
create a new World Trade Organization that will take part of the
sovereignty--diminish the sovereignty of our States and our Nation--
through a trade agreement and not a treaty.
The second constitutional issue is one that I raised last November--
the fast track procedure which prohibits amendments to the implementing
legislation is unconstitutional. The fast track procedure applies to
the bill that is before us now. It limits the amount of debate on the
bill and prohibits amendments to it. I believe that is
unconstitutional. I spelled out to the Senate, last November, this same
issue. There is no reason for me to raise it again, because I know I
will lose again, because the same people are here who voted on it
before. Maybe another Congress at a later date will realize that we
ought to start protecting the Constitution.
Members of the Senate have the Constitutional right under article I,
section 7 to offer amendments to revenue bills. It says:
All bills for raising revenue shall originate in the House
of Representatives; but the Senate may propose or concur with
amendments as on other bills.
GATT is a revenue measure. It originated in the House of
Representatives. Yet, I am prohibited now by this procedure from
offering amendments to protect my State. And the last time I presented
an amendment during the NAFTA debate, the Chair ruled that my amendment
was out of order and the Chair's ruling was sustained.
Critics of my amendment point to article 1, section 5, clause 2 of
the Constitution which provides that ``Each House may determine the
Rules of its proceedings'', arguing that the Members of the Senate
agreed to limit our own rights to offer amendments. I disagree with
that argument. The Constitution annotated--published by the
Congressional Research Service and sold to the public as an official
Government document--says:
In the exercise of their constitutional power to determine
their rules of proceedings, the Houses of Congress may not
ignore constitutional restraints or violate fundamental
rights, and there should be a reasonable relation between the
mode or method to be attained.
In Powell versus McCormick, the Supreme Court held that the
qualifications of Members are enumerated in the Constitution and
neither House of Congress may impose additional qualifications through
its own rules.
When we first contemplated the fast track procedure we believed we
were restricting our rights for very narrow purposes. Section
151(b)(1)(C) of the Trade Act of 1974 provides that the implementing
bill will only contain provisions ``necessary and appropriate'' to
implement the trade agreement. The implementing legislation we are
currently considering contains at least 29 sections that are not
essential to implementing the trade agreement. They are only needed to
meet the Budget Act and not the trade agreement. The inclusion of
nonessential provisions in a trade agreement that is not amendable--
even to strike the offending provisions--is an abuse of process. This
is the type of abuse of process that led the Senate to adopt the Byrd
Rule regarding the consideration of reconciliation bills. The Byrd Rule
states that if the budget effect is incidental to the nonbudgetary
impact then the provision is non germane and subject to a motion to
strike. I believe that there should be a similar type of rule which
would, at the very least, allow Members to strike provisions which are
not ``necessary and appropriate'' to implement the trade agreement.
It is unfortunate, I think, that we can get to the point where, under
a fast track procedure, we deny the rights of representatives of small
States. And they are the people that are being hurt, Mr. President, by
this bill. I mention in particular the double E savings bond provision
that is in the revenue portion of this bill.
The bill before us includes not only provisions required to implement
the trade agreement but also provisions to comply with the Budget Act.
I do not believe that we ever contemplated we would have Budget Act
provisions in a bill that came before us under the fast track that we
would not be able to amend.
One of these provisions is the double E savings bond provision which
is going to penalize people who use deductions from their salaries to
buy savings bonds. It raises a very small amount, about $122 million
over 5 years, compared to the billions that are required to offset the
revenue loss from the tariff reductions in this bill. This provision
was put in here--I say this respectfully--by the members of the Finance
Committee, and the Ways and Means Committee. A very small portion of
the Congress made this provision a part of the GATT deal. And, the
people who are going to pay for it are the people who purchase savings
bonds, quite often for their retirement or children's education. Many
of these individuals purchase the savings bonds through a deduction
plan from their paychecks. The $122 million savings that is included in
this bill will come about because someone redeeming a savings bond
could forfeit up to six months of interest. Currently interest is
credited every month, but under this provision the Treasury Department
will exercise its administrative discretion to credit interest every
six months instead. This is wrong and this provision should be subject
to amendment here on the floor.
I believe that denying us the right to offer amendments to deal with
these types of revenue provisions clearly violates the Constitution.
There is one other issue I am constrained to mention. I was the
author of the spectrum auction concept. For years I argued that the
people who were acquiring new licenses for spectrum, through the FCC,
should not get them through a lottery, but they should bid for them.
The licenses had extreme value.
People laughed at that. The first time that CBO looked at this issue
they said that my bill would probably raise about $250 million. It is
now in the budget for about $14 billion. And part of the provisions we
put in there provided for a pioneer preference provision to give
preference to people who develop new technologies but did not have the
financing capability to utilize those technologies because they would
be competing against the enormous financial entities of
telecommunications industry in this country for those licenses.
As a consequence of the fast track procedure which prohibits
amendments, included in this bill is a pioneer preference provision
that says, ``Oh, by the way, those people have to pay about 85 percent
of the average paid by other people in spectrum auctions.'' Which, Mr.
President, was not what was intended at all. Strangely, we have people
holding the spectrum under the pioneer preference auctions that are
part of the largest financial organizations in the country. They are
not small people who developed new technologies that need a boost to
get licenses for less than cost or--as a matter of fact, we wanted them
to get them free. But under the circumstances of this bill, I find
again a revenue provision that is included which I cannot, even as the
author of spectrum auction concept, offer an amendment to knock it out
of the implementing legislation. The pioneer preference provision
should not be in this bill at all.
I have the feeling that those of us from the small States are the
ones who are really harmed by this bill.
In addition to these constitutional issues, I have been concerned
that the GATT will adversely affect Alaska and 16 other States that use
the unitary tax method. If the Uruguay round agreement is adopted,
Alaska could be in jeopardy of losing approximately $200 million in
revenue annually from its unitary tax on oil producers. The other
States that rely on this method of taxation include Arizona,
California, Colorado, Connecticut, the District of Columbia, Illinois,
Indiana, Iowa, Kansas, Massachusetts, New Hampshire, New Jersey, New
York, Ohio, Rhode Island and West Virginia.
The Supreme Court of the United States recently upheld the right of
Alaska and other States to use a unitary tax. However, the European
Commission has already identified in its 1994 ``Report on United States
Barriers to Trade and Investment'' the unitary tax as an unfair trade
practice. In response the Administration negotiated an exception to the
General Agreements on Trade in Services which is designed to protect
the State's ability to use unitary taxes. In addition, the USTR
submitted reservations in Geneva on June 29, 1994. I submitted along
with Senator Dorgan a letter to the U.S. Trade Representative on
November 14 requesting a report on the status of the reservations. I
would like to submit for the Record a copy of the response to that
letter.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
The U.S. Trade Representative,
Executive Office of the President,
Washington, DC, November 30, 1994.
Hon. Ted Stevens,
U.S. Senate,
Washington, DC.
Dear Ted: Thank you for your letter of November 14, 1994,
regarding the status of the reservation we filed in June
exempting state and local tax measures from certain
requirements of the General Agreement on Trade in Services
(GATS). Specifically, you asked me to let you know the status
of negotiations relating to our reservation and whether it
will be included in the final agreement.
The reservation will be an integral part of the GATS--the
Uruguay Round agreement that governs services trade. The
reservation will limit the requirement for our states and
localities to provide ``national treatment'' under their tax
and subsidy regimes to services firms from other GATS
countries. One effect of the reservation--as well as of an
exception written into GATS Article XIV(d)--is to protect
state unitary tax regimes, such as Alaska's, from successful
challenge under the new World Trade Organization (WTO).
The reservation will go into effect at the same time as the
GATS. Its status does not depend on concurrence from other
GATS countries.
Since we filed our state and local tax and subsidy
reservations, various other GATS members have indicated that
they may insist on similar reservations for their own sub-
central government units. A number of governments have
suggested, alternatively, that the GATS should exclude
entirely sub-central government tax measures of the kind
covered by our reservation. That would allow all countries to
enjoy the kind of protection now provided to U.S. states and
localities under our reservation.
Although I cannot say whether the GATS countries will agree
to such an exclusion, I can you assure that, either way, the
state and local tax and subsidy measures covered by our
reservation will be fully protected from challenge under the
WTO.
Sincerely,
Michael Kantor.
Mr. STEVENS. I understand that Senator Murkowski sent a letter to
Ambassador Kantor and received a response which assures him that even
if Alaska's unitary tax were found to treat foreign service suppliers
less favorably than domestic suppliers, it would be protected from
challenge by a GATT panel due to the exception and reservations.
However, I would like to state for the record that I am not completely
convinced that the ongoing discussions with other countries regarding
our tax reservations will adequately protect Alaska's right to use the
unitary tax method. I do not believe that the letter that has been
delivered here by the Trade Representative answers the question, for
those of us who want to protect the unitary tax from this GATT and its
interpretation by the European Commission following the adoption of
this GATT proposal.
Even if the States are protected on this tax issue, there are many
other State laws which do not have reservations or have not been
excepted from the agreement which will be subject to challenge by WTO.
I am concerned that the ability of WTO to challenge State laws will
compromise the rights of States to operate as sovereign and independent
States. I would like to submit for the record a copy of an article
which appeared in ``Inside U.S. Trade on December 18, 1992.'' This
article states that in its last days, the Bush administration proposed
that the concept of a WTO--then known as the MTO: Multilateral Trade
Organization--be dropped from the Uruguay round of GATT. It is my
belief that the Bush administration took this action because it saw the
need to separate world trade from world government. I agree with that
separation. While I generally support free trade, I cannot support this
concept of world government.
There being no objection, the article was ordered to be printed in
the Record, as follows:
U.S. Calls for Eliminating Proposed Multilateral Trade Organization
The U.S. is seeking to scrap the proposed Multilateral
Trade Organization in the Uruguay Round and replace it with a
looser organizational structure headed by a trade committee
of ministers. The proposals are contained in a paper given to
trading partners last week, which elaborates on recent
remarks made by a senior trade official that the U.S. does
not support the creation of the MTO (Inside U.S. Trade, Dec.
11, p 1).
Informed sources said that the U.S. proposed dropping the
MTO largely out of fear that the voting procedures could have
allowed small countries to dominate the new organization by
``interpreting'' the agreement in ways harmful to U.S.
interests. But some other delegations criticized the U.S.,
saying that such concerns could easily have been addressed
through established negotiating channels, and that the U.S.
has not spelled out clearly its problems with the current
proposal. They charge that the U.S. has backed away from the
MTO as a result of pressure by Congress, and by some
environmental and consumer groups who have opposed the
proposed organization.
The U.S. proposal, reprinted below, was denounced by a
number of countries, including Canada and the European
Community, at a Dec. 10 meeting of the heads of the
delegations in Geneva, according to informed sources.
