[Congressional Record Volume 143, Number 152 (Tuesday, November 4, 1997)]
[Senate]
[Pages S11632-S11661]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         RECIPROCAL TRADE AGREEMENT OF 1997--MOTION TO PROCEED

  The Senate proceeded to consider the motion.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. BRYAN. Mr. President, under the rule, I would like to yield 1 
hour that I have to the distinguished ranking member of the Senate 
Finance Committee, Senator Moynihan.
  The PRESIDING OFFICER. If the Senator will suspend for a moment, the 
Senate is not in order. If Members will take their conversations off 
the floor? The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I thank the generosity of my good friend 
and colleague on the Finance Committee, the Senator from Nevada. He is, 
as ever, generous and not without a certain wisdom because this debate 
could be going on for a long time.
  I yield the floor.
  The PRESIDING OFFICER. The question is on the motion to proceed to 
the bill. Is there further debate?
  The Senator from North Dakota.
  Mr. DORGAN. Mr. President, could I clarify with the Presiding Officer 
the parliamentary situation? My understanding is that we are in a 
postcloture period of up to 30 hours debate?
  The PRESIDING OFFICER. The Senator is advised we are under 
postcloture debate, 30 hours of consideration.
  Mr. DORGAN. Might I ask the Parliamentarian how that debate will be 
managed and or divided? My understanding is that each Senator is 
allowed to speak for up to 1 hour during the postcloture period, is 
that correct?
  The PRESIDING OFFICER. The Senator is correct. A maximum of 1 hour.
  Mr. DORGAN. With the exception being that time can be provided, up to 
3 hours, to managers of the bill, is that correct, if another Senator 
would yield his or her hour?
  The PRESIDING OFFICER. The Senator is correct. Each manager and each 
leader may receive up to 2 hours from other Senators, and then of 
course with their own hour the total would be 3.
  Mr. DORGAN. Would I be correct to say that in a postcloture 
proceeding of this type, that the manager on each side can be a manager 
on the same side of the issue?
  The PRESIDING OFFICER. That could occur.
  Mr. DORGAN. So I then ask the managers, if I might yield to them for 
a response, because we will be involved here in a period of discussion 
prior to the vote on the motion to proceed, and that discussion is a 
period provided for

[[Page S11633]]

up to 30 hours, I would like to ask my colleagues how we might decide 
that all sides will have an opportunity for full discussion of this?
  I guess what I would ask the ranking manager, and the chairman of the 
Finance Committee as well, is how they would envision us proceeding in 
this postcloture period? I will be happy to yield to the chairman of 
the Senate Finance Committee for that purpose.
  The PRESIDING OFFICER. Does the Senator from North Dakota yield the 
floor?
  Mr. DORGAN. No. I do not. As I understand it, the Presiding Officer 
was intending to move to put the question on the motion to proceed. 
Because the Presiding Officer was intending to do that, I sought 
recognition and the Presiding Officer recognized me. My understanding 
is we are now in a postcloture period providing up to 30 hours of 
discussion.
  The PRESIDING OFFICER. The Senator is correct. The 30 hours of 
consideration.
  Mr. DORGAN. Consideration. Then I seek to be recognized, inasmuch as 
no one else was intending to be recognized and inasmuch as I certainly 
want time to be used to discuss this issue. I was simply inquiring of 
the chairman of the Finance Committee and the ranking member of the 
Finance Committee the process they might engage in, in terms of using 
this time that we are now in, in postcloture. I was intending to 
yield--not yield the floor, but I was intending to ask a question so we 
might have a discussion about how we use this time.
  If I am unable to do that, I will just begin to use some time, I 
guess, if that would be appropriate.
  I invite again--I didn't seek the floor for the purpose of intending 
to speak ahead of those who perhaps should begin this discussion. But 
neither did I want the Presiding Officer to go to the question, which 
the Presiding Officer was intending to do.
  Is the Senator----
  The PRESIDING OFFICER. The Senator presumes to know what the 
Presiding Officer was intending to go do. He may or may not be correct 
in that assertion.
  Mr. DORGAN. The Presiding Officer announced his intention, which was 
the reason I sought the floor. If it is not inappropriate, then, I 
would simply begin a discussion. But I don't want to do that if the 
chairman of the Finance Committee, who I think should certainly have 
the opportunity to begin the discussion, or the ranking member, wish to 
do that. I was simply inquiring about the opportunity on how we might 
divide some of the time as we proceed.
  The PRESIDING OFFICER. Does the Senator yield the floor?
  Mr. DORGAN. Mr. President, having invited that response, if there is 
no response I will be happy to begin a discussion in the postcloture 
period. But again I certainly want to----
  Mr. ROTH. Parliamentary inquiry, doesn't he have to yield the floor 
to get a response?
  The PRESIDING OFFICER. The Chair would advise, in response to the 
question of the Senator from Delaware, that the Senator who has the 
floor has no right to pose the question to another Senator unless he 
yields the floor.
  Mr. DORGAN. Mr. President, I make the point of order a quorum is not 
present.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Kempthorne). Without objection, it is so 
ordered.
  Mr. ROTH. Mr. President, it is unthinkable that the Senate would not 
revive the fast-track trade negotiation authority enjoyed by previous 
Presidents.
  Since its inception, the United States has been a trading state, and 
from the Jay treaty that ended the Revolutionary War to the Uruguay 
round agreements that established the World Trade Organization, we 
have, in the main, pursued a policy of free and open commerce with all 
nations.
  That legacy has helped bring us unrivaled prosperity. We are in the 
seventh year of sustained economic expansion, and during that same 
period, the United States has registered the greatest rise in 
industrial production of any developed nation, an increase over the 
last decade of 30 percent.
  It is no coincidence that our economic growth has taken place at a 
time when we have struck a series of international agreements that have 
sharply lowered barriers to American trade abroad. The opponents of 
trade and economic growth do not want you to hear that the United 
States has been a significant winner in those agreements.
  In the Uruguay round, we cut our tariffs an average of 2 percentage 
points, while trading partners cut theirs between 3 and 8 percent.
  In NAFTA, while we eliminated the average 2-percent tariff on Mexican 
imports, Mexico eliminated its 10-percent average tariffs, as well as a 
host of nontariff barriers that inhibited United States market access.
  That job is not done. In most developing countries which represent 
the markets of the future for U.S. goods and services, tariffs on many 
products range up to 30 percent and higher. Developed countries 
continue to maintain high barriers in sectors where the United States 
has a tremendous comparative advantage. In Europe, for example, tariffs 
on our dairy products exceed 100 percent. In Japan, the tariffs on 
United States dairy products exceed 300 percent, and tariffs on our 
wheat exports, most of it grown in Midwestern States such as North 
Dakota, remain above 150 percent. In other words, we have vastly more 
to gain from trade than we do to lose.
  Let's agree on this much: We cannot legislate reduction in foreign 
tariffs or market access. That has to be done at the negotiating table. 
For that, the President needs negotiating authority. Simply put, a vote 
for fast track recognizes the fact that today, more than ever, our 
economic well-being is tied to trade.
  Exports now generate one-third of all economic growth in the United 
States. Export jobs pay 10 to 15 percent more than the average wage. In 
the last 4 years alone, exports have created 1.7 million well-paying 
jobs and, by some estimates, as many as 11 million jobs, and this 
country now depends directly on exports.
  As a result, when asked why the Senate would extend fast-track 
authority to the President, I offered a very practical answer. In 1989, 
General Motors exported three automobiles to Mexico. This past year, 
the third full year after we reached a trade agreement with Mexico that 
many have criticized, General Motors exported over 60,000 vehicles. 
That amounts to $1.2 billion in sales and paychecks for workers in 
General Motors' facilities and those of their U.S. suppliers.
  I also explained that trade benefits all of us in many other ways. By 
producing more of what we are best at and trading for those goods in 
which we do not have a comparative advantage, we ensure that every 
working American has access to a wider array of higher quality goods at 
lower prices. In that respect, using the fast-track authority to 
liberalize trade acts just like a tax cut; we leave more of each 
consumer's paycheck in their pocket at the end of each month by 
ensuring that they get the highest quality goods at the lowest price.
  I think it is also worth underscoring that trade does not mean fewer 
jobs. By increasing the size of the economic pie, trade means more jobs 
and better pay, as the figures I noted attest. Higher wages depend on 
rising productivity, a growing economy and rising demand for labor. 
Each of those factors depend on expanding our access to foreign 
markets, and to expand our access to foreign markets, the President 
needs fast-track authority.
  I do not, therefore, view the question before this body as simply 
whether another, in a long line of bills, will pass. The question 
before this body is whether the United States will maintain its 
leadership role as the world's foremost economic power and assure our 
future economic prosperity.
  Some might ask why the United States should continue to bear that 
responsibility. The answer lies in our own history. It relates those 
times when we have forsaken our traditional policy of open commerce in 
favor of protectionism, as some would have us do now.

