[Congressional Record Volume 141, Number 100 (Monday, June 19, 1995)]
[Senate]
[Pages S8631-S8633]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                   DEPARTMENT OF INTERNATIONAL TRADE

  Mr. BOND. Mr. President, I have been very troubled during the past 
few months by the debate over the proposal to eliminate the Department 
of Commerce. Much of the debate has focused on the need to eliminate 
the so-called corporate welfare programs of the International Trade 
Administration and the Bureau of Export Administration. I would like to 
address these proposed cuts today.
  Congress is embarked on a long overdue effort to make real cuts in 
Government programs and move toward balancing the budget by 2002. This 
effort deserves strong support from every member of this body, because 
eliminating the budget deficit is the primary responsibility facing 
Members of Congress today. The debt is a burden on the backs of the 
American people, on the future of our children, and on the 
competitiveness of U.S. companies trying to win in today's competitive 
world marketplace. That is why I voted for the budget in committee and 
again on the Senate floor, and that is why I support it strongly.
  Certainly, the Commerce Department--like most of the Federal 
Government--can stand some significant trimming, and I applaud efforts 
to weed out outdated and inefficient programs at Commerce as well as at 
other departments. I believe, however, the attacks on these two trade 
agencies are misguided and misinformed.
  As we enter the 21st century, it is clear the future of our Nation's 
economy depends on the international marketplace. If we are to remain 
the world's leading economy, then we will have to dominate the 
international market as well as our own. The competition will be 
intense, and companies from other nations will come to the field 
equipped with a wide array of tools provided by their nation's 
governments--from concessional financing, to market research, to high-
level sales help from senior government officials. If our companies are 
going to remain competitive, they must have at least some access to the 
same tools. The International Trade Administration is the agency that 
helps to provide that edge.
  At the same time, it is just as critical that we ensure other 
countries are trading fairly and playing by the rules. That is the job 
of the U.S. Trade Representative. However, all of the trade negotiators 
at USTR operate with significant support from the Commerce Department. 
The loss of that support would have a crippling impact on our ability 
to ensure our interests. BXA, the Bureau of Export Administration, and 
ITA, the International Trade Administration, are the engine that drive 
the rest of the Federal Government's trade agencies. Without them, the 
other agencies will cease to function properly, and effectively to help 
our businesses gain jobs and the revenues that they need from the world 
market.
  For that reason, when the Senate considers legislation to abolish the 
Department of Commerce, I will offer an amendment to create a new, but 
very small Department of International Trade which will consist solely 
of the current Commerce Department trade agencies--the Bureau of Export 
Administration and the International Trade Administration.
  There are a wide range of reasons for retaining the trade functions 
in a Department of International Trade. I would like to take a few 
moments to discuss the most important ones:
  First, Senators need to understand that the International Trade 
Administration is responsible for supporting the activities of the 
Office of the U.S. Trade Representative with sectoral and technical 
expertise. The proposals to eliminate the Commerce Department appear 
not to recognize this fact.
  Everyone seems to agree that USTR is a successful agency which 
performs a critical function, and which must be retained. But too few 
seem to realize that USTR is made up of a mere 170 people. They could 
not possibly handle all of our trade negotiations without significant 
support from other agencies, particularly the International Trade 
Administration.
  When we are negotiating an auto parts deal with Japan, for example, 
there will be a USTR official sitting at the bargaining table leading 
the team. Behind that person, however, are almost certain to be experts 
from the Office of Automotive Affairs and the Office of Japan Trade 
Policy. The proposals to abolish the Commerce Department would 
eliminate both of these offices, which would leave the USTR negotiator 
unsupported, and unable to counter the Japanese negotiator on the other 
side of the table. We would
 have our head handed to us in these negotiations, and every other 
international trade negotiation we undertook. The result would be a 
loss of U.S. jobs as our ability to negotiate fair trade agreements is 
eroded.