Sources in Geneva said that the negotiations on the MTO
have come to a halt as a result of the U.S. proposal, and
that the issue must be worked out by chief negotiators, and
by Arthur Dunkel, director-general of the General Agreement
on Tariffs & Trade. Other delegations say they are still
waiting for the U.S. to table language detailing the changes
it is seeking, but the outline of the proposal lays out
generally what the U.S. envisions. The new ``post-Uruguay
Round system structure'' proposed by the U.S. would be
directed by a ministerial trade committee, which would meet
every two years to oversee the operation of the trade
agreements and to provide a forum for negotiating further
agreements. A General Council, composed of national
representatives, would perform the same functions between
meetings.
The U.S. proposal would, however, still require countries
to agree to abide by all the provisions of the GATT, as well
as the proposed General Agreement on Trade in Services
(GATS), the agreement on Trade-Related Intellectual Property
(TRIPs), and the GATT codes on procurement, import licensing,
standards, customs valuation and civil aircraft. The
Administration insists that the proposal would still achieve
the same ends as the MTO without creating a formal
organization.
While the structure proposed by the U.S. is similar to that
contained in the MTO proposal, the MTO would have been an
organization with an independent legal standing, along the
liens of the World Bank and the International Monetary Fund.
The U.S. proposal would not create such an organization. And
sources also said that U.S. proposal currently lacks any
definition of the powers and functions of the ministerial
committees and the councils, and does not spell out such
issues as how votes will take place and how amendments to
the agreements will be made.
The proposal would also deal with Administration fears that
the U.S. will be dominated by smaller countries under a
system of one-country, one-vote decision-making. The U.S.
proposal calls for negotiating partners to ``reaffirm
existing GATT practice with respect to decision-making by
consensus. ``Informed sources said this would delete two
provisions opposed by the U.S.: first, the language in the
draft of the proposed MTO that would allow a majority of
countries in the Ministerial Conference of the General
Council to ``interpret the provisions of the agreement''; and
secondly the proposal that amendments to the agreements which
are adopted by a two-thirds majority would be binding on all
MTO members. Under current GATT consensus procedures,
countries are only bound by those amendments to which they
explicitly consent. But sources critical of the U.S. idea
said that the MTO proposal had already incorporated the GATT
consensus procedures, and would not represent a significant
shift from current practice.
Once source in Geneva said that the U.S. proposal had
``hijacked'' the process that the Secretariat of the GATT had
hoped to initiate to resolve outstanding substantive issues
on the MTO and the dispute settlement system. This process of
setting up a special working group was intended to deal with
a handful of contentious issues that have been unresolved
since the so-called Track 3 negotiations on legal drafting
were suspended last May. The new working group was supposed
to deal with three MTO issues: the amending procedure,
waivers from the agreement, and the procedures for non-
application of the agreement (Inside U.S. Trade, Dec. 4,
p.1).
Sources said that the Track 3 negotiations have come to a
halt, and many negotiators are expected to leave Geneva today
(Dec. 18).
The MTO was originally proposed formally by Canada and by
the European Community in late 1991, and was intended to
provide a permanent institutional structure for overseeing
the world trading system. The new institution was aimed in
part at dealing with the problem of ``free riders,'' by
forcing countries to sign onto all the new agreements
emerging from the Uruguay Round, as well as the existing
codes of the GATT. It was also intended to implement the
single integrated dispute settlement system, which would have
allowed countries to ``cross-retaliate'' by taking trade
actions in one sector if its interest were impaired by
trading partners in another. Both principles are supported by
the U.S.
More than 300 environmental and consumer groups from around
the world spoke out against the proposed MTO last week, and a
Nov. 17 statement by groups from 30 countries called for
scrapping the MTO. The statement charges that the MTO would
``override national policies and possibly other international
agreements,'' and would contribute to environmental
degradation (see related story). In addition, the National
Wildlife Federation said that the Administration should
remove the MTO from the draft Uruguay Round agreement and put
on the same timetable as negotiations to reform the
provisions of the GATT (see separate story).
One informed source in Geneva, however, said that the U.S.
proposal could actually weaken the provisions on the
environment. While it has been generally accepted that a
trade and environment committee will be created within the
MTO, the source said that the EC and Canada had both favored
including language on the importance of environmental
protection and sustainable development in the body of the MTO
test itself. The U.S. proposal, however, would restrict this
environmental paragraph to a non-binding preamble to the
proposed ministerial decision, the source said.
____
U.S. Proposal on MTO--Ministerial Decision Outline
Define scope of multilateral trading system under one
umbrella: the four annexes to latest draft MTO agreement.
Agree to convene ministerial meetings every two years to
oversee the operation of these agreements, further their
objectives and provide a forum for negotiation of further
trade agreements.
Establish council of representatives to perform these
functions in the intervals between ministerial meetings.
Establish 3 subsidiary councils; Goods, Services, TRIPs.
Establish Dispute Settlement Body to administer the
integrated dispute settlement procedures in Annex 2 and a
TFRM in accordance with Annex 3.
Establish standing subsidiary bodies of the general
council: Balance-of-Payments Committee, Budget and Finance
Committee, Committee on Trade and Development. Committee on
Trade and Environment.
Designate Secretariat to support all the agreements in the
four annexes.
Reaffirm existing GATT practice with respect to budget and
contributions.
Reaffirm existing GATT practice with respect to decision-
making by consensus.
Provide that by adopting this Decision, Ministers agree to
submit, as appropriate, the annexed instruments for approval
and implementation in accordance with relevant domestic
procedures.
Adopt test of protocol to be accepted upon domestic
approval.
Mr. STEVENS. My third reason for opposing the GATT is because it
would bust the Federal budget. The Congressional Budget Office recently
estimated that the agreement would contribute to the Federal budget
deficit $1.6 billion in the first 5 years and up to an additional $16.5
over the next 5 years. With a Federal debt of $4.6 trillion and $202
billion budget deficit this year, I cannot in good conscience support
this agreement.
I say, in sheer frustration, that I do not know where this Congress
is going. Why can't we live up to the Constitution? Why can't we read
the Constitution again, and proceed according to the Constitution?
Again I state my good friend in the Chair will recall the discussion
we had during the debate on NAFTA. I am still waiting for the hearing,
from the Finance Committee, to give us a chance to determine the future
of fast track concepts. I for one will oppose fast tracks as long as I
am in the Senate, until we get an understanding of how we are going to
protect the Constitution as we consider bills under the fast track
procedure.
I thank my good friend for his courtesy.
The PRESIDING OFFICER. The time has expired.
The Senator from Wyoming.
Mr. WALLOP. Mr. President, I yield myself 10 minutes.
The PRESIDING OFFICER. The Senator from Wyoming is recognized for 10
minutes.
Mr. WALLOP. Mr. President, free trade means the freedom of private
parties to make choices about how to order their lives and how to spend
the money they earn. Restricting trade burdens the exercise of this
liberty. When governments restrict the freedoms of individuals to make
such choices, they are regulating the disposition of private property.
Whatever the arguably beneficial effects of trade laws, this is their
actual function: government interference in private transactions.
Free trade agreements, therefore, should get governments out of the
way of private choices, businesses, and transactions. Free trade
agreements should deregulate international trade, give bureaucrats less
control over how, where, and when exporters and importers can do
business with consumers in foreign nations, and streamline our outdated
and largely protectionist trade laws. Regulations are as harmful to
international trade as they are to the domestic economy, and in both
cases, they must be scaled back to stimulate private economic activity
and allow private parties to enjoy the fruits of their labor and
investments. Free trade agreements should encourage other nations to
scale back informal or formal government controls over private economic
activity.
I believe in free trade. I don't think any Member could argue with my
record of support for free trade. Thus, despite its flaws, GATT reduces
tariffs, the most obvious barriers to free trade, and institutes a
standard set of rules for international trade which should permanently
alter the entrenched protectionist policies of many foreign countries.
But what we are voting on today is not simply whether to make trade
freer through the GATT. We are not voting on the GATT agreement signed
in Morocco in April. We are voting on the implementing legislation
which the administration and the staffs of the Finance and Ways and
Means Committees drafted to integrate the substance of the GATT
Agreements into current U.S. trade law. Not only does the implementing
legislation not integrate the GATT faithfully, it became an excuse to
strengthen the protectionist biases in current U.S. law.
Let me give a few examples, examples of a few of the items which I
hope the next Congress will examine closely and strip from U.S. law.
First, according to the plain language of the GATT, there must be a
fair comparison between the prices of foreign goods imported into the
United States, and the prices of those goods in the exporting country.
The current legislation perverts this language to allow average prices
in the foreign market to be compared with individual transaction prices
in the United States. The relevant provision effectively requires every
sale of a foreign good in the United States to turn a profit or face
duties over and above any tariffs already imposed. This is economic
nonsense.
Second, a related provision allows a deduction of profits from the
U.S. price when comparing those prices to prices in foreign markets. In
other words, the more competitive imports are, the more certain it is
that the ever vigilant Department of Commerce will find that they are
dumped. Again, this is economic nonsense, and exalts the narrow
interests of protected U.S. industries above the broad interests of the
American consumer. Both of these provisions were unnecessary. We are
now forced to vote on barely decipherable legalese which either
obscures or contravenes what we negotiated with over 100 other nations.
Third, as part of the expansion of the definition of subsidy in the
implementing legislation, there is a provision which states that, if a
formerly government-controlled foreign company is privatized, its goods
will still be subject to U.S. countervailing duties, again over and
above duties which may already exist. This is a terrible incentive to
provide to the emerging market economies of the world. What sort of
message are we sending? In the context of a free trade agreement, the
U.S. Congress tells nations transforming from centrally planned
economies to private sector driven economies that their exports can
never escape the effects of prior subsidies in the eyes of U.S. laws.
This is both bad economics and bad foreign policy. Such a provision is
especially ridiculous because GATT itself creates categories of
subsidies immune from countervailing duties. Percentages of research
and development, environmental compliance, and aid to ``disadvantaged
regions,'' whatever that means, are by the GATT language OK to
subsidize. Mr. President, we as a nation cannot afford to subsidize
industries whether such subsidies are GATT legal or not. I know that
Senator Danforth and I agree that legitimizing subsidies on a national
scale amounts to sanctioning a national industrial policy, which is and
has always been a bad idea. The Government cannot pick winners; it only
makes losers out of potential winners by transferring the money of
working Americans to inefficient industries. American business and the
American people want Government out of the way and out of their
pockets. We cannot use a free trade agreement built on similar
principles to defraud taxpayers. I can only hope that the
administration will heed the language and intent of the amendments
which Senator Danforth and I offered to address these concerns.
Closing this point, let me make one thing clear. Earlier this month,
Secretary of Labor Robert Reich decried tax credits for corporations as
``corporate welfare.'' Secretary Reich, wake up. Subsidies are
corporate welfare. Antidumping laws which penalize efficient,
competitive foreign products are corporate welfare for domestic
industries. Tax credits, which mean that the Federal Government takes
away less of the money which a business has earned, are not welfare.