[[Page S11634]]

  The Smoot-Hawley tariff and the retaliation it engendered among our 
trading partners gravely deepened the Great Depression. Economic 
deprivation left citizens in many countries easy prey for the political 
movements that led directly to the Second World War. And it is worth 
remembering that the foundations of the current international trading 
system were built on the ashes of that great conflict. America led the 
way in establishing the current economic order as a means of ensuring 
that the trade policies of the past would not--and I emphasize would 
not--lead to similar devastating conflicts in the future.
  It was, in fact, the effects of the Smoot-Hawley tariff and the 
Depression that led to the original grant of tariff negotiating 
authority and the namesake of this bill: Reciprocal Trade Agreement Act 
of 1934.
  On the strength of that grant of negotiating authority, President 
Roosevelt and his Secretary of State Cordell Hull, a distinguished 
former Member of this body and a member of the Finance Committee, 
created the trade agreements programs that reversed the protectionist 
course of trade relations and laid the groundwork for the post-war 
economic order. Five decades and eight multilateral rounds of trade 
negotiations have helped us to build this burgeoning economy.
  The lessons of the postwar years are easy to forget. It is easy to 
forget that Congress' grant of trade negotiating authority to the 
President was one of the key components of our economic success, and 
led to reduction in tariffs among developed countries from an average 
of over 40 percent to just 6 percent at the end of the Uruguay Round.

