[Congressional Record Volume 142, Number 13 (Wednesday, January 31, 1996)]
[Senate]
[Pages S577-S578]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       MERCHANDISE TRADE DEFICIT

  Mr. DORGAN. Mr. President, none of my colleagues is here. We are not 
in business with votes today. We are in business today for the purpose 
of introduction of legislation, and we will have votes tomorrow. I 
would like to turn to one additional topic.
  I am going to bring to the floor of the Senate some information about 
our merchandise trade deficit in the next couple of days. It is 
interesting to me that we have an enormous amount of debate in this 
country about the budget deficit. It is appropriate because our budget 
deficit is a serious problem for this country. We are spending money 
which we do not have. We are borrowing it. When we do that, we run into 
trouble if we keep doing it. We need to have a budget that is in 
balance. We need to do it the right way with the right priorities. No 
one disputes that.
  Yet, the interesting thing is that there is a conspiracy of silence 
it seems to me. Its almost a complete conspiracy of silence about 
another deficit that is even larger than the budget deficit in this 
country. That is this country's trade deficit. Our merchandise trade 
deficit in America last year was higher than the Federal budget 
deficit. I will bet hardly anybody knows that.
  We had over a $60 billion trade deficit with Japan, over a $30 
billion deficit with China, and nearly a $40 billion deficit with 
Canada and Mexico combined.
  What does all of that mean? It means fewer American jobs, lower 
American wages, less American growth, and less opportunity for the 
people who live in this country.
  I am not suggesting we ought to construct a trade strategy that says, 
``Let us put walls around our country and keep out the exports from 
other countries in order to reduce our trade deficit.'' That is not the 
point I am making.
  The point I am making is that China says to us, ``We are going to 
ship you all of our goods, all of our trinkets. We will ship you all of 
our manufactured products, all of our textiles. And, we are going to do 
it in sufficient quantities so that we will run up a $30 billion trade 
surplus with you.'' That is real trouble because what that means is we 
have transferred jobs that used to be good-paying manufacturing jobs in 
the United States to China. They are now lower paid manufacturing jobs 
in China. It is also true with Mexico. It is true with Japan.
  Did you know that every single day there are two to three permits 
approved down on the Mexican-United States border from the maquiladora 
plants, the plants by which companies transfer their production from 
America to just outside of our country. They move just across that 
invisible line, the international border, so that they do not have to 
comply with the pollution laws of America, so they can pay lower wages 
for someone living outside of our country, and then manufacture goods 
there and ship them back to us here?
  Do you know Hershey kisses used to be American? Not any longer. They 
are now made in Mexico. Hanes underwear closed six plants in America. 
Guess where most of that underwear is going to come from in the future?
  Moving jobs from America to other countries means less opportunity 
here. It means slower economic growth. It means trouble for American 
workers and for American young people who want to go to school to learn 
and to get a good job. Nobody seems to care much about it. Trade 
deficits, that does not matter. Nobody talks about that.
  NAFTA is a good example of what I am concerned about. When NAFTA was 
proposed to the U.S. Congress, there was one major study called the 
Hufbauer-Schott study. One of the fellows was Gary Hufbauer, an 
economist. He predicted an enormous number of new jobs in America if we 
would pass NAFTA, the trade agreement with Mexico and Canada.
  Well, I did not support NAFTA for a lot of reasons. I felt that we 
would have a wholesale loss of American jobs. The year before the 
United States-Mexican trade agreement was approved by the Congress, we 
had a $2 billion trade surplus with Mexico. Two years later, we now 
have in this last year nearly an $18 billion trade deficit with Mexico. 
We went from a $2 billion surplus to an $18 billion deficit.
  Mr. Hufbauer in that study had predicted I think 130,000 new American 
jobs if we would pass NAFTA. He now says maybe he ought to be in a 
different business. He says, ``I am not much of an estimator.'' He now 
says he thinks we lost 220,000 American jobs as a result of NAFTA.
  That is just one example of a trade circumstance that has gone awry. 
I suppose in theory it does not matter much. I have never found a 
journalist who has lost a job because of imports or exports. So, you 
are not going to read a lot in the Washington Post about our 
merchandise trade deficit.
  In fact, when we debated NAFTA in the Congress, I counted the column 
inches devoted, pro and con, to the trade agreement in the Washington 
Post, New York Times, Wall Street Journal, and Los Angeles Times, four 
major papers. Do you know what these citadels of free speech and free 
expression gave? It was a 6 to 1 ratio, 6 column inches for NAFTA on 
their editorial and op-ed pages, and 1 column inch against. They gave a 
6-to-1 advantage for those who were proposing this trade agreement 
versus those who were opposed to it. That is what we faced in dealing 
with this topic.
  What I wish to do is to call this deficit to the attention of the 
Congress and the American people. We need to understand the trade 
deficit, especially the merchandise trade deficit.
  You do not in this country move America ahead by measuring our 
progress by what we consume. You measure it by what we produce. 
Economic progress is what we produce. And yet every single month you 
will hear on the news the economy is rolling along because we consumed 
more of this or we bought more cars or bought more of that, or that 
retail sales were up.
  That is not a barometer of economic progress. The barometer of 
progress is what has happened to production in this country. Are we 
producing more or less? And the second barometer, equally as important 
as it relates to production, is what has happened to wages.
  It has hurt over 60 percent of American families. When they sit down 
for dinner tonight at their dinner table--actually, in my hometown they 
sit down for supper; we still call it supper, but out East they call it 
dinner. But, when they sit down at the dinner table 