The money which a business and its employees have earned is theirs, Mr.
Reich, not the Government's to bestow upon them.
To further demonstrate that the implementing legislation is contrary
to the language and spirit of the GATT, I want to point out provisions
which were not included in this legislation. The administration fought
tooth and nail during the committee markup to defeat an amendment which
would simply have granted U.S. importers of specialized foreign
products temporary exemptions from antidumping and countervailing
duties in cases where no domestic supply exists. Clearly, if no one in
the United States makes a given product, no one would be inconvenienced
by the import of that product without duties, which can average over 50
percent of the value of the good. Why should an American consumer or an
American industry which needs such a product pay such duties? What or
who is being protected by such a blind application of the trade laws?
There are no benefits. Yet the Department of Commerce and the
International Trade Commission saw the amendment which would have
addressed this illogical situation as a threat to their imprudent
stewardship of the restrictive trade laws. Industries protected from
foreign competition by Commerce's favoritism in the application of
antidumping laws also felt threatened by the amendment, and helped to
defeat the amendment during the committee markups. These industries
argued that the amendment would destroy incentives for domestic
industries to produce the desired products. Again, bad economics. If
sufficient incentives existed for domestic industries to produce the
product, they would already be doing so. Because such incentives do not
exist, American consumers who need the product must import it, and
under current law, they are penalized for doing so. Protected
industries were not swayed by the language in the amendment which gave
domestic industries first crack at producing any desired product before
any remission of duties took place. They and their allies in the
administration simply rejected out of hand any language which suggested
that American consumers ought not to be penalized for importing
specific goods, in small quantities, when there is no domestic
production.
The administration would have us believe that they are committed to
free trade. I for one am not surprised that their actions diverge so
clearly from their rhetoric when less government management of trade is
advocated. And the amendment to which I just spoke was but one example.
The Caribbean Interim Trade Program, originally proposed for inclusion
in the GATT, would have expanded the now $22 billion United States-
Caribbean trading relationship. It would have accelerated these
nations' accession to GATT, necessitated protection of intellectual
property rights, and stimulated bilateral investment treaties. The
United States, including my own State of Wyoming, has run a trade
surplus with the Caribbean Basin for 8 years. Yet it too, was left out
of this implementing legislation due to lukewarm support from the
administration and the same advocates of protectionism who were
responsible for the other anti-GATT inclusions and omissions about
which I have spoken.
On the whole, the implementing legislation reflects bad policy turned
into bad law by bad leadership from the administration. If any Senator
votes against this agreement, the reasons I have detailed above would
amply support his or her decision.
But as every Senator knows, we are rarely asked to vote on perfect
legislation. Far from perfect, this remains a historic vote. As my last
vote in the Senate, I judge this legislation against the one thing that
has underscored every vote I have cast in this body--liberty. The
biggest reason to support GATT is to expand individual liberty. When
governments regulate and restrict the way that millions of private
citizens choose to do business and with whom they do business, they are
restricting freedom, restricting liberty. Restrictions in the name of
protection are without merit; government cannot protect citizens from
the risks of free commerce without denying them the rewards. But when
governments reduce barriers to trade, they increase the ability of each
and every consumer to make choices. Thus my vote for GATT, despite the
many problems in this implementing legislation, is simply that a vote
for the ability of peoples around the world to engage in commerce more
freely, with greater liberty.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Chair notes that this will be the last
vote that the Senator from Wyoming will cast, and if anyone could
characterize a career as having been devoted to liberty, none would be
more exemplary than his.
Does the Senator from North Dakota seek recognition?
Mr. CONRAD. Mr. President, I do seek recognition, and I would grant
myself such time as I might consume.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CONRAD. I thank the Chair.
Mr. President, I will vote for GATT. I will vote for it because I
believe it is in the best interest of the State of North Dakota and of
our Nation. The reason is simple: The United States has the most open
market in the world, and this agreement will force other countries to
open their markets to us. The United States is the largest exporting
nation in the world, and the agreement will provide the largest tax cut
on our goods in world history. The $740 billion in tariff cuts will
mean $700 billion in cuts by other countries while we reduce our own
tariffs by only $40 billion. Clearly, that is in our interest.
The United States is the most competitive nation in the world,
according to a recent analysis by the World Economic Forum. Opening
other countries' markets to us will allow us to sell them more and
create additional jobs for us. Clearly, that is in our interest.
North Dakota exports much of what we produce. This agreement will
provide new opportunities for sales of our agricultural products,
including wheat, cattle and hogs. Projections from the respected Food
and Agricultural Policy Research Institute indicate that by the year
2001, the average North Dakota wheat farmer will realize $3,300 a year
in increased income as a result of this trade pact. But the agreement
does not just benefit agriculture. It will increase our sales of farm
machinery, computer software and many other products we produce.
Clearly, that is in our interest.
Mr. President, as you know, I have opposed trade agreements in the
past, such as the Canadian Free Trade Agreement and the North American
Free Trade Agreement. I opposed them because I did not think they were
in North Dakota's interest. But I believe this agreement is
dramatically different. Those agreements contained provisions that
stacked the deck against our producers. This agreement starts to level
the playing field. It is certainly true that other countries have
played us for suckers on trade in the past. They have taken advantage
of our relatively open markets while keeping their markets closed to
us. This agreement starts to open their markets and make them play by
the same rules that we have followed for years.
These changes are projected to add $100 to $200 billion each year to
our economy when fully implemented. That translates into an extra
$1,200 a year for every American worker.
According to the U.S. Treasury Department, it means $60 billion in
deficit reduction over the next 10 years, without a tax increase. For
those concerned with the loss of jobs, I believe this agreement will
produce many more and better jobs than those we might lose as a result
of this pact.
The U.S. Treasury Department projects that the agreement will result
in a net increase of 500,000 jobs in the next 10 years. Mr. President,
that is nearly as many people as reside in the State that I represent.
For those concerned with our sovereignty, I share their concerns. I
do not think we should erode our sovereignty, and I would not support
this agreement if I thought it would. After examining this issue
closely, I do not think the agreement will interfere with our sovereign
rights as a nation. But if the World Trade Organization proves to
infringe on our sovereignty, we have the clear right to withdraw at any
time on 6 months' notice. Further, every 5 years, we can vote in the
Congress on whether or not to continue in the World Trade Organization.
This vote cannot be filibustered. It will be a straight up-or-down vote
on withdrawing.
We would be less than frank if we did not admit that this agreement
is far from perfect. It will not solve all of our trade problems. We
recognize that. Japan's unfair trade practices are only partially
addressed. They will remain a serious problem that we must address in
negotiations between the two countries. China, which remains outside of
the General Agreement on Tariffs and Trade, will no doubt continue its
unfair trade practices. We will have to aggressively address its trade
abuses as China seeks to re-enter the GATT and join the World Trade
Organization.
Finally, this GATT agreement does not address the major problem of
unfair competition from countries that use child labor, pay their
workers abysmal wages or force them to work under terrible conditions.
This is a serious failing of the agreement. American workers should not
be expected to compete with foreign workers who are not accorded fair
working conditions.
But rejecting the GATT agreement will do nothing to change these
circumstances. They exist today. Rejecting the GATT agreement will only
retard economic progress in developing countries and slow progress on
these issues.
Whatever the outcome of this debate, we must aggressively pursue a
commitment from all of our trading partners to raise labor standards
and wages if they expect continued access to our markets.
Although this agreement does not solve all our problems, it moves the
123 nations that are signatories in the right direction. It deserves
our support.
The fact is that the world is changing. We must choose whether we
attempt to cling to the past or bend the future to our best interests.
I believe it is hopeless to try to prevent the changes that are already
occurring in every corner of the world. Instead we must seek to make
those changes work for us.
This GATT does that. I will support it.
I thank my colleague. I especially thank our chairman and the
Presiding Officer for his courtesy.
I yield the floor.
The PRESIDING OFFICER. I thank the Senator.
Who yields time?
Mr. WALLOP. Mr. President, I yield myself but 1 minute.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. WALLOP. Mr. President, I feel very strongly as well about the
Budget Act, though I will support GATT. As I told the chairman when we
were in committee, those of us who have voted against waiving it over
the course of time could scarcely be expected to waive it now without
being accused of either falsely supporting it or politically supporting
it in the past. I regret to say that. But once that hurdle is cleared,
I will be happy to add my support to the treaty.
Mr. President, I suggest the absence of a quorum with the time being
equally divided.
The PRESIDING OFFICER (Mr. Conrad). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. WALLOP. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WALLOP. Mr. President, I yield to the Senator from Alabama 15
minutes.
The PRESIDING OFFICER. The Senator from Alabama is recognized for 15
minutes.
Mr. SHELBY. Mr. President, I rise today not to reject free and fair
trade, but to oppose the unwise ceding of our national sovereignty,
irresponsible budgeting, and backdoor legislative tactics. Mr.
President, if the Senate fails to pass the pending legislation
implementing the Uruguay round of the General Agreement on Tariffs and
Trade, this body will not be rejecting the principles of free trade.
Neither I nor the vast majority of my colleagues and constituents
believe that American businesses and their employees cannot compete
with any foreign enterprise on a level international trading field.
Few would argue that eliminating international trade barriers to our
products and services is not a healthy and productive endeavor. It is.
I am convinced that if the current enabling legislation contained
nothing more than measures adjusting certain tariff duties and was
adequately financed that there would be little concern on the part of
most Americans to this agreement.
However, a cloud of mistrust, suspicion, and outright hostility on
the part of many ordinary Americans has surrounded this legislation
since its delivery from the White House to Congress.
This tension and exasperation is only heightened by the fact that a
largely repudiated Congress is considering the measure only weeks after
an historic election in a lameduck session.
Having reviewed the voluminous document to which this legislation
would bind this Nation and the implementing legislation itself, I can
draw no conclusion other than that this Congress and our trade
negotiators should go back to the drawing board and create a trade
agreement instead of a document promoting world government and fiscal
irresponsibility.
The legislation before the Senate is hastily crafted, largely
unstudied, and unpredictable in its effects.
Mr. President, each Member of this body is sworn to uphold and defend
the Constitution of this great Nation. As such, our highest obligation
is to preserve the sovereignty of this country and the powers of its
elected bodies to write the laws that govern our people.
Yet, this document, before the Senate tonight would require the
United States to join a World Trade Organization that would have the
power to order the Federal, State and local governments to alter laws
relating to trade, labor, industrial or any other policy that a panel
of three international bureaucrats meeting in secret might find
offensive to their interpretation of the GATT agreement.
