[Congressional Record Volume 142, Number 137 (Saturday, September 28, 1996)]
[Extensions of Remarks]
[Pages E1779-E1780]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   DOUBLE SPEAK CLINTON TRADE POLICY

                                 ______
                                 

                        HON. DONALD A. MANZULLO

                              of illinois

                    in the house of representatives

                       Friday, September 27, 1996

  Mr. MANZULLO. Mr. Speaker, this week the Clinton administration 
released its annual National Export Strategy, as required by the 1992 
Export Enhancement Act. The report contains many accolades for various 
initiatives within the administration to boost exports. Many of these 
initiatives are good. But what I found missing was the Clinton 
administration's record on the single largest export opportunity--its 
policy on killing sales of United States equipment and services to the 
Three Gorges Dam [TGD] project in the People's Republic of China.
  Last summer, America was confronted by a new reality on the 
international scene. For the first time in history, the Census Bureau 
revealed that China has eclipsed Japan as the nation with which the 
United States has the largest trade deficit at $3.33 billion for the 
month of June. In fact, our trade deficit with China expanded even 
further to $3.8 billion in July. The United States could have a trade 
gap with China of over $40 billion for 1996 if this trend continues.
  Many pundits have decried this growing trade deficit. Some argue that 
the United States should erect more trade barriers to

[[Page E1780]]