  It is easy to forget that on the strength of those grants of 
negotiating authority, Democratic and Republican Presidents alike 
helped forge economic relationships with our allies that have seen us 
through the succeeding decades to the dawn of a new era.
  American firms and American workers now compete in a global 
marketplace for goods and services, and the economic future of each and 
every American now depends on our ability to meet that challenge. The 
changes we see in the marketplace and in our daily lives represent the 
benefits and costs of technological change. We should not make trade a 
scapegoat, as some do, for that process.
  Progress brings dislocation and requires adjustment. Indeed, with 
every expansion of our economy there are dislocations. This is an 
inevitable part of the economic process. Every expansion exposes 
inefficiency.
  At its most basic and personal level, economic progress occurs when 
an individual worker shifts from an inefficient way of doing things to 
a more efficient one, from stage coach driver, the original teamster, 
to railroad engineer, to truck driver, to pilot for an overnight air 
delivery system.
  Such transitions, of course, are not always easy. I firmly believe 
that the many who benefit from expanding trade and economic growth must 
help those who do not. But that adjustment is the inevitable effect of 
technological progress and economic growth, not the grant of fast-track 
authority.
  There are some who argue that the cost of these transitions is too 
high, that we are doing just fine economically without further trade 
agreements, and that there is no need for fast-track negotiating 
authority. My reply is simple and straightforward. We need fast-track 
authority now more than ever. Without the ability to take a seat at the 
negotiating table, we will be giving up the ability to shape our own 
economic destiny. If we leave it to others to write the rules for the 
new era of international competition, we will be leaving our economic 
future in their hands, and we will lose the ability to shape the rules 
of the new global economy to our liking.
  The evidence of that is already mounting. Our trading partners are 
proceeding without us and giving their firms a competitive advantage 
over American businesses in the process. Canada and Mexico have, for 
example, negotiated free-trade arrangements with Chile while we have 
debated the merits of fast track. And because Chilean tariffs average 
11 percent, our firms now compete at an 11-percent disadvantage against 
Canadian and Mexican goods in the Chilean market.
  The same holds true more broadly in the rest of the rapidly growing 
markets of Latin America and Asia. A recent article in the Wall Street 
Journal described the efforts of European trade negotiation to steal a 
march on the United States and Latin America while the debate on fast-
track authority continues here.
  There is even more at stake in upcoming negotiations in the World 
Trade Organization. We are scheduled to complete talks on opening 
foreign markets to our financial services, a sector in which the United 
States has a strong comparative advantage.
  Without fast-track authority, the President is unlikely to be able to 
conclude these terms or these talks on terms most favorable to the 
United States. In a little over a year, the World Trade Organization 
will once again take up the difficult and contentious issue of barriers 
to trade and agriculture.
  I know of no one in the agricultural sector who was entirely 
satisfied with the outcome of the Uruguay round talks. It is difficult, 
as a consequence, to conceive of a more harmful message to send our own 
agricultural community than derailing fast-track negotiating authority 
that will allow the United States to participate fully in those talks.
  Thus, we in this body face a simple choice--we can reject our 
heritage as the world's greatest trading state, or we can vindicate the 
faith of our forefathers and America's ability to compete anywhere in 
the world where the terms of competition are free and fair. We can 
focus only on the possible economic dislocations that occur when trade 
barriers are lowered, or we can look at the common good that results 
from economic growth. We can leave our economic fate in the hands of 
others, or we can step forward to shape our own economic destiny.
  For me, the choice is clear. We must move forward to maintain our 
economic leadership in the eyes of the world, as well as provide the 
fruits of an expanding economy to our citizens. Enacting the pending 
legislation is indeed essential to that effort. Our trading partners 
will not negotiate trade agreements with us unless we as a nation can 
speak with one voice.
  That is what this bill does. It allows two branches of the 
Government, the President and the Congress, to speak with one voice on 
trade. This bill creates a partnership between two branches that allows 
us to speak with one voice and does so to a degree greater than 
previous fast-track bills.
  As it has since the original grant of fast-track authority, Congress 
establishes the negotiating objectives that will guide the President's 
use of this authority. The negotiating objectives also serve as limits 
on the Executive, since the bill ensures that only agreements achieving 
the objectives set out in the bill will receive fast-track treatment.
  In that regard, I want to emphasize the effort we have made to ensure 
that the negotiating objectives restore the proper focus of the fast-
track authority. This authority is granted for one reason alone, to 
allow the President to negotiate the reduction or elimination of 
barriers to U.S. trade.
  Authority granted in this bill is not designed to allow the President 
to rewrite the fundamental objectives of our domestic laws. Rather, the 
fast-track process applies solely to those limited instances in which 
legislation is needed to ensure that U.S. law conforms to our 
international obligations.
  There is one trade negotiating objective that has drawn particular 
attention. It relates to foreign government regulations. It includes 
labor and environmental rules that may impede U.S. exports and 
investments in order to provide a commercial advantage to locally 
produced goods and services.
  Indeed, in this provision is the concern that foreign governments 
might lower their labor, health and safety or environmental standards 
for the purpose of attracting investment or inhibiting U.S. exports. I 
want to emphasize that this negotiating objective is limited to 
affecting conduct by foreign governments in these areas. It does not 
authorize the President to negotiate any change in U.S. labor, health, 
safety or environmental laws at either the Federal or State level, nor 
does it authorize a negotiation of any rules that would otherwise limit 
the autonomy of our Federal or State governments to set their own 
health, safety, labor or

[[Page S11635]]