Decisions by such dispute panels can only be overturned by unanimous
vote of the GATT membership--a membership that will be composed not of
the major industrialized nations of the world but of countries that
simply agree to move toward more open markets. Think about it.
Given the U.S. track record in the General Assembly of the United
Nations, it is far from assured and less than encouraging that trade
disputes will be adjudicated in our favor.
Should WTO dispute panels rule against the U.S. when its domestic
laws are challenged, we will be subject to international sanctions if
we choose not to comply by altering our laws to fit the WTO's wishes.
The thought of an underdeveloped and undemocratic nation passing
judgment on the laws of the largest free market and most democratic
nation in the world is simply offensive to most Americans.
Yet, the White House's trade negotiators can give us no reassurance
that the worst case scenario involving membership in the WTO will not
come to pass.
When it is pointed out to trade negotiators that WTO membership
requires a member ``to ensure the conformity of its laws, regulations,
and administrative procedures with its obligations as provided in the
annexed agreements,'' and that the WTO will interpret and enforce this
conformity they respond not with concrete assurances. Instead, trade
negotiators express wishful thinking that it just will not happen. A
hope and a prayer is simply not sufficient grounding for a decision
that could affect the sovereignty of our governing institutions.
In addition, Mr. President, the American people most assuredly voted
on November 8 for fiscal responsibility and I believe restraint.
Yet, only 3 weeks after that historic election, approval of this
document mandates that we vote to waive the requirements of our budget
law and add another $15 billion to our national debt over the next 10
years.
In the haste to pass this legislation, the administration has failed
to provide over half of the funding to pay for lost tariff revenues. In
addition, one of the few revenue raisers in this bill would finance
GATT on the backs of the elderly and the working Americans by reducing
the rate of return on ordinary savings bonds. Just think about it.
This legislation does not pass the straight-face test. We cannot
seriously, I believe, talk about fiscal responsibility in the weeks
leading up to the last election, and within a month vote to pass
another budget-straining piece of legislation and still wonder why
voters are cynical and mistrustful of this Congress.
Finally, as it has repeatedly in the past 2 years, the administration
has inevitably succumbed to the temptation to load a large piece of
legislation up with prizes and cutouts for some of its friends. For
example, some of the worst among these cutouts is section 801 of title
8 of the bill that would give, some people think, between $1 billion
and $2 billion in Federal fee relief to the Washington Post and to the
Atlanta Constitution for exclusive and lucrative telecommunications
licenses.
Mr. President, I have no idea, and I challenge my colleagues to
explain to me what this provision has to do with international trade.
Given that this legislation could cede our national sovereignty to an
international body, that it busts the budget and contains extraneous
materials, we should hardly be surprised that so many Americans are so
passionately against this agreement.
Mr. President, proponents will argue that this debate should be about
free trade. Indeed, I agree that it should be. And if it were, I could
easily support the agreement. But, Mr. President, there are more
important issues at stake in this debate than the lowering of trade
barriers. This agreement has become a post-Thanksgiving turkey to be
swallowed by a lame duck Congress.
There is simply too great an atmosphere of distrust and confusion in
the minds of the American people and too little knowledge on the part
of the Congress to pass this legislation.
I believe that we should come back next year with new legislation
that guarantees our continued sovereignty, pays for this agreement, and
is free of extraneous material. I ask my colleagues to vote no on this
agreement at this time.
I yield the floor.
Mr. MOYNIHAN. Mr. President, I am happy to yield 15 minutes to the
distinguished Senator from New Jersey, who returns in welcomed triumph
to this Chamber.
Mr. LAUTENBERG. I thank the distinguished chairman of the Finance
Committee.
Mr. President, I take this opportunity to present my views on the
GATT agreement, the General Agreement on Tariffs and Trade currently
before the Senate. It is a culmination of more than 50 years of
developing international trade relationships and practices. It has been
the subject of specific negotiations for almost a decade. We will soon
decide whether the United States will support this document which our
Government has been instrumental in developing.
I have approached my decision on GATT by asking questions about our
future, about the direction our economy is taking, about the best way
to improve our prospects, and the best way to provide opportunities for
the workers, the families, and the children in my State.
As the Presiding Officer knows, I come from the business community in
New Jersey. My corporate experience led me to deal with corporations of
all types, all different businesses, and I got to know the industrial
makeup of our State. It pains me, Mr. President, to see the decline in
various parts of the manufacturing sector in our State and throughout
this country.
Therefore, after much review, a lot of questions, a lot of time spent
in dealing with staff and with people from the trade office, I have
decided that supporting GATT is the best way to build a better economic
future for the people of New Jersey and for our Nation.
Historically, America offered those who were willing to work a real
opportunity to get ahead. Low-skilled workers could make a week's pay.
They found a way to care for their families. They could help their
children get an education and move up the economic ladder and get a
piece of the American dream.
But in the last few decades, we have seen declines in American
industrial employment. Manufacturing jobs at decent wages are harder to
find. Too many industries are fading away. Too many firms are
shrinking. The people who used to start in manufacturing plants now end
up in the low-wage service jobs, without fringe benefits, without job
security, without health insurance, and without a secure future.
These developments have been difficult for our country. They have
created unprecedented anxiety even as we pull out of a recession,
unemployment is going down, and the economy is growing. But still, too
many American workers fear that they will never have the kind of income
and job security they need to fully participate in the American dream.
These economic trends result from many factors, and I would like to
identify just three.
First, new technologies have made our economy more competitive and
productive; but they have also allowed companies to reduce their work
force even as their profits grow.
Second, as developing nations move to share free markets, we face a
new challenge. We have to compete with companies who pay their workers
a 10th, or a 20th, or even a smaller fraction of American wages. And
those companies operate with little regard to the health and safety of
their workers or the well-being of the environment.
Third, our own economic development in the international marketplace
has in some ways pitted sectors of our economy against one another.
Whenever we try to protect less competitive economic sectors, other
nations retaliate against our new and growing industries seeking niches
in their marketplace.
GATT or no GATT, our society must face and deal with these difficult
decisions. America's future depends on a highly skilled work force,
top-notch job training, and technological innovation. I do not want to
see a single job lost in this country, especially not to competition
from workers in low-wage, exploitive economies. But with or without
GATT, we do face that competition. There is no way to ignore it. So
what we have to do is respond to it.
GATT, though not perfect, is a reasonable response. It will increase
economic growth, create new jobs, and provide our workers and their
children with the opportunities they deserve. Today, as we prepare to
vote on this historic agreement, I have tried to look into the future a
little and make a decision that will contribute to the most stable,
prosperous society that we can have. I believe that approval of GATT
will provide us with that opportunity.
This legislation amounts to the largest single tax cut in the history
of the world. As tariffs decline, so should prices, and all consumers,
Americans and others, will benefit.
GATT provides the kind of intellectual property protection that we
need to compete in the global economy. More markets will be open to our
products, and fewer of our ideas will be pirated or counterfeited. GATT
goes a long way toward securing our economic future and addressing our
concerns. It establishes a level playing field in those areas where our
economy is growing--pharmaceuticals, communications, and other high-
tech industries. And in sectors that will suffer, like textiles, it
attempts to cushion the blow by phasing in the new rules and giving
people time to adjust to them.
The benefits of GATT will spur growth in American industry, both
large and small.
In my State of New Jersey, exports have increased 90 percent since
1987. There are 6,900 companies in New Jersey that sell their products
outside the United States. Of these companies, 6,100 of them, 6,100 out
of 6,900, have fewer than 100 employees. Unlike the giant firms that
continue to downsize, these are the firms that led New Jersey's
economic recovery. These are the firms that will continue to increase
employment if they can increase sales. And GATT encourages them to do
just that.
Real economic growth, the kind that creates jobs as well as profits,
requires us to support the small companies that have always been the
bread and butter of American business.
The Treasury Department estimates that GATT will create 18,000 new
jobs in New Jersey alone, many of them in small high-tech companies.
These are good, well-paying jobs, the kind that let people enter or
remain in the middle class and build a future rather than being forced
to work harder for less money.
Throughout this debate, I have been particularly concerned with the
issues of job loss, child labor, and sovereignty. I had a lengthy
conversation this morning with U.S. Trade Representative Mickey Kantor,
and we discussed these concerns.
Obviously, we can find flaws in the agreement in these areas. And
even after my discussion with Ambassador Kantor, I am concerned about
our ability to prohibit abuses of child labor. But I do recognize that
this is an issue that we can continue to pursue. GATT is not the last
word on trade issues. We will continue to fight child labor and other
human rights abuses.
While GATT does not solve the problem, it does not prevent us from
solving it. We have other ways to make our case and protect our laws,
including GSP renewal and section 301, and I intend to pursue our goals
in this manner. In addition to these trade-related remedies, we can
also use our military and foreign aid programs to deter practices that
we oppose.
Mr. President, I recognize that many fear that GATT will undermine
U.S. sovereignty. If I believed that was the case, I would not support
it. Nor would four former Presidents. Nor would a majority of Members
of the House of Representatives.
Specific concerns about our rights under GATT have been addressed in
the implementing legislation. We have reaffirmed the simple fact that
no rule in GATT, no decision by the WTO, will require that the United
States to modify any of our domestic laws. And even Senator Dole, the
current Republican leader, who was so skeptical about this point, has
been reassured by the administration's commitment to support future
legislation that will allow us to withdraw from the agreement if WTO
decisions are arbitrary.
Mr. President, with or without GATT, we have an obligation to retrain
displaced workers. We have a moral responsibility to them. And we must
work in a bipartisan way to ensure that they are not forgotten.
I believe that if we work together and work hard we can compete
successfully in the global economy. I think this agreement will allow
us to do so more effectively. I have faith in the American worker and
American industry. And I am confident that with a level playing field
we can create an export surplus, improve our economy and build a more
prosperous America for future generations.
My distinguished colleague, Senator Bradley, who has had long
experience as a Member of the Finance Committee and working with trade
issues, came to a conclusion after a deep review of what benefits there
might be and what kind of problems would follow. He came to a very
thoughtful conclusion that he is going to support GATT.
I am pleased that he and I view this the same way, that this is the
better way to support America's opportunities in the future, and I am
happy to register my support for it.
With that, Mr. President, I yield the floor.
The PRESIDING OFFICER (Mr. Kerrey). Who yields time?
Mr. MOYNIHAN. Mr. President, may I just for a moment thank the
Senator from New Jersey for his statement and emphasize his
observation. This is a historic decision. The Senate will not make a
more important vote in this decade and his statement is very important
in seeing to its success.
Mr. President, I yield the floor. I see the Senator from Iowa I
believe is managing time on the other side.
The PRESIDING OFFICER. The Senator from Iowa is recognized.
Mr. GRASSLEY. Mr. President, I will yield what time I might consume
to the Senator from Indiana.
The PRESIDING OFFICER. The Senator from Indiana is recognized.
