[Congressional Record Volume 143, Number 36 (Wednesday, March 19, 1997)]
[Senate]
[Pages S2514-S2515]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               COMMISSION TO ELIMINATE THE TRADE DEFICIT

  Mr. BYRD. Mr. President, I am pleased to join with the distinguished 
Senator from North Dakota, Senator Dorgan, in introducing an ambitious 
new effort on the matter of our nation's persistent and growing trade 
deficit. This legislation would establish a Commission to take a broad, 
thorough look at all important aspects of, and solutions to the growing 
U.S. trade deficit, with particular attention to the manufacturing 
sector.
  The trade deficit, as my colleagues know, is a relatively recent 
phenomenon, with large deficits only occurring within the last 15 
years. In the 1980's, the U.S. merchandise trade balance ballooned from 
a deficit of $19 billion in 1980 to $53 billion in 1983, and then 
doubled in a year, to $106 billion in 1984. Last year it stood at $188 
billion, setting a new high record for the third consecutive year. 
Projections by econometric forecasting firms indicate long term trends 
which will bring this figure to over $350 billion by 2007. No one is 
predicting a decline in the near future. If we do nothing, within 2 
years the merchandise trade deficit will equal the annual budget for 
national defense.
  To reiterate, in 1996 the United States had the largest negative 
merchandise trade balance in our history, some $188 billion, and it is 
the third consecutive year in which the deficit has reached a new 
record high.
  This legislation is committed to a goal of reversing that trend of 
the next decade. The goal of the commission is to ``develop a national 
economic plan to systematically reduce the U.S. trade deficit and to 
achieve a merchandise trade balance by the year 2007.
  While it is not clear what the particular reasons for this growing 
trade deficit may be, nor what the long term impacts of a persistently 
growing deficit may be, the time is overdue for a detailed examination 
of the factors causing the deficit. We need to understand the impacts 
of it on specific U.S. industrial and manufacturing sectors. 
Furthermore, we need to identify the gaps that exist in our data bases 
and economic measurements to adequately understand the specific nature 
of the

[[Page S2515]]

impacts of the deficit on such important things as our manufacturing 
capacity and the integrity of our industrial base, on productivity, 
jobs and wages in specific sectors.
  Throughout the 1980's, my own State of West Virginia literally bled 
manufacturing jobs. We saw the jobs of hardworking, honest West 
Virginians in the glass, steel, pottery, shoe manufacturing and leather 
goods industries--and other so-called smokestack industries--hemorrhage 
across our borders and shipped overseas. While economic development 
efforts in my State have commendably encouraged our businesses to 
refocus to help recover from those losses, the lack of knowledge about 
the causes and impact of our trade deficit leaves West Virginia, and 
the nation as a whole, at a disadvantage in the arena of global 
competition.

  We debate the trade deficit from time to time. We moan about it. We 
complain about it. But, if we do not understand the nature, of the 
long-term vulnerabilities that such manufacturing imbalances create in 
our economy and standard of living, we are surely in the dark. It 
appears to me that debate over trade matters too often takes on the 
form of rhetorical bombast regarding so-called protectionists versus 
so-called free traders. This is hardly a debate worthy of the name, 
given the problems we are facing. It is not an informed debate. We are 
talking past each other, and in far too general terms. It has been more 
of an ideological exchange than a real debate, primarily because we 
have not had sufficient analytical work done on the data bearing on 
this problem. Neither side knows enough about what is really 
transpiring in our economy, given the very recent nature of these 
persistent deficits.
  Certainly we know that the deficit reflects on the ability of 
American business to compete abroad. We want to be competitive. 
Certainly we know that specific deficits with specific trading partners 
cause frictions between the United States and our friends and allies. 
This is particularly the case with the Japanese, and is quickly 
becoming the case with China. It is clear that the trade deficit has 
contributed to the depreciation of the dollar and the ability of 
Americans to afford foreign products. Less clear, but of vital 
importance, is the relationship of the trade deficit to other important 
policy questions on the table between the United States and our foreign 
trading partners.
  Attempts by the United States to reduce tariff and nontariff barriers 
in the Japan and China markets, which clearly restrict access of U.S. 
goods to those markets, have been crippled by the intervention of 
other, more important policy goals. During the cold war, the United 
States-Japan security relationship had a severe dampening effect on our 
efforts to reduce these myriad barriers in Japan to United States 
exports. The same effect appears to have resulted from our need for the 
Japanese to participate in our treasury bill auctions. This becomes a 
closed cycle--the need to finance the trade deficit with foreign 
capital, resulting in regular involvement of the Japanese Government in 
our treasury bill auctions, seems to dampen our efforts to push the 
Japanese on market-opening arrangements. Naturally, without reciprocal 
open markets, the trade imbalance remains exaggerated between the 
United States and Japan, prompting further need for Japanese financial 
support to fund the national debt. Of course, this is a vicious circle. 
Thus, some argue that the need for Japanese involvement in financing 
our national debt hurt the ability of our trade negotiators to get 
stronger provisions in the dispute settled last year over the Japanese 
market for auto parts.
  Similar considerations appear to prevail in negotiating market access 
with the Chinese in the area of intellectual property. While our trade 
negotiator managed a laudable, very specific agreement with the Chinese 
in 1995 in this area, the Chinese were derelict in implementing it, 
leading to another high-wire negotiation last year to avoid sanctions 
on the Chinese, and to get the Chinese to implement the accord as they 
had promised. Again, it is unclear whether the Chinese will now follow 
through in a consistent manner with the implementing mechanisms for the 
intellectual property agreement belatedly agreed to in the latest 
negotiation. The highly trumpeted mantra about how the U.S.-China 
relationship will be one of, if not the most important, U.S. bilateral 
relationship for the next half century, has a chilling effect on 
insisting on fair, reciprocal treatment, and good faith implementation 
of agreements signed with the Chinese government.

  The Chinese government has again recently reiterated its desire to 
become a member of the World Trade Organization and certainly her 
interest in joining that organization is a commendable indication of 
her willingness to submit to the rules of that organization regarding 
her trading practices. There is legitimate concern however, that 
insufficient progress has been made by the Chinese on removing a wide 
variety of non tariff discriminatory barriers to U.S. goods and 
services, as she committed to do in the 1992 bilateral Market Access 
Memorandum of Understanding [MOU]. Indeed, in the 1996 report by the 
United States Trade Representative entitled foreign trade barriers, the 
amount of material devoted to the range of such barriers on the part of 
China is exceeded only by the material on Japan, indicating that we 
have a continued persistent problem that needs serious attention along 
these lines.
  It will only be when we truly understand the specific impacts of 
these large deficits on our economy, particularly our industrial and 
manufacturing base, that the importance of insisting on fair play in 
the matter of trade will become clear.
  Finally, the legislation requires the Commission to examine 
alternative strategies which we can pursue to achieve the systematic 
reduction of the deficit, particularly how to retard the migration of 
our manufacturing base abroad, and the changes that might be needed to 
our basic trade agreements and practices.
  These are the purposes of the Commission that Senator Dorgan and I 
have proposed in this legislation.
  I commend the distinguished Senator from North Dakota for his 
studious approach to this question. He is as knowledgeable, if not more 
so, than certainly most other Senators, and perhaps any other Senators, 
as far as I am concerned, on this subject. I am pleased to join him in 
offering this proposal for the consideration of the Senate.
  I hope that many of our colleagues will join us, and that we can 
secure passage of the proposal in the near future.
  Mr. President, I yield the floor.
  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. HATCH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Ms. Collins). Without objection, it is so 
ordered.

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