  The important role that ITA plays in trade negotiations is 
illustrated by looking at the NAFTA talks on which ITA experts spent 
more than 50,000 hours in the last year of the negotiations alone.
  It should also be noted that ITA plays the lead role in a wide range 
of trade talks. For example, ITA led the negotiations that opened 
Japan's construction and government procurement markets to United 
States firms. ITA experts developed the negotiating positions for all 
U.S.-E.U. standards barrier talks since 1990.
  It is also important to note that the International Trade 
Administration is the Federal agency with primary responsibility for 
monitoring bilateral and multilateral trade agreements. Elimination of 
the network of ITA specialists would severely hamper our ability to 
monitor trade agreements and ensure that other countries are playing by 
the rules.
  Second, the proposals to eliminate the Commerce Department would 
effectively remove the Federal Government from providing export 
promotion and assistance for nonagricultural exports.
  Now I realize there are many of my colleagues who would applaud that 
development, but I would like to take just a moment to review the 
impact it would have on American companies.
  The economic battleground has moved solidly to the international 
marketplace. Our future economic growth depends, in large part, on 
American firms winning their share of the new markets developing in 
places like Indonesia, India, Brazil, and China. These countries have 
huge populations which are hungry for development. The infrastructure 
needs is these nations are staggering. Investment in roads, bridges, 
telecommunications systems, power generation, and other infrastructure 
projects is estimated to be $1 trillion over the next 5 years in Asia 
alone. The competition for these projects will be intense. Companies 
from Germany, Japan, Canada, and other nations will aggressively seek 
to win them; and they will go after them with strong tools provided by 
their governments. These tools will include not only concessional 
financing, but also market research, industry expertise, and the high-
level marketing help of senior government officials. Already our 
companies go into this battle with fewer resources available from the 
government than their foreign competitors. If we send them in unarmed, 
they will simply get stomped.
  We must also recognize that the markets in these countries are not 
like ours. Almost all of these infrastructure contracts will be awarded 
by governments, not by private firms. The officials responsible for 
making the buying decisions are used to dealing with other Government 
officials, rather than with businessmen. U.S. Government support is 
needed to support the business effort so that they can win in these 
markets.
  I know of many examples from my personal experience in which ITA 
personnel played a key role in helping to clinch huge exports for 
companies in my State. In one, Black & Veatch, a Kansas City 
construction firm teamed with General Electric, won a $250 million 
power generation project in Malaysia last year with the active support 
of the Foreign Commercial Service officer in Kuala Lumpur, who spent 3 
years on the project. The result was a win for the United States 
against a Japanese firm offering concessional government financing. The 
project has the potential to bring in a total of $1 billion in business 
if the American companies win the follow-on work. They would never have 
had a chance of winning without the active, on-the- [[Page S 
8632]] ground support of the U.S. Government.
  Commerce assistance is just even more important for small firms. 
Earlier this year, I received a letter from one businessmen in St. 
Louis who summed up the important role the US&FCS plays in supporting 
exports by small companies.
  I might add here, Mr. President, we all know the major exporting 
companies, large companies in America are very competitive in the world 
market. They need help to stay on an equal footing with Export-Import 
Bank assistance and other financing, but when it comes to getting into 
the world market our medium- and small-sized businesses do not have the 
resources to mount an effective campaign for a small business. This 
letter reads as follows, and I quote:

       Four years ago, acting as vice president of a 65-year-old 
     small business in St. Louis, Mo., I watched in horror as more 
     and more of our independently owned retail customer base 
     began closing. I then observed the exit of our largest single 
     account, which accounted for 10% of our total company sales. 
     After studying the competitive nature of U.S. business, I 
     decided to investigate foreign markets as a possible answer 
     to our declining sales problems.
       I did not know one single thing about international trade, 
     I did not know where to look for possible customers, how to 
     find them or how to communicate with them if, indeed, one was 
     to be found. To a first-time potential exporter, the world 
     looked like a very big place indeed, and I thought I had no 
     way of knowing how to access it.
       One single seminar sponsored by the Department of Commerce, 
     a two-hour lecture on international shipping, started my 
     company once again on the road to financial stability. For 
     during that two-hour meeting, and during the subsequent small 
     talk that followed, I was introduced to the world through the 
     eyes of the United States and Foreign Commercial Service and 
     the U.S. Department of Commerce.
       Within only one year's time, our company exports climbed to 
     $110,000. With continued tutelage from various members of the 
     US&FCS, the second year of exporting yielded $263,000. Year 
     three saw our sales climb to $473,000. Year four saw $576,000 
     in international sales alone.