Mr. COATS. Mr. President, I rise this evening to speak in favor of
the General Agreement on Tariffs and Trade. I have concluded that this
agreement will not only benefit our Nation's economy, it will also
benefit the world's economy, and in particular, it will benefit the
economy of my home State of Indiana.
The State of Indiana is consistently ranked among the top exporting
States in the Nation. We continue to lead the country in the production
of steel. We are one of the Nation's premier agricultural States. We
are in the top five auto manufacturing States. And Indiana has been a
leader of pharmaceutical and medical devices manufacture, all products
that will significantly benefit from expanded world trade.
I will speak in a moment about the larger benefits of GATT to the
American economy and why I believe this historic free trade agreement
is a step, and an important step, that our country should take.
But first let me speak specifically about how the GATT will affect
the State of Indiana.
I want to be very specific about why I believe this agreement is good
for the State of Indiana. Productive workers, making products and
providing services that are in demand around the world, need expanding
markets or they simply will lose their jobs. It is that simple and that
important.
Free, fair, and open trade is crucial to Indiana because exports are
the lifeblood of Indiana's economy. One of every six Hoosier
manufacturing jobs is due to exports. Were those products not exported
around the world, one of six Hoosiers would be out of work.
One-third of our farm production travels overseas. One- third of our
acreage would be idle and one-third of our agricultural workers would
be out of a job were those agricultural products not shipped overseas.
Over 155,000 Hoosiers owe their jobs directly to the export of
manufactured goods. We have seen in the State of Indiana a 126-percent
increase in merchandise exports just since 1987. We ranked 14th overall
in the value of export sales just last year alone.
We exported $1.3 billion worth of agricultural commodities in this
last year, an amount that is estimated to increase by $240 million
through passage of GATT. University of Purdue economists are predicting
today that the passage of GATT will inject $63 million into the Hoosier
farm economy each year and will cause farm income to rise 1.5 percent.
There has been a crucial fact missing from this GATT debate, and it
is central to the American way of life and to the promise that the
American economy holds for our workers. That is a fact that we should
never forget and a fact that I think is determinative in this debate.
The American worker is the best in the world in terms of productivity.
We can compete with any country anytime, anywhere. America's overall
productivity is 30 percent higher than that of the Japanese worker. Our
manufacturing productivity is 28 percent higher. These are astounding
figures when compared to one of the most dynamic economies in the
world, West or East.
But GATT, which is certainly a global agreement, has a major local
impact on where it is we live and where we work and where we raise our
families.
So, once again, I return to Indiana. In Gary, our U.S. Steel plant
uses only 2.7 man-hours to produce a ton of steel, compared with an
average of 5.4 man-hours in Japan and 5.6 in Germany.
Let us compete and the American worker can do great things. To opt
out of GATT would be to opt out of a dynamism that is the future not
only of the American economy but of the world economy. We must
recognize this reality. We must recognize this truth, this fact that is
changing the way that America works, is changing the way the world
works. If we do not meet this challenge, if we do not compete
successfully to meet this change, we will see declining productivity,
we will see declining opportunity, we will see declining job
opportunity for American workers. But if we do meet the challenge, as
we are accomplishing in our manufacturing and service industries today,
if we do meet that, America will see a continued rise in our standard
of living and in employment opportunities in this country.
As the world's largest economy, the United States stands to gain more
than any other country from increased commerce that could be generated
and will be generated, I believe, by a new global trade pact. GATT is
projected to add $100 billion a year to our gross domestic product just
in the next decade. That growth may well represent over a half million
new jobs for America's workers.
The North American Free Trade Agreement, a benchmark which we can
look to which was approved just last year after a tough battle here in
the Congress, provides a lesson on the merits of open trade. During the
first 6 months of NAFTA, U.S. exports to Canada surged 29 percent and
exports to Mexico jumped by 17 percent.
My home State newspaper, the Indianapolis News, said this in a recent
editorial:
Trade has become the prime engine of economic growth in
America, which is the world's leading exporter and importer.
U.S. workers, who are the most productive in the world, will
see more jobs created by GATT.
Mr. President, this agreement, as has been stated on this floor, is
not a perfect agreement. It is a negotiated agreement over a decade of
time among more than 100 nations. There had to be some give and take.
There are portions of it that all of us would like to modify. However,
we should not let the perfect be the enemy of the good.
I believe it is a good agreement. I believe it is an agreement that
is in the best interest of the Nation and in the best interest of the
State that I represent.
The changes incorporated by Senator Dole in an agreement with the
President are important changes. They address some of the fundamental
questions that have been raised and important questions that have been
raised by many of our citizens. Those agreements, I believe,
satisfactorily address the concerns that many of us had when the
initial agreement was presented to us by the administration.
I commend the minority leader, Senator Dole, for his efforts in
working with the administration to address these concerns and
incorporate these changes that will allow us to go forward and support
this agreement.
America is today presented, Mr. President, with a historic prospect.
I hope my colleagues will join me in supporting this treaty.
Mr. President, I thank the Senator from Iowa. I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, I am happy to yield 20 minutes to the
distinguished Senator from California, Senator Boxer.
The PRESIDING OFFICER. The Senator from California is recognized.
Mrs. BOXER. Mr. President, GATT is important for my home State of
California and I hope it will pass the Senate today.
The GATT Agreement will expand California exports, create jobs, and
strengthen my State's economic recovery.
The GATT Agreement will tear down foreign barriers on California-made
goods from computers, semiconductors, electronics, pharmaceuticals, and
medical devices to construction equipment, steel, chemicals, and wood
products.
The GATT Agreement will provide greater protection for California's
world-class software and pharmaceuticals and music recordings and
television shows. The strength of California's economy--and the promise
of our future--are the great ideas of our inventors and entrepreneurs.
Too often, these ideas are stolen and sold by pirates in markets
abroad--in fact, in 1992 alone, U.S. companies lost between $15 billion
and $17 billion from piracy. With the GATT Agreement, we will have more
effective tools to attack these pirates.
The GATT Agreement will also expand California's farm exports and
create jobs in the agriculture sector, especially for growers of rice,
grapes, almonds, walnuts, tree fruit, and vegetables.
The GATT Agreement may mean as much as $10.1 billion in new
California exports in the first 10 years. According to the California
Institute, California stands to gain as many as 200,000 jobs from
increased exports of manufactured products alone. And, exports of
services and agricultural products will generate another 44,000 jobs
for Californians.
Yes, GATT will be good for California.
But, let me say: I know this agreement is not perfect. It does not do
enough to open markets for our entertainment industry, and
telecommunications companies, and our aircraft makers.
I also recognize that many are concerned that our strong Federal and
State environmental, health and safety laws could be vulnerable under
new GATT rules. I understand these concerns and I have thought about
them very carefully.
But, let me say: I do not believe that this GATT Agreement will
threaten those laws. GATT rules or GATT panel decisions do not have the
force of law. Not a single environmental, health, or safety law--at the
Federal or the State level--can be changed without action by the
Federal or the State Governments. Yes, our trading partners could
challenge our laws, but no--our trading partners cannot change our
laws.
I have received specific assurances from U.S. Trade Representative
Mickey Kantor on this very issue. Ambassador Kantor has assured me
that:
California's strong environmental and consumer protection
laws cannot be overturned by WTO rules or dispute settlement
panels.
Ambassador Kantor points out that section 102(a)(1) of the GATT
implementing legislation states explicitly that no provision of the
GATT agreement ``that is inconsistent with any law of the United States
shall have effect.''
I also want to say to GATT critics: GATT is not NAFTA. GATT is about
creating a more level playing field for American exports around the
world. The GATT Agreement creates trading rules that 123 nations will
agree to live by--and many of these nations have a standard-of-living
that is the same or above that of the United States. In contrast, NAFTA
created a special trading relationship with one country--a low-wage
developing economy.
The GATT is not NAFTA because, under the GATT, Congress has the power
to say: ``We want out.'' The GATT implementing legislation provides an
expedited procedure for Congress to revoke its approval of the GATT
Agreement; NAFTA did not provide this kind of mechanism for Congress to
end U.S. participation in the trade arrangement.
GATT is not perfect. But, GATT will be good for California and GATT
will be good for the economic health and growth of our entire Nation.
GATT--or no-GATT--our industries and our workers already compete in a
global marketplace. Our industries and our workers face competition--
not only within our country--but also with industries and workers on
the other side of the globe.
GATT--or no-GATT--this is economic reality. Trade--in all parts of
the world and in all sectors of our economy--is expanding rapidly. GATT
is an opportunity to see that this trade is fair.
The GATT agreement creates rules that all nations will have to play
by--creating a better and more fair climate for U.S. industries and
workers who must compete in this global marketplace.
This Nation--and especially California--has always been ready to look
forward and face new challenges. Competition in the global marketplace
is among the biggest of these challenges. But, we are ready--ready with
the best, most productive workers and bold new ideas. We are ready with
industries that produce what the world wants to buy.
Since my youth I wondered what it would be like to have a world that
was no longer divided between the Soviet Union and the United States of
America. I wondered what changes would come with the end of the cold
war.
When I became a Member of Congress in 1983 that dream seemed very far
off. The United States and the Soviet Union had missiles pointed at
each other; children had nuclear nightmares; stories appeared that the
Government had an underground maze as a place to survive a nuclear
attack; every year more and more deadly missiles with multiple warheads
were built with precious tax dollars.
Then the physical walls came down in Europe. The Gorbachevs and the
Walesas and the Havels changed the world. Communism collapsed of its
own weight and, although the world is certainly volatile, complicated
and dangerous, it is no longer divided between two nuclear armed camps.
You might wonder what all that has to do with GATT. What does all
that have to do with the General Agreement on Tariffs and Trade? To me,
it has everything to do with it.
The challenge for America now that we have won the cold war, is to
continue to be the leader in the world. Yes, we will always be the most
powerful. Today, we spend 500 percent more on the military than all of
our potential enemies combined. We will always have a powerful
military. But being a leader also means engaging in the world
diplomatically and economically. And when we engage in the world
economically, we have the opportunity to do so much for our Nation
because we will influence people all over the world and we will help
people all over the world.
When we have the chance to make lives better for the people of the
world with our abundant food, our pharmaceuticals, our computers, our
services, our know-how, our country will gain influence and friends
among the people of the world.
I look at GATT as a major part of the peace dividend. The countries
that have signed the GATT Agreement include many who were once behind
the walls of communism and other countries that now feel free to join
the world economic system because the cold war is over.
So in the large sense: I see world trade as one answer to avoiding
conflict and isolation. The more countries that are involved the
better.
From the standpoint of the direct benefit to our Nation I think the
answer is clear: the most productive nation in the world should not
shrink from engaging in the world's commerce, it should
enthusiastically accept the challenge and win the competition.