[[Page S578]]
and they talk about their situation, 60 percent of American workers, 
are making less money now than they did 20 years ago when you adjust 
their income for inflation. They are making less money now than 20 
years ago. They have made no progress in 20 years. In fact, they have 
lost ground.
  Now, why would people lose ground in 20 years with respect to their 
personal income? Because we have constructed a trade circumstance where 
we say to them, you American workers, especially you lower skilled 
American workers, we are going to ask you to compete with 2 or 3 
billion other people and those people are willing to work for 12 cents 
an hour, 40 cents an hour or a dollar an hour. And they work for people 
who put up factories where they do not have to worry about pollution. 
They can pump the waste in the water. They can pump the pollution 
straight up in the air.
  So, the result is we get somebody working an hour and a quarter of 
direct labor to make a pair of tennis shoes in Malaysia, making 14 
cents an hour. Thus there is roughly 20 cents or slightly less in 
direct labor costs in a pair of tennis shoes from a plant in Malaysia. 
The labor comes from a woman, often under age, who works 12 hours a day 
at 14 cents an hour. Then that tennis shoe made there is shipped to 
Pittsburgh or Fargo or Denver and sold for $80 a pair. It comes with a 
20-cent direct labor cost from a foreign country. It is under these 
kind of circumstances that we have told American workers: ``You compete 
with someone making 14 cents an hour.''
  We cannot do that. You cannot compete with that. You lose. What do 
you lose? You lose the jobs. You lose the plants and the jobs, and you 
lose economic opportunity and economic vitality in our country.
  As perverse as it may sound, we not only have this problem in 
merchandise trade deficits, but we also have a provision in our tax law 
that says we are going to make it easier for companies to do that. Our 
tax laws say, ``We will provide a tax incentive in America's tax code 
if you will please shut the doors to your plant in America and move 
your jobs overseas.''
  We have a tax incentive that says, ``Shut your plant down here and 
move your jobs overseas. We will give you a tax cut.''
  Interestingly enough, in the bill that went to the President for a 
veto during this budget battle there was another provision that made it 
even a sweeter deal to close a plant here and move jobs overseas.
  When that bill was in this Chamber, I offered an amendment which 
would shut down this perverse incentive that says, ``If you move your 
jobs overseas, we will give you a tax break.'' I said. ``Let us shut 
that down.''

  If we can agree on anything, it ought to be on this. We ought not 
give a tax break for moving jobs out of America.''
  Do you know the vote was a partisan vote, essentially a partisan 
vote? Everybody on one side voted for my amendment, everybody on the 
other side voted against it, and we lost. It makes no sense at all. We 
need to come together and decide as a matter of economic strategy what 
we want for this country.
  Part of it is a more sensible tax law. Part of it is a more sensible 
trade strategy that provides fairness and opportunity for American 
workers and provides for the resurgence of an American manufacturing 
sector. We need to do that soon.
  The reason I mention it today is it in some respects fits with what 
we are talking about with respect to agriculture. I do not want to 
build walls. I wish to build bridges. As a fellow who represents a 
State that needs to find a foreign home for a fair amount of grain, I 
understand the need for international trade. I want to expand trade, 
not restrict it.
  I wish to make darned sure that the circumstances of trade are 
represented by fair rules. I do not mind that Americans should have to 
compete. They must compete and must win in competition, but the 
competition must be fair. We should not say to an American worker and 
his family, ``You compete against someone overseas making 14 cents an 
hour employed by someone who does not have to follow any laws with 
respect to pollution.'' I say that is not fair. We need to dig into 
this and be concerned about it and respond to it. It relates to the 
issue that I described about where we are going with respect to wages 
and opportunity and where we are going with respect to jobs in this 
country's future.
  Mr. President, I will be in the Chamber tomorrow to offer some 
amendments and discuss in some detail the alternatives that we will be 
discussing when we talk about the farm program. There will be some 
differences, and as I said the major difference between us is that many 
of us feel we should not withdraw a long-term safety net from family 
farmers. Notwithstanding those differences, I hope there will be 
significant agreement as well because I want by the end of the day 
tomorrow to have this Senate pass out into a conference committee some 
kind of basic farm legislation. This Senate owes that to American 
farmers.
  Mr. President, I yield the floor, and I make a point of order that a 
quorum is not present.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. PRESSLER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Smith). Without objection, it is so 
ordered. The Senator from South Dakota.
  Mr. PRESSLER. I thank the Chair.

                          ____________________