[Congressional Record Volume 141, Number 43 (Wednesday, March 8, 1995)]
[Senate]
[Pages S3670-S3671]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      THE U.S. WORLD TRADE DEFICIT

  Mr. DORGAN. Mr. President, today there has been discussion in 
Congress about the problems of the dollar on the international currency 
exchanges and the collapse of the dollar in the last week or two and 
especially the collapse of the dollar in recent months.
  I noted that one of the leaders of the other body said, well, that 
dollar problem relates all to the constitutional amendment to balance 
the budget. Mr. Greenspan, the head of the Federal Reserve Board, 
testified before a congressional committee today, and he said that 
there were several reasons for the collapse of the dollar.
  I would like to add my opinion today to what is happening. I think 
people need to know that the collapse of the dollar on the currency 
exchanges is not something that should be unexpected, given the current 
circumstances in this country.
  We received about 3 or 4 weeks ago the trade data for December, which 
means that we have trade information for all of last year to try to 
evaluate how did America do in international trade.
  The chart that I brought to the floor shows how our country has done 
in international trade in the past year. This chart shows a history 
full of red ink. It shows that in the last calendar year we suffered 
the largest merchandise trade deficit in the history of this country--
in fact, the largest trade deficit in the history of humankind. This 
trade policy, yes, belongs to this administration, but it belongs also 
to the previous administrations because it is a continuation of the 
same trade policy we have been conducting and following in this country 
for nearly 40 years. The deficits are staggering in international 
trade.
  Most importantly, you will see what is happening to our manufacturing 
base in this country. This is a chart that shows foreign imports taking 
over now one-half of the manufacturing gross domestic product in our 
country. In 1970, manufacturing imports as a percent of U.S. 
manufacturing GDP was 10 percent. Last year, it was nearly 50 percent. 
You can see what is happening to manufacturing in this country by 
virtue of what we are importing in manufactured goods.
  ``U.S. faces historic losses in manufacturing trade.'' In other 
words, the trade on goods that are manufactured, that is a trade 
process in which we lose. The fact is in international trade, there are 
winners and there are losers. The winners have the jobs and the 
opportunities, and the losers suffer economic decline. This trade 
picture in this country shows a picture, a bleak picture, of decline, 
and it is something that we must change.
  The last chart is an illuminating one. It shows what has happened in 
recent years to the major economic powers, the net exports of the major 
economic powers in the world. And you will see what has happened to 
Japan, to Germany, and then take a look at what has happened to the 
United States in terms of net exports. It has collapsed. It weakens and 
injures this country.
  This trade policy does not work. This trade policy flows from the 
post-Second World War era, when our country decided that our trade 
policy was also going to be our foreign policy and we were going to 
have trade policies that helped a lot of other countries get back on 
their feet. These days the continuation of that policy weakens our 
country. Our country suffers very stiff, steep deficits in 
international trade balances, and the fact is it means lost jobs and 
lost opportunity here in the United States.
  We hear this chant about free trade. Well, the suggestion is that we 
should compete anywhere around the world and win. That is free trade. 
If it is free, if it is open competition, we should compete and we 
should win.
  The difficulty, of course, is in free trade this chart shows the 
average manufacturing wages in various countries. The United States is 
here, $16.79 an hour. Germany is up here at $25, and you can see who we 
are going to compete with. We compete with countries around the world 
where they pay 12 cents an hour to 12-year-olds who work 12 hours a day 
to manufacture products and say that is free trade; there are no 
tariffs on that commodity trade, so you go ahead and compete, Mr. and 
Mrs. America.
  The problem is American workers cannot and should not have to expect 
to compete against 12-cents-an-hour wages, and yet that is where we are 
in that kind of trade scheme in this country.
  I want to put the first chart back up because this is what I want to 
talk about, the historic trade deficits in this country today and the 
need for us to fundamentally revisit trade strategy and decide that we 
need to reinvent our trade strategy in this country.
  The post-Second-World-War trade strategy of 50 years is failing this 
country and it is injuring this country. 
[[Page S3671]] These trade deficits cannot be compiled in a country 
like ours without threatening the dollar, weakening the dollar, and 
causing the collapse of the dollar we have seen over a period of a 
dozen years on the international currency exchanges.
  I have talked about the numbers, but the specifics are even more 
devastating. If you take a look at the specifics on the 1994 trade 
deficit what you find is that our trade deficit in autos and auto parts 
total $50 billion; our trade deficit in data processing equipment and 
parts totals $21 billion; telecommunications equipment, $17 billion; 
electrical equipment, $13 billion. These are the high-technology items 
in which manufacturing pays good wages. These are good jobs. These are 
the very items we ought to be winning in and instead we are losing. It 
is where our jobs are being exported in wholesale quantity to other 
parts of the world.
  In fact, if you take a look at this trade deficit you will see, 
though I have not annotated the countries on here, we have a nearly $65 
billion trade deficit with Japan at a time when the dollar is at a 
nearly record low against the yen. That is a time when you would expect 
we would be making progress in reducing our trade deficit with Japan. 
In fact it grew. Our trade deficit with China is $30 billion and 
growing astronomically; again, shipping American jobs outside of this 
country and weakening America's currency and causing others around the 
world to look at this mess and say, ``We do not have confidence. We do 
not have the kind of confidence we should because the fact is this 
country, the United States of America, is running an enormous trade 
deficit which it cannot continue to do.''