Right now we are the world's most competitive economy. In fact, the
World Economic Forum in Geneva in its ``1994 World Competitiveness
Report'' ranked the United States the world's most competitive economy
for the first time since 1985--above Japan, above Europe, above all the
nations in Asia. The United States was the world's No. 1 exporter of
goods and services last year. The American workforce is the most
productive in the world--the productivity of workers in France is 91
percent of the United States level, in Germany it is 86 percent of the
United States level, and workers in Japan are at 73 percent of the
productivity of American workers.
We have been tested. We have had our fiscal nightmares
like the S&L scandal which came about because of greed. For a while in
the 1980's we didn't seem to value productivity, only wealth. But we
saw our country moving backwards and we saw our Nation building up debt
and we turned it around. It hasn't been easy.
I remember when President Bush had a dinner in Japan and he got sick
and that became a symbol of our economic weakness. We tried to tell the
nations of the world what to do with their economies but they wouldn't
listen to us because we weren't leading by example. But, now we are. We
have reduced the deficit 3 years in a row; we will have the fewest
Federal employees since John Kennedy and we are productive and creating
jobs. President Clinton deserves credit for this, although he rarely
gets it. We are getting our economic house in order. This is the right
moment for us to step up to GATT and lead the world.
Change isn't easy. The opponents of GATT speak to our fears. They
talk about lost jobs to imports. But they don't speak of new jobs from
exports, exports all over the world, exports to new and growing and
exciting marketplaces all over the world.
Yes, there will be a World Trade Organization with the authority to
judge if the rules are being followed. But, if this organization steps
over their bounds and begins to encroach on our sovereignty we can pull
out. That is a real safety net and one which this Senator would not
hesitate to use if necessary.
Looking out to the future we need to ask ourselves where will the
customers come from to buy American goods. In America, of course. But
beyond America. Too many times we have been stopped by tariffs and
barriers. With GATT that will end and I believe in America's ingenuity
and skill. We will sell our products and people will come back for more
and there will be more jobs.
There is one world now. And that world looks to America. Whenever I
travel I am so taken with the world's fascination with our Nation, with
its interest in our Nation. America's TV is all over the world.
America's music is all over the world. America's blue jeans are all
over the world; America's hamburgers are all over the world. All of our
products should be all over the world. We will dominate in trade
because of our productivity, because of our ingenuity and because we
are a free people, free to be creative. But we need rules, and GATT
will give us fair rules.
We have a tremendous opportunity with the GATT, in this shrinking
world to expand the reach of the American people through trade.
That is the future I believe is best for my State and for my country.
It is the future that is best for the working men and women of this
country, whom I care deeply about. I hope and trust that a strong
majority of my colleagues see it that way.
The PRESIDING OFFICER. Who yields time? The Senator from New York.
Mr. MOYNIHAN. Mr. President, may I congratulate the Senator from
California for a thoughtful, comprehensive and spirited statement about
this subject: Step up to the GATT and get on with the future; we are
the most competitive economic power on Earth; we were not leading by
example, we now do; now is the time to go on.
I think that is exactly the spirit in which you end up this decade
and this century.
The PRESIDING OFFICER. The Senator from Oregon is recognized.
Mr. MOYNIHAN. I yield the floor.
Mr. PACKWOOD. Mr. President, waiting for another speaker I might
allocate some time for myself.
I want to talk a bit about this argument as to whether or not this
loses money--we passed GATT and it loses money--because it is very
critical that those who are viewing this understand the difference
between static revenue estimates and what we call behavioral or dynamic
revenue estimates.
A static estimate, Mr. President, is this: You presume no change in
behavior. If you have a 25-percent tax rate on all the people in this
country and that produces $1,000, you raise it to 50 percent and you
get $2,000. Raise it to 100 percent, you get $4,000. I suppose if you
raise it to 200 percent, you get $8,000. That is a static revenue
estimate.
I, at one time, asked the Joint Tax Committee, which is the
professional group that advises us, if they could do an estimate of how
much money we could raise at a 100-percent level of taxation. And they
said, well, they really could not do that exactly, but they could tell
us how much money there was that was untaxed over $100,000 and how much
we could apparently raise if we taxed it all. So their estimate
indicated that in the first year at 100 percent rate of taxation, we
would raise something, as I recall, let us say $120 billion, the second
year $140 billion, and the third year--they do these 5-year estimates.
Each year it kept going up.
So I said, ``You mean to tell me that if we have a 100 percent rate
of taxation for 5 years in a row, the revenues will go up every year?''
And they said, ``Well, we presume no change in behavior.''
I said, ``You mean to say at 100 percent rate of taxation you think
people will keep working?''
Then they did say they thought if the taxpayer thought there was no
hope of getting out from under and no way to defer this income tax past
5 years, no way to avoid the tax, that they would expect a significant
downturn in activity and a downturn in Federal revenue.
Well, that is static revenue projecting and, of course, behavior
changes. You tax somebody 100 percent and most people will not work
very much if they have to give it all to the Government. You lower the
taxes to 90 percent, some people might work; you keep 10 percent. That
would be a behavioral change, dynamic change. You lower the tax rates a
bit, lower it to 80 percent, maybe more people would work.
Now, of course, everybody can see the undertow that is coming. This
leads to the theory of supply-side economics: You cut the taxes and cut
the taxes and more revenue comes in. Dr. Laffer was right in his theory
of the Laffer curve. He tried to say there is a point on a parabola
that is the optimum level of taxation that raises the most money. And
if anyone knows where that exactly is, that person should be in the
stock market rather than attempting to predict taxation. Well, that is
dynamic or behavior prediction. You change the rates, people's behavior
changes.
In the revenue projections that we are doing on this bill, we are
projecting revenues on a static basis because our rules require that.
So we are saying, if the present tariffs raise a million dollars and we
lower the present tariffs, we are going to lose money. It does not
presume any increase in trade. It does not presume any increase in
activity that would raise money from other sources.
Now here is the interesting difference. There is not a respectable
economist that I know of from the far left to the far right that says
this bill loses money. The Congressional Budget Office has had to
predict that it loses money because they have to predict on this static
basis. The Office of Management and Budget will say if we must predict
on a static basis, it loses money. But they will both say unofficially,
``We don't think it loses money.''
Why are people afraid of those kinds of predictions? It is
understandable why we are hesitant to get into dynamic predictions, but
I want to emphasize again, to the best of my knowledge not a single
respectable economist from the left to the right says this bill loses
money.
The reason we are hesitant to use this form of revenue estimating
normally is that every zealot group that believes in a cause is
convinced that if we will spend money on their cause now, it will save
money in the future. Come in and spend $5 billion on juvenile crime
prevention now and it will save us $30 billion on prisons 20 years from
now. Spend more money on education now, people have more education if
they go to college instead of high school, they make more money, they
will pay more taxes, we will get more money back than we spend.
Everybody says that. And the zealots believe it. There are programs
where I believe that.
But the trouble is, there is no one who believes in a program who
thinks that program is going to lose money. So we have to have some
middle ground of attempting to dispassionately, bipartisanly attempt to
estimate what is going to happen if you change tax rates. And here,
because we are going to get into this again on capital gains this year,
I want to talk about the capital gains tax.
Three years ago, President Bush proposed a capital gains tax cut. The
Treasury Department predicted that over 5 years, the cut would produce
about $12 billion in revenues. The Joint Tax Committee, the
professional group that advises the House and the Senate, predicted
that over the same 5 years, it would lose about $12 billion and this
became a cause bell between those who wanted it and those who did not.
Those who did not said this is a boondoggle for the rich and the poor
will have to pay for it. Those who wanted it said this is going to give
us $12 billion we can spend on the poor.
The irony is the Joint Tax Committee and the Treasury Department were
not very far apart. Both of them were attempting to estimate on a
behavioral basis. The base of transactions upon which they were basing
their estimate was trillions of dollars--trillions. Twelve billion
dollars, plus or minus, was so close to being almost the same
prediction, well within the margin of error, that we should not have
been hassling, but philosophy swept us up in the argument. It was a
very, very close estimate between Treasury and Joint Tax.
Here would be the difference in guessing, but magnify this a million
times over. Let us say that the capital gains tax is $10 a transaction.
Let us say a $10 stock transaction, and you had 100 transactions last
year. A thousand dollars in taxes come in.
Now somebody says, ``Let's cut the tax to $5 a transaction and we
will raise money.'' But if you are going to cut it to $5 a transaction,
then instead of 100 transactions, you have to have 200 transactions to
get the same thousand dollars.
In essence, what Treasury and the Joint Tax Committee did when they
were estimating is that Treasury said, we think at $5 you will get 210
transactions; the Joint Tax Committee says we think at $5 you will get
190 transactions, and that was the difference in their revenue
estimates and it is the difference between two estimates as to
behavior. A static estimate would have been if you cut it to $5, you
get $500. No change, no difference in transactions.
I want to emphasize again that in our dealings here, the estimates of
revenue loss are based on the assumption that no matter how you lower
the tariffs, there is going to be no difference in the quantity and
quality and cost of the goods that come in. It would be the same number
of goods regardless of whether there is a tariff or no tariff,
regardless of whether there are barriers at the border that keep it
from coming in or not. That simply is not realistic, and no one I know
says it is realistic.
So I hope we can put this boogeyman to bed that what we are trying to
do costs money. It does not. Because of our arcane budget rules, we
have to score it that way, but it does not lose money.
Now I want to talk about one other situation, and this is a little
more difficult to talk about. There are winners and losers in any kind
of trade arrangement.
Let us say the United States and Germany are negotiating trade
agreements, just the United States and Germany. And we say to Germany,
``We think you are not allowing us to sell our telecommunications
equipment in your country fairly.
You have an unfair barrier or tariff and we cannot sell our
telecommunication equipment fairly. Germany says we think you have an
unfair barrier to our pharmaceuticals and we cannot sell our
pharmaceuticals in our country fairly. So we work out a deal with
Germany. We say if you will lower your telecommunication barriers we
will lower our pharmaceutical barriers. The Telecommunication
Manufacturing Equipment Association of Germany, if there is such a
thing, does not like that arrangement and probably the Pharmaceutical
Manufacturers Association in this country does not like that
arrangement. There is a give and a take.
But what it means is that German consumers will be able to buy at
least telecommunications equipment cheaper and probably better because
there will be more variety and more competition. And, conversely, you
have a greater option of pharmaceutical options in this country. The
consumers benefit in both countries. The industries that are affected
do not like it, understandably. Most of these industries are decent,
well-intentioned.
I really am using a wrong example of pharmaceuticals because they are
one of the leading edges in the world. They produce in this country a
tremendous surplus balance of trade. And one of the great things they
get out of this agreement is their intellectual property protection. So
their drugs cannot be copied, stolen, or manufactured elsewhere and
they get paid nothing for them. I do not mean to in anyway say this
industry is slacking. They are tremendous from our standpoint.