environmental standards as they see fit.
  I view these provisions of the bill as protecting everyone's 
interests in these areas. I know of no one who is an advocate of labor 
or environmental interests that would want the President to be able to 
negotiate international trade agreements that effectively weaken U.S. 
standards and then submit the implementing legislation on a fast-track 
basis. Under this bill, no President can negotiate an agreement that 
raises or lowers U.S. labor or environmental standards and then submit 
an implementing bill for consideration on a fast-track basis.
  Beyond setting the specific negotiating objectives, we have also 
strengthened Congress' role in the trade agreement process in several 
ways.
  First, we have ensured the right of the two committees of the 
Congress that have general trade jurisdiction to veto at the outset any 
negotiation that might ultimately rely on fast-track authority if those 
committees disagreed with the President's objective. This check on the 
Executive applies to all negotiations, not merely bilateral free trade 
negotiations as under prior law. The only exceptions are for 
negotiations already underway, such as financial services negotiations 
in the World Trade Organization, those anticipated with Chile.
  Second, the bill strengthens Congress' role and the partnership with 
the President by requiring greater consultation by our trade 
negotiators than has ever occurred in the past.
  The bill requires the U.S. Trade Representative to consult closely 
and on a timely basis throughout the process and even immediately 
before the agreement is initialed. The bill obliges the President to 
explain the scope and terms of any proposed agreement, how the 
agreement would achieve the policy purposes and objectives set out in 
this bill, and whether implementing legislation on nontrade items would 
also be necessary since only trade provisions are entitled to fast-
track treatment.
  Any nontrade items would be handled under the regular practices and 
procedures of the Senate, which allow for amendment and unlimited 
debate. Clearly, many in the Congress have been displeased in the past 
with cursory and nontimely consultation. The legislation in our report 
makes clear that this will no longer do.
  The bill provides an explicit provision allowing Congress to withdraw 
the fast-track procedures with respect to any agreement for which 
consultation has not been adequate. So not only does the legislation 
exhort the trade negotiators to consult; it provides sanctions if they 
do not adequately do so.
  Third, the bill carefully circumscribes the scope of the implementing 
legislation that can be considered under fast-track procedures. 
Basically, to qualify, the implementing legislation must be a trade 
bill. It must be limited to approving a trade agreement, which is 
defined to include only, one, reducing or eliminating duties and 
barriers and, two, prohibiting or limiting such duties or barriers.
  Moreover, the implementing legislation may only include provisions 
necessary to implement such trade agreement and provisions otherwise 
related to the implementation, enforcement, and adjustment to the 
efforts of such trade agreement that are directly related to trade.
  Examples of such provisions would include amendments to our 
antidumping laws and extensions of trade adjustment assistance such as 
those reauthorized with this bill.
  Finally, the implementing bill may include pay for provisions needed 
to comply with budget requirements. Since this component of the 
implementing legislation does not address the agreement and its 
implementation but is included only to satisfy interim budget 
requirements, some have suggested that this portion of the implementing 
legislation be fully amendable.
  The Finance Committee decided to follow previous fast-track 
legislation out of concern that allowing amendments to this portion 
would make passage of the implementing bill more difficult. There was 
concern about turning every implementing bill into a general tax bill, 
that pay for provisions might be offered by opponents to cause 
mischief, and that adopting amendments would create the need for 
conference with the House and would invite deadlock over nontrade 
issues.
  In sum, the terms of the partnership between Congress and the 
President are these: If the President adheres to the trade objectives 
expressed in the bill to which fast-track procedures apply, if he 
provides us an opportunity to disapprove of a specific negotiation at 
the outset, if he consults with us closely throughout the negotiation 
right up to the time the agreement is to be initialed, if the agreement 
is a trade agreement as defined in the bill, and if the implementing 
legislation contains only the trade-related items I noted, Congress 
agrees to allow an up-or-down bill after 30 hours of debate on the 
implementing legislation.
  Now, I think for Congress that is a very good deal. I fully 
appreciate the important role and responsibility this body has in 
American Government: The right to offer amendments, to debate the 
merits of an issue as long as necessary, are rights not to be laid 
aside lightly. That is why at every juncture we have sought to refocus 
the fast-track procedure on reducing trade barriers.
  We have done our best to make sure that matters of domestic policy 
remain outside the limited scope of the fast-track procedure. Such 
matters of domestic policy should and will remain subject to the 
traditional practices and procedures of the U.S. Senate. I would not 
support this limited exception to our Senate traditions were it not 
absolutely essential to our continued economic leadership around the 
world. This is a critically important accommodation. It is not 
unprecedented. Grants of similar authority for the President, in 
effect, exceptions to our Senate rules, have been provided in the past, 
dating back to the Trade Act of 1974.
  As recently as 1988 a Democrat-controlled Congress provided a 
Republican President the legal assurance that America would speak with 
one voice on trade. I hope that a similar spirit of bipartisanship 
envelops us today.
  Let me say in conclusion that if in 1988 my colleagues on the other 
side of the aisle do, for the good of this country, see fit to entrust 
a President from another party with this authority, that today it would 
help us in extending this authority to President Clinton.
  I yield the floor.
  Mr. MOYNIHAN. Mr. President, I rise with a measure of ebullience. By 
a solid majority of both sides of the aisle, we have just voted to do 
exactly what our revered chairman said ought to be done, and reported 
how in the past it has been done. The vote was 69 to 31. I think that 
augurs well.
  I would particularly like to note a fact about this legislation which 
has been little remarked, the fact that with great felicity and sense 
of historic importance, the chairman has given to the bill the title 
the Reciprocal Trade Agreements Act of 1997. The Reciprocal Trade 
Agreements Act, hearkening back almost two-thirds of a century to 1934 
when Cordell Hull, a former member of the Finance Committee, as 
Secretary of State helped the Nation out of the ruin that had been 
brought about by the Smoot-Hawley Tariff Act of 1930, a tariff meant to 
raise living standards and do all the things that seem so easy if you 
don't think them through.
  If you were to make a list of five events that led to the Second 
World War and the horror of that war, that tariff bill of 1930 would be 
one of them. If there was a harbinger of the reemergence of the 
civilized world and the reinstitution of intelligent analysis of public 
policy, it was the Reciprocal Trade Agreements Act of 1934.