keep out imports from China. Yet, there is a consensus among free 
traders and protectionists that the United States should use every 
opportunity to sell products to China. In this case, there are willing 
customers in China who wish to buy over $1 billion in United States 
products for the TGD, but the Clinton administration has thus far 
effectively prevented these exports in order to please certain 
constituencies in the Democrat Party.
  American exporters need the help of the Export-Import Bank of the 
United States [Ex-Im] in order to win the fierce competition for huge 
contracts associated with the TGD. Ex-Im can provide loans with lower 
interest rates--generally 3 to 6 percent less--so that our exporters 
will not be shut out of the bidding when our European and Japanese 
competitors secure similar loans from their home government export 
finance agencies. Already, Canada's export finance agency has provided 
some help to its exporters willing to sell to the TGD project.
  Two years ago, Ex-Im asked the National Security Council [NSC] for 
advice on the TGD project. Because of its immense size, Ex-Im 
determined that they did not have sufficient expertise to deal with all 
the complex issues associated with this dam project. The NSC convened 
several meetings of 11 different agencies to come up with a series of 
recommendations for the project. In May 1995, all the agencies 
involved, including the usually pro-trade Department of Commerce and 
Ex-Im, recommended that the White House oppose the dam project at this 
point in time because of environmental issues and human rights concerns 
over the resettlement of 1.2 million Chinese. Many of the strongest 
voices against the TGD in this NSC interagency working group came from 
individuals who had previously worked for environmental lobbying groups 
prior to their service in the Clinton administration.
  Since then, the Yangtze River has flooded twice. More than 3,200 
people died in the flooding that occurred during the summers of 1995 
and 1996. In fact, during the most recent flooding in July, more than 3 
million were left stranded and 810,000 homes ere completely destroyed. 
Some cities were under 20 feet of water and 2.5 million acres of 
cropland were completely wiped out, costing China $11.3 billion in 
economic losses. And, southern China has been hit with five more 
typhoons, further compounding the flooding damage closer to the coastal 
areas. Thus, the flooding along the Yangtze in this year alone has done 
more environmental damage and relocated more Chinese than ever 
contemplated by the TGD project.
  China has debated over the past 70 years a possible solution to this 
annual flooding problem along the Yangtze River. They fear a repeat of 
a massive 50 year flood, which last occurred in 1954 that killed 30,000 
people and displaced 19 million others. China's leadership concluded 
that building a dam across the Yangtze at the Three Gorges area would 
be the best solution in terms of cost, engineering design, and least 
damage to the environment. While 80 percent of the project is expected 
to be designed, built, and funded by China itself, it has identified 
several high-quality foreign products China wishes to use in the dam 
construction such as hydroelectric power generators, earth moving and 
concrete placing equipment. The United States is in a unique position 
to sell these products but the Clinton administration has placed 
several hurdles in the way.
  The most troubling aspect is that the supposedly independent Ex-Im 
agreed with the Clinton White House recommendation. A number of Members 
of Congress are very concerned about the independence and the future 
mission of Ex-Im in light of the May 30, 1996 board decision to 
indefinitely postpone further consideration of a letter of interest for 
American companies who want a level playing field against foreign firms 
competing to win contracts associated with the TGD. The way this 
decision was made was a diversion from Ex-Im's charter and Ex-Im's own 
internal environmental regulations.
  Ex-Im has gone well beyond its statutory mandate contained in the 
charter and lost sight of its primary mission to ``arrange competitive 
and innovative financing for the foreign sales of United States 
exporters.'' According to Ex-Im's charter, environmental policy and 
procedures apply to any transaction involving the following three 
criteria:
  First, the project requires more than $10 million of long-term 
support;
  Second, Ex-Im's participation in the project would be ``critical to 
its implementation''; and
  Third, the project ``may have significant environmental effects upon 
the global commons or any country not participating in the project, or 
may produce an emission, an effluent, or a principal product that is 
prohibited or strictly regulation pursuant to Federal environmental 
law.''
  While the financing request for U.S. exporters to sell American goods 
and services to the TGD certainly fits the first criteria, it does not 
meet the other two tests. All foreign financing will form approximately 
20 percent of the total cost of the final project. Thus, Ex-Im's 
participation in the project is not critical to the TGD implementation. 
The dam will be built with or without U.S. participation. The way 
events are unfolding, it appears that the real life consequence of the 
Clinton administration policy is to have the dam built, but only with 
foreign-made equipment.
  Regarding the third environmental criteria mentioned in the charter, 
the TGD project is located in the heart of central China. The dam will 
only impact the internal environment of China. It will not affect 
China's neighbors in Russia, India, or Southeast Asia. As a ``clean'' 
hydropower project, the TGD will not produce an emission or a noxious 
effluent. Thus, Ex-Im was not forced by Congress in its charter to turn 
down these letters of interest.
  In fact, Ex-Im has gone even beyond its own internal environmental 
procedures and violated its own guidelines, which clearly state that 
``no environmental review will be conducted by Ex-Im Bank prior to 
issuance of a Letter of Interest.'' The guidelines also explain that 
``no LI's will be issued * * * for projects that * * * involve 
potentially unacceptable environmental risks. As a result, such 
transactions must seek preliminary commitments or final commitments * * 
*.'' Yet American companies were repeatedly told to apply for a letter 
of interest from Ex-Im for the Three Gorges project even though the 
proper step should have been quick advancement to the preliminary 
commitment stage where environmental considerations would be taken into 
account. Ex-Im's response was that they were simply seeking a way to 
help the applicants avoid the substantial charge for processing a 
preliminary commitment application. So, American workers were denied a 
$1 billion export opportunity to willing buyers in China to save a few 
hundred bucks on an application fee.
  If millions of exports and thousands of jobs weren't at stake, this 
might be an interesting academic exercise. But unfortunately, it isn't. 
One has to wonder if Ex-Im had already made up its mind months before 
their May decision, as evidenced by their concurrence with the NSC 
memorandum. This was the first major test case of Ex-Im's 
implementation of its new environmental guidelines since they were 
finalized last April. If this is any indication of future action, the 
United States will certainly surrender many export opportunities to our 
foreign competitors who have no similar prohibitions.
  What adds insult to injury is that now the Clinton administration has 
begun to provide humanitarian aid to the Chinese suffering from this 
flood while, at the same time, refuses to revisit its failed policy on 
the TGD to provide a permanent solution to this annual tragedy. A wise 
man once said, ``Give a man a fish, he is fed for a day. Teach him to 
fish, he will be fed for a lifetime.''
  Ex-Im still has one last opportunity to rescue themselves from this 
dilemma. China is working very hard to get substantive answers to the 
remaining questions asked by Ex-Im at their May 30 press conference 
dealing with water pollution, endangered species, relocation, and 
salvaging archeological treasures. If China fulfills their end of the 
bargain, I urge Ex-Im to use that opportunity to reissue letters of 
interest to United States exporters to keep them in the game. Our 
exporters lost out on $4 billion in export opportunities last April 
because Ex-Im kept delaying their decision. Let's not repeat that 
mistake because there are more contracts worth billions more up for bid 
later this fall. Let's use America's ingenuity and expertise to 
``teach'' China to build the best, safest, and most environmentally 
benign dam to prevent the annual tragedy that occurs on the Yangtze and 
lower the trade deficit with China by supporting Ex-Im involvement with 
the Three Gorges Dam.

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