But almost every industry is convinced that it cannot stand
competition. You see the world through your eyes. I mean you grow up.
Here is the forest as you live in it. It is hard for you to step back
and see anything but trees.
So there is a give and a take. One of the gives I fear to say may be
the apparel industry. I remember once the chairman of the Finance
Committee, Senator Moynihan, saying we have not yet learned how to
automate the making of a man's suit. Not the textile industry. That is
very capital intensive. Their exports as a matter of fact are going up.
Japan is instructive on this.
I think I heard earlier somebody saying go out and try to find a
garment that says ``made in U.S.'' You will see that it is made in
Bangladesh, Singapore, India, Hong Kong--none made in United States.
Thirty years ago Japan was in the top 5 in the export of apparel, and
also the largest exporter of textiles. Today, Japan is not even listed
in the top 25 of apparel exporters. Maybe, but it is difficult to go to
any clothing store in this country and find a garment that says ``made
in Japan.'' They nearly got out of the business. They realized they
could not compete in a heavy hand labor business with Bangladesh. But
they did not get out of the textile business. That is capital. That is
machines. That is immense investment in highly-skilled, technical,
well-paid workers. They are still in the top 10 in the export of
textiles in the world.
If we are going to sell Boeing 747's, and American pharmaceuticals,
and General Electric nuclear reactors around the world, the world has
to have dollars to buy those things and in order to have dollars they
have to sell us something to get dollars so they can buy what we can
make best.
I used the example earlier. It is not all necessarily advanced high
technology. I used the example earlier of a company on the outskirts of
Portland, OR, called Denton Plastics. They are in the business of
recycling garbage plastic, the kind of plastic you get when you come
from the dry cleaners or the plastic or the paper at the grocery store,
those kinds of things. They recycle the plastic wrappers you find on a
frozen food package with all the colored carrots, beans, and all those
different colors on the packages. They only have 40 employees.
How often have we heard on the floor the multinational corporations
who are going--they have 40 employees. It is 11 years old. Mr. Denton
is still the principal owner of the company. They take all of this
garbage plastic and somehow squeeze it, heat it, and crush it.
Here I have an example. Here is the kind of bag that they take. It is
a normal bag you would get. Here is the kind of wrapper that you might
find on a frozen food package. They take all of this and they crush it
up, heat it up, and out comes these little black plastic pellets which
they then sell to China and Thailand and Korea who in turn make yo-yo's
out of them and sell them back to us. This came from this.
I talked with Mr. Denton not an hour and a half ago. I said to him,
``How on Earth can you compete with China in your kind of a business?''
He has been to China several times. He sells in China where this yo-yo
comes from. He said what the Chinese do is they have something like
this. They will take a pair of scissors and they cut by hand the color
out of it because they do not have the process for taking all of this,
wadding it up and throwing it in the big heated vat. Then they will
even take something like that and try to cut it into different colors
by hand.
I said to him, ``Mr. Denton, how much is your floor labor costs?''
And I mean on the floor, not as research and development, and not Mr.
Denton's salary. He is not going to move to Beijing. His R&D is not
much. ``How much are your floor labor costs?'' He said, ``Just a
minute. Let me check.'' I could hear him looking: 10 percent. It is not
worth moving to China when your labor costs are 10 percent. That is not
the key to your competitiveness around the world.
That is how you can compete with a company that pays whatever we have
heard today, 3 cents an hour, 30 cents an hour, $3 a month, whatever.
The labor costs are de minimis. Go to any of our major electronics
companies.
Intel is an immense operation in Oregon. They are just about--they
have already made their announcement--ready to put in a new $1.2
billion plant in addition to, not 20 miles away, a $700 million
expansion on a plant they already have. They are the biggest single
private employer. Their company was founded in 1969. I asked them.
``What are your floor labor costs?'' They are 6 percent, or 7 percent.
This is a highly capital intensive company; 6 or 7 percent. The only
reason they are overseas--if they have to go overseas--to manufacture--
is to be in the market to overcome trade restrictions in that market.
Those are the kinds of things that this GATT Agreement breaks down.
Intel is not investing close to $2 billion in Bangladesh or Singapore
or Malaysia. They are investing it in Oregon; Oregon, U.S.A. Oregon is
a high tax State, comparatively speaking. We have no sales tax in
Oregon. So we have a very high property tax and a very high income tax
and a high corporate income tax. With all of that, they can compete
throughout the world manufacturing in what is allegedly a high-cost
country.
We cannot compete in everything. There are some things other
countries can do better than we can, but there are not many things that
they can do better that involve intellectual property. In films,
Hollywood dominates the world; television, New York dominates the
world. We have two kinds of merchandise figures. One is basically
industrial things: refrigerators, cars, airplanes. We call that
merchandise. The other is services, credit cards, insurance. Take Visa.
Take Master Card. Take American Express.
They license the use of their card all over the world, and the
licensee pays dollars to the American company. That is services. We
have an immense surplus in trade in this country in services, and it is
getting bigger and bigger as the world becomes more service oriented in
comparison to its manufacturing base, and I mean the whole world's
manufacturing base. But that is all of the service industries dependent
upon quick and accurate communications. They do not have immense
machinery like a shipbuilding facility. It is small and quick. Can we
compete? You bet.
So as we consider this bill, remember just these few points: This
bill does not cost money by anybody's rational scoring that I know that
lives in this world, right or left, conservative or liberal. Two, if we
are going to trade in this world, we are going to have to buy some
things from other countries so that they have some money to buy things
from us. And the things that we want to do and the lessons we should
have learned are the kinds of lessons that Japan taught us some years
ago. There are certain industries that you can justify keeping, and
others you cannot. One I did not mention--and it is not so much a
competitive thing--is aluminum. Japan, almost 20 years ago now, got out
of the aluminum business. They are an energy-poor country. They have no
coal, no oil, no natural gas of any consequence, no great rivers to dam
up for electricity. Of course, the reduction of aluminum is an
immensely electric-consuming, energy-consuming industry. Japan just
said, ``We are getting out.'' My hunch is they probably had a little
base of aluminum workers, probably unionized, that did not like it.
Japan said they had better things to do with their money.
In 1969, 1970, maybe 1971, I was a young Senator here, and Oregon was
trying to sell beef in Japan. We were having a dickens of a time coming
in. We are much more successful in their market recently. A young
economic attache in the Japanese Embassy came to my office, and I
thought he was both wise and perceptive in explaining why he had no
intention of letting us in. He said, ``Mr. Senator, your States, this
country, the United States, produces very good beef. I am convinced
that if we opened up our market to your beef, you could probably find
$500 million to $1 billion in sales in your beef, and that is $500
million to $1 billion we need for oil and not beef. We cannot afford to
spend it on beef. We raise a little beef ourselves, but frankly we need
it for oil.'' That was a rational answer, I thought. You only have so
much money. But we have crashed their market in beef, and in a good
many other products now.
So, Mr. President, I hope, as we continue to debate this tonight, and
then into tomorrow, that we will remember this does not cost money.
This bill produces money, except under our arcane method of scoring.
There are winners and losers but, on balance, America is the winner for
this reason: On average, tariffs and other restrictions are higher in
countries around the world where we try to sell our products than they
are in this country where other countries try to sell their products.
At the moment, the present world trading system disadvantages us.
This bill that we are now considering attempts to bring down tariffs
significantly, but it is as if we are starting with the world here;
zero is here and the world is here and we are here, and what we are
trying to do is this, come down, get them both down to zero eventually.
We do not even make it in full with this agreement. But it gives us a
better opportunity for trading throughout the world than we have now,
and that, if no other reason, is a justifiable reason to vote for this
bill.
I thank the Chair.
Mr. MOYNIHAN. Mr. President, I thank the soon-to-be chairman of the
Committee on Finance for a very thoughtful and precise statement. This
legislation will not lose any money. But if we are going to talk
economics for a bit, I wonder if I could add just a 4-minute statement
about what economists have come to call the ``trade cycle'' in
particular activities, which is that when it is typical for a product
in the United States to be developed here, then to be exported to
foreign countries. Then it begins to be manufactured in foreign
countries, and then it begins to be exported back here. That is a
perfectly normal cycle. There are good economic reasons for it and it
makes perfect sense, as long as by the time the exports of our original
product get back here, we are making something new. And we are, as the
Senator has said.
We are the most competitive Nation on Earth in intellectual
properties, and that being the case, yes, it can be a little disturbing
to see familiar American products arriving with strange foreign names.
Daniel Boorstin, our distinguished former Librarian of Congress
Emeritus, in his book on the Americans, described how one of the ways
these people from all over God's Earth got together and became a
nationality was in part by the Model-T Ford, and other artifacts we
manufactured here, which were very distinctly American, and we all knew
about them, and that is why we knew about each other. Well, when that
Ford equivalent starts being called a Nissan something, you start
saying what is going on in our country, when in fact it is something
that is very normal.
We have begun exporting computer chips, and the day will come when
they come back and Intel will have something else. So there will be a
new Intel. These are unsettling things, but nothing has equaled the
growth in the wealth of nations--and this Nation in particular--than
the growth in trade since the reciprocal trade agreement of 1934. That
process began with Cordell Hull. Four years earlier, under Smoot-
Hawley, we got tariffs to the level of 60 percent, and our exports
dropped two-thirds in 2 years. We have a historic moment here at the
close of the century, and it is looking good.
May I ask a question of the soon-to-be chairman? You are feeling good
about this agreement, are you not?
Mr. PACKWOOD. I am feeling wonderful about this agreement.
Mr. MOYNIHAN. Mr. President, do you hear that? We feel wonderful.
Mr. PACKWOOD. Is that the question?
Mr. MOYNIHAN. That is the question. I think it appears there are no
further speakers desiring to speak on our side.
Mr. President, I suggest the absence of a quorum, the time to be
divided equally between Senator Packwood and myself.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. PACKWOOD. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. PACKWOOD. Mr. President, I yield to the Senator from Missouri
such time as he might want.
The PRESIDING OFFICER. The senior and distinguished Senator from the
State of Missouri is recognized.
Mr. DANFORTH. Mr. President, I thank the Chair and I thank my friend
from Oregon.
Mr. President, I strongly support the GATT agreement and strongly
support the enabling legislation that is now before us in the Senate.
There is no doubt in my mind that if the United States is going to
face the future, we have to compete with the rest of the world. We
cannot as a nation pretend that the world does not exist. We cannot as
a nation crawl into a hole and hope that somehow the world will pass us
by, because if we do crawl into a hole, the world will indeed pass us
by and relative to the rest of the world America will get poorer and
poorer. So the concept of an international marketplace is one that in
my opinion we are committed to and must be committed to as a nation.
Many people point out the fact that in international trade today the
rules are not applied fairly to the United States. Many people have
said that they believe that Americans can compete with any country in
the world provided that the playing field is level, provided that the
rules are fair.