  I might like to take a preliminary effort to note that in 1934 the 
United States, in fact, did two things of note regarding legislation 
before the Senate today. We passed the Reciprocal Trade Agreements Act, 
and the President proposed and Congress agreed to our membership in the 
International Labor Organization, two parallel but distinct measures. 
We began opening our trade and in the same year, same Congress, moved 
to join the International Labor Organization for purposes not different 
than ones we have expounded in this legislation, which speaks directly 
to that issue. Now, the matter before the Senate is of the highest 
portent and urgency. Just yesterday in the Washington Post our--how do 
I say it? Has Bob

[[Page S11636]]

Dole been gone long enough to be called fabled, legendary? Certainly 
vastly embraced by this institution on both sides of the aisle. Senator 
Dole, Republican candidate in the last election, wrote in yesterday's 
Post, ``the fate of fast-track legislation this fall may determine 
whether the President ever will negotiate another free trade 
agreement.'' He urged that we give the President this power, a power 
which every President since President Ford has had and which under the 
original Reciprocal Trade Agreements Act has been in place for two-
thirds of a century.
  Since the fast-track authority lapsed, as it did 3 and one half years 
ago, the United States has effectively been reduced to the status of an 
observer as unprecedented new trading arrangements, bilateral and 
multilateral, have been put in place. The changes in trade and patterns 
and arrangements that you see very much correspond to the change in 
techniques of production, in modes of manufacture and in the 
information age of which we have heard so much. They reflect the 
technological underpinnings which have changed the economies of the 
developed world, are changing the developing world, and in consequence, 
change the economy.
  For example, as the chairman remarked, Mexico and Chile negotiated a 
free trade agreement in 1991 and now are engaged in talks to expand the 
scope of that agreement by the end of this year. On July 2 of this 
year, Canada's free trade agreement with Chile entered force, giving 
Canadian exports just that advantage, the 11-percent tariff advantage, 
that the chairman has spoken of. Remember, the pattern of Canadian 
production and exports is very like ours. We are in a competing world 
with them. We wish them every success. But there is no point in 
hindering our own ability to negotiate and trade in the same way.
  If I may remind the Senator, we have been here before. On March 4, 
1974, President Nixon's Special Trade Representative, William D. 
Eberle, testified before the Finance Committee in support of the 
legislation that established the first fast-track procedures for non-
tariff matters. He said, ``Without the fast-track authority, our 
trading partners will continue to negotiate but they will do so 
bilaterally and regionally, to the probable exclusion of the United 
States.''
  Do not suppose that cannot happen again. The United States is at a 
position of unparalleled influence and importance in the world. That 
can produce an unparalleled resentment with consequences that will move 
through the generations to come. Do not be overconfident in a moment 
such as this, and certainly do not be fearful. We have nothing to fear 
from world trade. We gain from it. We have gained from it. And now I am 
confident with that resounding bipartisan vote, we will.
  Of course, in 1994 we created the World Trade Organization. It took 
us a long time. In the aftermath of World War II it had been understood 
we would have an international trade organization to correspond with 
the World Bank and the International Monetary Fund. That never came to 
pass. It came to grief, in point of fact, in the Finance Committee.
  The WTO, the World Trade Organization, is beginning negotiations on 
agricultural trade, protection of intellectual property. By 
intellectual property, think Silicon Valley, think Microsoft, think of 
all the innovations we have made in the world, and the innovators have 
the right to see their work protected. And, again, international trade 
in services, think banking, insurance, all those areas in which we have 
been particularly excluded in the developing world and which we can now 
negotiate.
  The Uruguay round of negotiations represented the first serious 
attempt to address barriers to American farm products, but a great deal 
needs to be done. The last area of economic activity which is freed 
from protection will always be farm matters. It is one of the great 
events of our age that the great agricultural States in this Nation 
have seen what trade can do for them and are supporting these measures. 
Agriculture is always protected, always subsidized, but in 1999, the 
World Trade Organization on that matter will begin and we ought to take 
these negotiations seriously. We ought to be part of them and now we 
will be.
  American farm exports in 1996 reached $60 billion in an overall 
global market estimated at something more than half a trillion. So we 
have something like 10 percent of that trade. This export sector alone 
represents about 1 million American jobs.
  A similar situation exists with respect to services trade, which was 
addressed for the first time in the Uruguay round, and the financial 
services, banking, insurance, securities, are scheduled to wrap up in 
December in an important round of talks. Another round will begin on 
January 1 of the year 2000 involving a full range of services, 
including such sectors as health care, motion pictures, and 
advertising, where American companies are among the strongest in the 
world. I don't think it would be in any way inappropriate to recall the 
remarks of President Jiang Zemin of the People's Republic of China just 
a few feet off the floor here a week ago, in which he described the 
formative experience of his college years when he watched the film 
``Gone With the Wind.'' It is America that makes the movies for the 
world to see. Getting them in is a matter of negotiation. Now we can do 
it.