  Mr. President, those are significant amounts for a small company. 
They are very significant for any community. They are vitally important 
for the workers who make the products that are sold in the world 
market. If we multiply it across the tens of thousands of small firms 
that could be exporting, you would see the enormous impact on our trade 
deficit and our overall economic well-being that these functions of the 
Department of Commerce serve.
  It is for that reason, Mr. President, I believe, when we take a look 
at weeding out the chaff and cutting out unnecessary activities, we 
must be well advised to keep those things which are working, to keep 
those things which are vitally important for ensuring the continued 
competitiveness of small- and medium-sized firms in the world market. 
If we do not help these firms, they will wither and die.
  We must recognize, however, that small companies like this one are 
not going to export without help. They do not have the people, they do 
not have the time, and they do not have the resources to devote to 
entering the often-difficult international marketplace. If we take away 
their access to Commerce Department assistance, they are not going to 
go out and hire private lawyers and accountants--instead, they are 
going to forgo exporting, and cede valuable markets to foreign firms.
  Third, the proposals to eliminate the Commerce Department would 
destroy the Import Administration. The Import Administration is the 
Agency responsible for enforcing and administering the laws against 
dumped and subsidized exports of other countries. Actions initiated by 
the Import Administration have played a key role in the revitalization 
of several U.S. industries.
  The proposal that has been introduced in the House to abolish the 
Commerce Department would transfer the functions of the Import 
Administration to USTR which is not a proper agency to be making such 
determinations, and which will not have the manpower to handle the job.
  A fourth problem with the plans that have been put forward is that 
they would transfer the responsibility for licensing dual use exports 
from the Bureau of Export Administration, to either the State 
Department or Defense Department.
  Under the current system of export controls, the Commerce Department 
is responsible for licensing dual-use exports such as machine tools, 
computers, and telecommunications. The State Department has the 
responsibility for licensing weapons sold overseas. Over the past 
several years, as Congress has considered proposals to rewrite the 
export control system, a primary goal of exporters has been to ensure 
that as many exports as possible fall under the jurisdiction of the 
Commerce Department rather than the State Department. There are several 
reasons for this move. State is seen as not being friendly to 
exporters. It is seen as something of a black hole where export license 
applications can disappear until sales are lost to foreign firms by 
default.
  Further, exporting is not the primary concern of the State 
Department. Instead, the Agency is focused on foreign policy concerns. 
It is easy to imagine a scenario in which an export application might 
be denied due to foreign policy interests rather than commercial 
interests.
  Finally, State is in the process of taking cuts in its primary 
programs. As that happens, there is almost certainly not going to be an 
adequate number of people assigned to noncore functions such as export 
licensing. The result will be a further loss of jobs for American 
firms.
  The alternate proposal to move the licensing function to the Defense 
Department is similarly problematic. DOD has responsibility for 
national security, not exporting. They do not have there expertise to 
deal with dual-use commercial items such as machine tools, computers, 
and telecommunications items. The result is certain to be that they 
will err on the side of caution and deny all licenses--or at least a 
majority of them.
  Fifth, the proposal would transfer the responsibility for enforcing 
export controls from Commerce to the Customs Service. Now I am a strong 
supporter of the Customs Service. I think they are doing a fine job 
with the limited resources we give them. I have visited several of 
their facilities, I have watched them in action at the border. We can 
be proud of the job they are doing, particularly in keeping illegal 
drugs out of our country.
  I am concerned, however, that the proposal to split enforcement from 
export licensing and transfer it to Customs will weaken our effort to 
control the spread of weapons of mass destruction. No matter how good a 
job Customs does, and they have done some good work in this area, they 
will still not be focused on it as their primary function, as the 
agents in Commerce are currently. Also, I fear that export enforcement 
will take back seat to the more visible activity of combating the 