  At least with respect to the budget deficit you can make a case that 
it is money owed, one to other. With respect to the trade deficit, the 
trade deficit must be repaid by a lower standard of living in the 
United States. It is inevitable and it is true. This bleeds the 
American work force, bleeds American opportunity, and bleeds away 
American jobs.
  I must say the Mexican example--largely I raise that because of the 
deterioration of the dollar--the Mexican example in my judgment is an 
example of the kind of policy we should not follow. When we link the 
American dollar to the peso--as we did when we formed an economic union 
with Mexico and as we did when we decided on a bailout strategy as a 
result of the collapse of the peso--it seems to me inevitable that we 
diminish confidence in the dollar, linked to an economic circumstance 
like they have in Mexico.
  It is interesting, I did not support NAFTA but we were told, with 
NAFTA, if we can negotiate lower tariffs across the United States-
Mexican border we will see a massive new trade coming across the border 
that will strengthen and help both countries. Of course what happened 
then was the peso was devalued and the fact is to sell American goods 
now in Mexico means the American goods are 40-percent higher priced 
than they were when NAFTA was passed and Mexican goods to be sold in 
this country now sell at a 40-percent discount vis-a-vis when we passed 
NAFTA.
  What has happened? We had a very significant trade surplus with 
Mexico, about $4 billion. That shrunk last year to over a billion, and 
in recent months we even have a trade deficit with Mexico. Of course 
that threatens to grow.
  My feeling is that as we look at the collapse of the dollar on the 
international currency exchanges and wonder why, we ought not wonder 
too long without understanding that a country cannot continue this kind 
of trade policy. Yes, I want open markets. Yes, I want free trade. But 
this country ought to take the lead in this world to say, ``We also 
expect fair trade. There is an admission price to the American 
marketplace and the admission price to sell your products in the 
American marketplace is, yes, you must pay living wages. And you must 
have a safe workplace, and you cannot hire 12-year-old kids for 12 
cents an hour.''
  We must, it seems to me, stand for our own economic interest and stop 
this kind of policy. That is the sort of thing that ultimately will 
strengthen confidence in the dollar on the international currency 
exchanges.
  I hope this President and others who care about this issue--including 
Members of Congress--will decide that it is time for us to have a new 
Bretton Woods conference, a new type of Bretton Woods strategy in which 
we take a new analysis of trade strategy 50 years after the end of the 
Second World War and decide what is right for this country. What will 
set us on a course where we will not see these kinds of staggering 
trade deficits that weaken our country? What will promote new jobs, 
good jobs, with good income in this country?
  I hear about everybody being upset in our country, and I understand 
that. At least one of the reasons the American people are upset is no 
matter what the economic indicators say, no matter what the dials and 
indicators say in the engine room with respect to this ship of state, 
most American families having dinner tonight understand they are 
working harder for less money. Mr. President, 60 percent of the 
American families earn less money today, if you adjust it for 
inflation, than they did 15 years ago. One can tell those American 
families, ``Things are better for you.'' But if they are earning less 
money on a real income basis than they were 15 years ago, it is awfully 
hard to convince them that they are doing better. You do better when 
you have good jobs and good opportunity.
  I might say, all the other issues that are going to come before this 
Senate in the coming months--almost all of those issues can also be 
addressed by good jobs with good incomes. You can talk about welfare 
reform, you can talk about crime, you can talk about 100 different 
issues--you can address most of them in this country with a good job 
and opportunity for Americans who are skilled and want to work.
  So, as we discuss the collapse of the dollar and all of the 
macroeconomic reasons and we hear the economists give us their notions 
of what is at work in the world, at least I would like to contribute, 
from this Senator, my notion that these staggering trade deficits, the 
worst in history last year, contribute to a weakening of the confidence 
in the American dollar and I think call out--virtually call out for a 
new trade strategy, a summit on international trade in this country, to 
wonder: What on Earth are we doing, bleeding away good American jobs 
and good income for the American people with a trade strategy that does 
this?
  Let me finish by saying we have a Trade Ambassador, Mickey Kantor, 
who is the best I have seen since I have been in Washington. He gives 
me hope. He has been tough with other countries. He stood up to the 
Japanese and the Chinese and others to say this cannot continue.
  I appreciate that. I want to offer him strength to whatever extent I 
can. But I also say we are dealing with a trade regime that is 
fundamentally flawed and we need to build a new foundation and a new 
understanding of the various obligations that we and our trading 
partners have for and with each other as we conduct commerce in the 
years ahead.
  Our interests must in this country be interests in promoting and 
creating stronger means to promote jobs and opportunity and hope for 
the American people. Frankly, this kind of trade picture, not just with 
Democrats--yes, this is under a Democratic administration--but 
Republicans and Democrats together have embraced a trade regime that in 
my judgment is fundamentally flawed and cries out for reinvention and 
cries out for reform.
  I yield the floor.
  Mr. INOUYE addressed the Chair.
  The PRESIDING OFFICER (Ms. Snowe). The Senator from Hawaii.
  Mr. INOUYE. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HATFIELD. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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