  I would like to make a point of particular importance to the matter 
before us. First of all, this is not a new authority, untested or 
untried. We have been with it for two-thirds of a century. The Smoot-
Hawley Act, in which Congress, line by line, set more than 20,000 
tariffs, resulted in an average tariff rate, by the estimate of the 
International Trade Commission, of 60 percent. The result was ruinous, 
not only to us, but to our trading partners. The British abandoned 
their free trade policy and went to empire preferences. The Japanese 
went to the Greater East Asian Co-Prosperity Sphere. In that year, 
Adolf Hitler became chancellor of Germany in a free election. Such was 
the degree of unemployment and seeming despair that the consequences of 
the First World War would never be over.
  Next came one of the largest trade events of the postwar period, the 
Kennedy round, which came about because of the Trade Expansion Act of 
1962. I make the point, sir, that there were persons at that time, as 
now, concerned about the impact of expanding trade on American workers 
and American firms. As a condition of a Senate vote on giving the 
President the power to negotiate what became the Kennedy round--it was 
named for the President who began it--we had to negotiate a separate 
agreement, the Long-Term Cotton Textile Agreement, and three persons 
were sent to do this negotiation: W. Michael Blumenthal, Deputy 
Assistant Secretary of State; Hickman Price, Jr., an Assistant 
Secretary of Commerce; and myself, then an Assistant Secretary of 
Labor. We negotiated to limit surges of imports that might come about 
from drops in tariffs. It was meant to be a 5-year matter, as I recall. 
That was 35 years ago, and it's still in place. It was succeeded by the 
Multi-Fiber Agreement. We have not been unattending to the needs of our 
workers in these matters. To the contrary. We began Trade Adjustment 
Assistance in the 1970's. We have more Trade Adjustment Assistance in 
this legislation. We negotiate these matters with the interests of the 
American worker in mind, and the evidence is the standard of living we 
have achieved in this country, of which there is no equal.
  With that point, sir, I would like to call attention to a very 
special issue. We are asked by some to include in this legislation a 
requirement that trade agreements include provisions, in effect, 
statutory requirements, concerning labor and the environment. At first, 
it seems a good idea. Why not? But let me tell you why not, and if I 
can just presume on age at this point, which is getting to be a factor 
in my perspective. I have been there and it doesn't happen, it doesn't 
work.
  If you go to a developing country and say to them, ``We would like to 
enter into a trade arrangement whereby you will reduce your tariffs and 
barriers--non-tariff barriers--we will do the same, so we can have more 
trade,'' and at the same time, in the same setting, say, ``We want you 
to adopt higher environmental standards and higher labor standards,'' 
right or wrong, the negotiating partners will say, ``Oh, you want us to 
lower our tariff barriers and

[[Page S11637]]

raise our costs.'' Well, they won't do it. ``You are asking that we be 
put at a double disadvantage. We put those tariffs in to protect 
ourselves against you, and our environmental and labor standards are 
those of a developing nation. Now you want to put us at a double 
disadvantage.'' It won't happen. There will be no such agreements.
  I can speak to this. I was Ambassador to India when our trade was at 
a very, very low level. The great anxiety of the Government of India 
was that we would somehow use trade in a way that would disrupt their 
internal affairs, which was never our intention, but it was a 
perception, and will be even more so now. That is why I point to the 
serendipity, if you would like, of the provisions in this bill. I made 
the point that the Reciprocal Trade Agreements Act--the original one--
was enacted in 1934, and the United States joined the International 
Labor Organization in 1934--a measure of great importance at that time. 
President Roosevelt was very firmly in favor of it, and Frances 
Perkins--and I talked to her about it--thought it was one of the 
central initiatives. They saw it as parallel to trade--parallel.

  Over the years, the International Labor Organization has developed a 
series of what are called the ILO Core Human Rights Conventions. There 
are a great many important conventions, but they tend to be on 
technical matters. These go right to the rights of working people. And 
there are not many. They are the Forced Labor Convention of 1930; 
Freedom of Association and Protection of the Right to Organize 
Convention of 1948; Right to Organize and Collective Bargaining 
Convention of 1949; Equal Remuneration Convention, equal pay for men 
and women, of 1951; Abolition of Forced Labor Convention of 1957.
  In 1991, I stood on the floor of this Senate, with Claiborne Pell, 
then chairman of the Foreign Relations Committee, and we called that 
up, and it passed the U.S. Senate unanimously. It is our law now 
because we chose to make it our law. We passed it. It is a treaty and 
we passed it as such. And then there was the Discrimination (Employment 
and Occupation) Convention of 1958, and the Minimum Age Convention--a 
child labor convention--of 1973.
  Now, in this bill before you is an extraordinary initiative. We 
fought for an initiative by the United States to promote respect for 
workers' rights by seeking to establish in the International Labor 
Organization a mechanism for the systematic examination of and 
reporting on the extent to which ILO members promote and enforce the 
freedom of a subsidization, the right to organize and bargain 
collectively, prohibition on the use of forced labor, prohibition on 
exploitive child labor, and a prohibition on discrimination in 
employment.
  We have never before made such a proposal. It has enormous 
possibilities. The ILO is the oldest of our international 
organizations. But it comes from an era when the idea of sending 
inspectors into a country to see whether that country was keeping an 
agreement would have been thought much too radical. That all changed in 
the aftermath of World War II.
  Just this moment, we are going through something of a crisis with 
Iraq over the right of American members of the inspection team from the 
International Atomic Energy Agency to look into Iraqi production of 
nuclear power and the possibility of nuclear weapons. That begins with 
the International Atomic Energy Agency, which is part of the United 
Nations system. You send inspectors in to see what they are doing. It 
is now a common practice over a whole range of international concerns.
  What we propose is that the International Labor Organization bundle, 
if you like, the core labor standards, and then set about an inspection 
system, to see to it how China is doing on prison labor, or child 
labor, or how the United States is doing--we will be looked into, too--
and how countries around the world have done. Now, this will take 
energy. I would like to think that, somewhere in the executive branch, 
someone is listening to this debate because these measures were 
proposed by the President. But it takes energy in the executive to get 
this done. Come to think of it, Alexander Hamilton's definition of good 
government was ``energy in the executive.''
  I would like to think that our Trade Representative, our Department 
of Labor, our Department of Commerce, will be actively involved. I say 
the Department of Commerce because business is involved. The ILO is a 
tripartite group. Business has a vote, the U.S. Council for 
International Business, as does the AFL-CIO. They each have a vote, and 
the U.S. Government has two votes. This is a business-labor enterprise. 
We have been involved with it for a very long time. Herbert Hoover, as 
Secretary of Commerce under President Harding, sent delegates to the 
ILO conference in Geneva from the Chamber of Commerce and from the AFL-
CIO. So we are addressing concerns about the environment and labor 
standards in their proper context and setting. If you want them, you 
have to do it there.
  If you only want not to have more open trade, you can try it in 
negotiations. But Mr. President, it won't work. The trading partners 
just will not agree. And if you want to take the time to find it out, 
very well, but for the moment, I think you will find that the 
overwhelming judgment of economists is that what we have here is a 
clean measure. That is the way to go. And this is what we now need to 
do--give the President fast-track authority, which will enable him to 
enter negotiations that will result in agreements, and with those 
agreements in place, we will go into the 21st century proud of what we 
began in the 20th.
  Mr. President, I again thank my chairman for the felicity with which 
he chose to give the name Reciprocal Trade Agreements Act of 1997 to 
this legislation.
  For the purpose of the Record, I ask unanimous consent that the 
description of the ILO Core Human Rights Conventions be printed in the 
Record at this time.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  ILO Human Rights (Core) Conventions