But, Mr. President, in today's world the rules as they are applied
are not fair, and one of the key examples of that is the series of
problems that American soybean farmers have had with competition from
subsidized oilseeds in Europe.
On two different occasions a GATT case has been brought and on two
different occasions the GATT case has been won by American soybean
farmers and on two different occasions there has been no result from
winning those contests.
A lot of people have commented about the World Trade Organization as
though it is somehow a threat to the United States. But the fact of the
matter is that the World Trade Organization would make it possible for
once to have enforceable rules of international trade. The problem in
world trade has not been that the United States does not comply with
the rules. We do comply. We have a long history of negotiating trade
agreements and then abiding by those trade agreements because that is
the kind of country we are, but other countries do not necessarily
abide by agreements or play by the rules.
And what happened in the two oilseed cases that were brought by
American soybean farmers is that we won those cases and then the
European Community said simply: We do not care whether you won or not.
We are not going to do anything about it.
So the present state of affairs is that we have an unworkable system.
We have a system that does not act to the advantage of American
farmers. It does not necessarily act to the advantage of Americans
because other countries can abide by the rules when they want to or
forget the rules when they want to and we cannot do anything about it.
One of the great accomplishments of this trade agreement is that it
does provide for better enforcement than we have today, and better
enforcement is something that is going to be to the advantage of the
American people.
Now, some have said, well, how about the budget? Does not this forgo
certain revenues? And it does forgo certain revenues, tariff revenues
by the United States. But, Mr. President, I believe that is a technical
argument rather than a real argument because the fact of the matter is
that by expanding international trade, we will create somewhere between
300,000 and 700,000 new jobs for the American people, and there is no
way that we can create 300,000 to 700,000 new jobs for the American
people without simultaneously creating more revenue for the Government.
It is not a revenue accomplished by the tax increase. In fact, it is a
revenue increase that is accomplished by the largest international tax
cut in history, but the effect of it is to stimulate economic activity,
create more jobs, create more American jobs, more good American jobs,
and with those additional jobs comes more income, more revenue to the
Federal Government, more spending by people, a ripple effect throughout
the economy and better opportunities for all of us, including a better
situation for the budget deficit.
So the argument that somehow this has a negative effect on the budget
is flatly wrong.
I would like to just make one other point, Mr. President. It is
something that I think all of us understand. There is a natural fear by
a lot of us of the unknown; a fear that when we enter the future, when
we enter new challenges as a country we are going to be hurt. There is
a comfort in the status quo. There is a comfort level in not having
change. There is a comfort level in not having to compete as a country.
And I understand that. If you compete, maybe somebody else will do
better than you do. Would not it be better if we have no competition?
But, I do not think that this land of ours is the land of the timid.
I do not think that it is the land of the fearful. I do not believe
that the American people deep in their hearts really think that America
just is not good enough to keep up with other countries of the world.
I think that most Americans feel that, given the opportunity, we can
compete with any country, anywhere. Given fair rules, we can compete
and we can win that competition with anybody. And that is what trade
legislation and that is what trade agreements are all about. It is to
create the possibility of real competition, not slanted competition,
unfair competition, but real competition so that the American people
will have the opportunity to sell what we produce on international
markets.
This trade agreement, for the first time in history, limits
agricultural subsidies. We wish that the limits would have been more
stringent than they are. But for the first time there are some limits
on agricultural subsidies and the agricultural subsidies of
particularly the European Community have acted to the detriment of our
country. This agreement establishes trading rules for intellectual
property rights and for trade and services. These are two areas where
the United States clearly has a competitive advantage over the rest of
the world. Intellectual property, that is trademarks, patents, the
inventiveness of the American people. It is a terrible situation when
American effort and American ingenuity creates a new patent which is
promptly stolen in another part of the world.
This covers intellectual property. It covers trade and services. And
there is no doubt in my mind that in doing so this is to the advantage
of Americans and of American jobs.
So, Mr. President, I am very supportive of this GATT agreement.
I want to pay a special compliment to the U.S. Trade Representative,
Ambassador Mickey Kantor, and to his associates at the U.S. Trade
Representative's office. I have, over the past year, noted certain
problems that I had with the agreement as it was negotiated; problems
relating to whether or not governments are going to get in the business
of subsidizing especially high-tech industries and problems of whether
or not we would open up future rounds of trade negotiations which tied
trade policy to extraneous matters, even desirable extraneous matters,
including labor standards and the environment. Those problems have been
worked out to my satisfaction.
I want to express my appreciation to Ambassador Kantor for his
willingness to work with interested Senators in addressing these very
thorny questions.
But all in all, Mr. President, this is a really magnificent
accomplishment, an outstanding trade agreement, and one which will
greatly benefit the people of our country.
Mrs. KASSEBAUM. Mr. President, I rise today in support of legislation
to implement the Uruguay round agreement of the General Agreement on
Tariffs and Trade [GATT]. After months of study, questioning, and
debate--both in Congress and in Kansas--I am convinced that this trade
agreement is vital to our nation's economic future.
For half a century, the world's trading powers have recognized that
everyone benefits from having basic rules of the road for international
trade. That is why we have participated in the GATT system since its
inception in 1947. The issue before us today is not whether to have an
international system of trading rules but whether we can improve the
rules that already exist.
I believe that we can.
The Uruguay round agreement--which resulted from 7 years of hard
negotiation by the past three U.S. administrations--is not perfect. But
in many key areas, it marks a significant improvement over the system
now in place.
For the first time, this agreement will afford the protection of law
to our farmers and agribusinesses who rely on overseas markets. It will
help protect our rapidly growing industries that trade in copyrights
and patents. It will offer the first protection in history to our
businesses that sell services overseas.
The agreement will cut tariffs and help reduce Government
interference in the free market around the world. It will make deep
cuts in taxes on imported goods, and consumers will be the winners.
Tariffs worldwide will fall by roughly one-third. And, companies in the
United States--which already have less tariff protection than many of
their competitors abroad--will come out ahead.
For example, I was contacted by Flexel, Inc., a cellophane
manufacturer with more than 300 good jobs at its plant in Tecumseh, KS.
More than half of Flexel's product is sold overseas, but today the deck
is stacked against this small American manufacturer. The U.S. tariff on
imported cellophane from Flexel's competitors in Europe is 5 percent;
the European Union tariff on U.S. cellophane is 13 percent. The GATT
agreement will level the playing field, lowering the European tariff to
match our own.
As the critics point out, certain U.S. tariff barriers will have to
come down in return. But it is clear that, overall, our domestic
employers will gain far more than we concede. Consider, for instance,
overall industrial tariffs. Under this agreement, we will reduce ours
by 1.6 percent. By contrast, India will cut its industrial tariffs by
15.0 percent. Japan by 2.5 percent. The Europeans by 2.3 percent.
I believe we are winners with this agreement. However, many
thoughtful people genuinely do not. I am deeply disappointed at the
failure of the GATT's supporters to take the case to the people and to
lay out clearly and precisely the arguments in favor of this agreement.
I also have been disappointed by the unwillingness of many people on
both sides of this debate to listen to the arguments of those who
disagree--and to respect their sincerity.
Many Kansans worry about the role of the new World Trade Organization
[WTO] and its potential to affect American sovereignty. They do not
want an economic United Nations where the world's largest economic
power has no more influence than any other country.
I share those concerns, and I have raised them with numerous trade
experts, both in and out of Government. The WTO system has no
relationship to the United Nations--indeed, the member countries have
explicitly rejected any ties to the U.N.
Most of the changes that WTO will make in the existing GATT system
are aimed at fixing problems that long have disadvantaged the United
States.
For example, under the current system, decisions of the panels that
settle trade disputes cannot be enforced by the country that prevails.
And they are frequently ignored by the country that loses. Because the
United States brings and wins far more challenges than any other
country, we need a system that lets us enforce the rules. And that is
precisely what we got in this WTO agreement.
For half a century, we have been members of a world trade
organization known as the GATT Secretariat. This debate should focus on
how the new WTO will differ from the existing organization that it
replaces.
The new WTO will strengthen the procedural protections that the
United States--and other countries--have in defending their trading
rights. I believe we must get past the generalities and look at the
details of how this WTO will work:
The current GATT can amend the trade agreements in ways that do not
alter members' rights or obligations with only a \2/3\ vote of the
members--under WTO, a \3/4\ vote would be required to get to an
amending vote, and no amendment would bind any country that votes
``no.''
The GATT can change the agreements in ways that alter members' rights
and obligations by a \2/3\ vote--under WTO, a \3/4\ vote is required.
The current GATT can expel by majority vote a member who refuses to
accept changes in trade rules--under WTO, a \3/4\ vote is required.
The current GATT can interpret the substantive trade agreements by a
simple majority vote--under WTO, a \3/4\ vote will be required, and
protections are included to ensure that amendments masquerading as
``interpretations'' are not permitted.
The current GATT permits a majority of members to decide to take
trade actions not specified in the agreements as long as those actions
facilitate the operation and objectives of the GATT--the WTO eliminates
this broad freelance provision.
The current GATT makes trade decisions only by consensus of all
members, but that requirement is customary rather than required--the
WTO mandates that decisions must be by consensus.
The current GATT establishes ad hoc panels to settle trade disputes
among nations, and their rulings are final--the WTO adds a new
opportunity to appeal panel decisions.
I was further reassured by the protective agreement worked out
recently by Senator Dole, which ensures added review of WTO judgments
against the United States. If a panel of American judges finds that WTO
panel decisions are arbitrary and capricious, we can expedite our
withdrawal from the organization. The bottom line is simple: Only
Congress can change U.S. laws, and nothing in this agreement cedes even
one bit of that national sovereignty. That is why conservative Judge
Robert Bork, who has studied the agreement, concluded that the
sovereignty issue is a scarecrow.
Many also have expressed concern about the budget implications of
reduced tariff revenues. But in the end, the budget argument does more
to illustrate the shortcomings of the bizarre congressional budget
rules than any shortcoming in the GATT agreement. The requirement--
unique to the Senate--that legislation be revenue neutral for 10 years
after enactment is simply unrealistic. It is impossible to predict with
any semblance of certainty what legislation passed today will mean to
the Treasury in 10 years. Remember: Ten years ago, it was predicted
that the Gramm-Rudman-Hollings legislation would have balanced the
budget by now. The budget argument is, at best uncertain.
This vote is about new markets, less Government regulation of the
marketplace, lower consumer prices and expanded American businesses and
workforces. I will vote for the Uruguay round agreement because it is
in our interest.
But the vote also is about leadership and our ability to shape,
rather than follow, world events. Eight years ago, we led the world in
calling for this agreement. Our trading partners now are watching to
see whether the United States, the world's largest economic power, will
turn its back on free trade.
We must not underestimate the importance of this vote.
I, for one, believe we must lead.
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