spread of illegal drugs.
  I should like to turn for a moment to the proposal to transfer 
several of these functions to USTR. I simply do not think that will 
work.
  USTR is part of the Executive Office of the President. For 2 years 
now, we have told the President that he must cut the White House staff 
back significantly. Now some are coming forward with a proposal that 
would reverse any progress that has been made, by transferring hundreds 
of new employees to the White House. That does not make a whole lot of 
sense.
  Just as important, USTR is not an appropriate home for these agencies 
or functions. USTR is a policy agency designed to advise the President 
and play the role of honest broker between other trade agencies. 
Transferring the functions of the Import Administration, the Foreign 
Commercial Service, and other agencies to USTR will make it a line 
agency with significantly broader responsibilities than it currently 
has. I question whether that is a step we want to be taking. I, for 
one, do not think so.
  And there are other problems that are sure to arise. I am sure 
agricultural interests will be concerned that this proposal will put 
some of Commerce's manufacturing and services trade specialists into 
USTR. Since we would not be doing the same for the commodity 
specialists in the Department of Agriculture, they are certain to see 
this move as tipping the balance of interest in the White House away 
from agriculture interests.
  As I stated earlier, if we are in fact going to eliminate the 
Commerce Department, I believe the solution to this [[Page S 
8633]] problem is to create a very small, but very effective Department 
of International Trade made up solely of the existing functions of the 
International Trade Administration and the Bureau of Export 
Administration, and represented in the Cabinet. Creation of this agency 
will allow us to continue to remain effective in the international 
arena without spending more money than we are now. It keeps BXA and ITA 
together, thereby preserving the synergy that comes from keeping trade 
in one agency; and it allows exporters to continue to have a place at 
the cabinet table.
  This new Department of International Trade would not be the 
bureaucratic monster that today's Commerce Department has become. It 
would have a budget of less than $400 million--not even one-tenth of 
the current Commerce Department budget.
  My plan would not consolidate other existing trade agencies. It would 
leave USTR, the Export-Import Bank, OPIC, and TDA as independent 
agencies. Senators may ask why I do not consolidate them into this new 
agency, and my answer is very simple, they work, and I have long 
subscribed to the old adage, if it ain't broke, don't fix it. They are 
small agencies, performing critical functions, and we ought to leave 
them alone to continue that fine work.
  As I have said already, trade is the key to our economy's future. If 
we toss in the towel right now, we can give up on the hope of remaining 
the world's most important economy. We simply will not be able to do 
so. I am not willing to toss in the towel, and I bet a majority of 
Senators agree with me.
  In closing, I would note that a number of wild charges have been 
tossed around by those opposed to the so-called corporate welfare 
programs of export promotion and finance. I would like to focus on just 
one of those wild charges.
  The report accompanying the House budget resolution references a CBO 
report which states:

       [a]ll increases in exports * * * resulting from ITA's * * * 
     activities are completely offset by some mix of reduced 
     exports of other industries and increased imports.

  Now, Mr. President, I do not know which rocket scientist at CBO came 
up with than analysis, but it is one of the most ludicrous assertions I 
have come across in my time here in Washington--and trust me I have 
heard some good ones.
  When the people at ITA work to see that a foreign airline buys Boeing 
747's or McDonnell Douglas MD-11's rather than Airbus aircraft, is that 
increase in our exports offset by reduced exports or increased imports? 
No.
  When a US&FCS officer in Kuala Lumpur helps to ensure that American 
firms win a major power project against their subsidized Japanese 
competitor, does that result in reduced exports somewhere else in our 
economy? Of course not.
  Mr. President, the world trade pie is huge. The United States has a 
large part of it, but we should have an even larger part. Attitudes 
like the one expressed by this bureaucrat at CBO show a complete lack 
of understanding of this fact. If we make the mistake of believing 
them, we will condemn this Nation to lost jobs, a declining economy, 
and a lower standard of living as we enter the 21st century.
  Mr. President, I thank the Chair for the indulgence. I yield the 
floor.

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