       The ILO's human rights conventions, commonly referred to as 
     ``core'' conventions, are receiving more attention as the 
     debate on trade and labor standards continues after the World 
     Trade Organization's ministerial meeting last December.
       Informal agreement on which ILO conventions are human 
     rights standards dates at least as far back as 1960. Formal 
     recognition was achieved when the Social Summit in Copenhagen 
     in 1995 identified six ILO conventions as essential to 
     ensuring human rights in the workplace: Nos. 29, 87, 98, 100, 
     105, and 111. In addition, the United Nations High 
     Commissioner for Human Rights now includes these conventions 
     as the list of ``International Human Rights Instruments.''
       The Governing Body of the ILO subsequently confirmed the 
     addition of the ILO Convention on Minimum Age, No. 138 
     (1973), in recognition of the rights of children. An ILO 
     convention banning intolerable forms of child labor is in 
     preparation and is scheduled for a vote on adoption in 1998.
       Conventions Nos. 87 and 98 form the cornerstone of the 
     ILO's international labor code. They embody the principle of 
     freedom of association, which is affirmed by the ILO 
     Constitution and is applicable to all member states. A 
     complaint for non-observance of this principle may be brought 
     against a member state under a special procedure, whether or 
     not the member state has ratified these two conventions.
       The following list presents the seven core conventions and 
     their coverage. The chart on the reverse side of this sheet 
     shows which countries have ratified them as of December 31, 
     1996.


                 No. 29--Forced Labor Convention (1930)

       Requires the suppression of forced or compulsory labor in 
     all its forms. Certain exceptions are permitted, such as 
     military service, convict labor properly supervised, 
     emergencies such as wars, fires, earthquakes . . .


No. 87--Freedom of Association and Protection of the Right to Organize 
                           Convention (1948)

       Establishes the right of all workers and employers to form 
     and join organizations of their own choosing without prior 
     authorization, and lays down a series of guarantees for the 
     free functioning of organizations without interference by the 
     public authorities.


 No. 98--Right to Organize and Collective Bargaining Convention (1949)

       Provides for protection against anti-union discrimination, 
     for protection of workers' and employers' organizations 
     against acts of interference by each other, and for measures 
     to promote collective bargaining.


             No. 100--Equal Remuneration Convention (1951)

       Calls for equal pay and benefits for men and women for work 
     of equal value.


          No. 105--Abolition of Forced Labor Convention (1957)

       Prohibits the use of any form of forced or compulsory labor 
     as a means of political coercion or education, punishment for 
     the expression of political or ideological views,

[[Page S11638]]

     workforce mobilization, labor discipline, punishment for 
     participation in strikes, or discrimination.


 No. 111--Discrimination (Employment and Occupation) Convention (1958)

       Calls for a national policy to eliminate discrimination in 
     access to employment, training and working conditions, on 
     grounds of race, color, sex, religion, political opinion, 
     national extraction or social origin and to promote equality 
     of opportunity and treatment.


                 No. 138--Minimum Age Convention (1973)

       Aims at the abolition of child labor, stipulating that the 
     minimum age for admission to employment shall not be less 
     than the age of completion of compulsory schooling.

  Mr. MOYNIHAN. Mr. President, without further comment, I yield the 
floor once again with a sense of ebullience. We are going to do this. 
We kept the faith. We followed the convictions and the experience of 
Presidents going all the way back to the 1930's.
  So I close simply by quoting again, Senator Dole in his fine op-ed 
piece in yesterday's Washington Post:

       The decision to give the President fast-track authority is 
     urgent and must be made now. Very simply, passing fast track 
     is the right thing to do. Our Nation's future prosperity, the 
     good jobs that will provide a living for our children and 
     grandchildren, will be created through international trade. 
     Today it is more important than ever that the debate between 
     advocates of free trade and protectionism is over. Global 
     trade is a fact of life rather than a policy position. That 
     is why we cannot cede leadership in developing markets to our 
     competitors through inaction, thereby endangering America's 
     economic future and abandoning our responsibility to lead as 
     the sole remaining superpower.

  Mr. President, I thank the Chair for his courteous attention and I 
yield the floor.
  The PRESIDING OFFICER (Mr. Burns). The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I listened with interest to the two 
presentations. They are thoughtful Senators, but Senators with whom I 
disagree. I would like to spend some time describing my view of where 
we are. Let me start by saying what this debate is not about.
  This debate is not about whether we should be involved in global 
trade. Nor is it about whether expanded global opportunities are going 
to be part of this country's future. That is not what this debate is 
about. There are some who will always say, the minute you start talking 
about trade, that there are those of us who believe in free trade and 
then there are the rest of you who don't understand. They say that 
there are those of us who believe in the global economy and the 
benefits and fruits that come from being involved in expanded trade in 
a global economy, and then there are the rest of you who are xenophobic 
isolationists who want to build a wall around America. That is the way 
it is frequently described when we discuss trade.
  But that is not what this discussion is about; not at all. It is 
about our trade strategy and whether it works. When I think of our 
trade strategy I think of watching a wedding dance when I was a little 
boy. A man and woman were trying to dance. One was dancing the waltz 
and the other was dancing the two-step. Needless to say, it didn't work 
out.
  We have a trade strategy that is a unilateral free trade strategy 
that says we are going to confront others, who have managed trade 
strategies, with our trade strategy. Somehow this strategy is going to 
work out. We are going to open our markets but we are not going to 
pressure other countries to do the same. We are going to pass free 
trade agreements and we are going to move on to the next agreement 
without enforcing the agreement we had.
  I would like to just take inventory, if I might. Let's take some 
inventory about what we have experienced in trade. For those who are 
color conscious, the red in this chart would not be considered good. 
Red represents deficits. This chart represents this country's 
merchandise trade deficit. We have had 21 straight years of trade 
deficits. The last 3 years have been the worst three in the history of 
this country, and we will set a new record again this year. In 36 out 
of the past 38 years we had current account deficits. We had 21 
merchandise trade deficits in a row. This year will mean 4 years of 
higher record trade deficits.
  I want to ask a question. When you suffer these sort of merchandise 
trade deficits every year--and they are getting worse, not better--is 
this a country moving in the right direction? Is this a trade strategy 
we want more of? Or should we, perhaps, decide that something is wrong 
and we ought to stop and evaluate what doesn't work and how do we fix 
it?
  We are choking on red ink in international trade. This trade strategy 
doesn't work. So the debate is going to be between those of us who want 
change and those who want to cling to the same old thing. There are 
those of us who believe this policy isn't working and we want to change 
that policy. We want to reduce and eliminate these trade deficits and 
expand this country's trade opportunities. We want to do it in a way 
that is fair to this country and improves this country's economy. Then 
there are those who say no, and who are against change. They are for 
the same old thing. They support the same, tired, shopworn strategy 
that I say doesn't work. That is what this debate is about.

  The last debate we had about trade was a few years ago. It was on 
NAFTA, the North American Free Trade Agreement. And you had fast track 
for that. It is a trade agreement with Canada and Mexico. Before we 
adopted that trade agreement we had an $11 billion trade deficit with 
Canada and we adopted that agreement and the trade deficit has doubled. 
Before we adopted this trade agreement we had a $2 billion trade 
surplus with Mexico and that has collapsed to a $16 billion trade 
deficit.
  According to an Economic Policy Institute recent study, 167,000 jobs 
were lost to Canada, 227,000 jobs lost to Mexico, 395,000 jobs lost as 
a result of NAFTA. The combined accumulated deficit as a result of 
NAFTA cannot possibly be anything that anyone around here wants to 
stand up on the floor and raise their hand about and say, ``Yes, that's 
what I envisioned. I voted for that. That's what I was hoping would 
happen.''
  Surely we must have someone who will come to the floor and say I 
voted for this but boy, this turns out to be a pretty sour deal. We 
didn't expect the deficits to expand and mushroom. Is there someone who 
will suggest that somehow this hasn't worked out the way we expected? 
Or is this, in fact, the kind of thing that we embrace? Do we have a 
trade strategy that no matter how bankrupt, we continue to say, ``Yes, 
we are the parents. This is ours. This is our conception.'' I am 
wondering when enough is enough?
  Let's look at the trade treaty tally. We are told that if you don't 
have fast-track procedures given to this President, he can't do 
anything about trade. They ask who on Earth would negotiate with him? 
Well, there have been countries apparently that will negotiate, because 
there have been 220 some separate trade agreements negotiated by the 
USTR since 1993. That is the President's own statement. He has 
negotiated 220 agreements . Only two of them have used fast track. He 
didn't need fast track on the rest of them. So why would they have 
negotiated with him if he didn't have fast track?
  Fast track has been used five times in this country's history: The 
Tokyo round in 1975; United States-Canada, 1988; United States-Israel, 
1989; NAFTA, 1993 and the Uruguay round and WTO--GATT, in 1994.
  Let me show you what has happened with respect to each of these 
areas. When the Tokyo round took effect, we had a $28 billion annual 
merchandise trade deficit. Then we had a United States-Canada free 
trade agreement. By that time the trade deficit was $115 billion. Go to 
NAFTA, $166 billion. Then the Uruguay round it was $173 billion. We now 
are up to a $191 billion merchandise trade deficit and it is getting 
worse, not better. Does anybody here think we are moving in the right 
direction? If you do, tell us we need more of this. I guess that is 
what we are hearing. This is working so well. Let's have more of this 
red ink. Let's accumulate more of these deficits.
  Let me describe this here. I mentioned the trade agreements, NAFTA, 
and others. We have bilateral trade arrangements with Japan and China 
that also yield huge deficits for this country. One of our problems in 
this trade strategy that doesn't work is that we negotiate bad 
agreements, No. 1; and then, No. 2, we don't enforce the agreements we 
negotiated.

[[Page S11639]]

  The American Chamber of Commerce in Japan said the following:

       Indeed, the American Chamber of Commerce in Japan was 
     astonished to learn that no U.S. Government agency has a 
     readily accessible list of US-Japan agreements or their 
     complete texts. This may indicate it has often been more 
     important for the two Governments to reach agreement and 
     declare victory than to undertake the difficult task of 
     monitoring the agreements to ensure their implementation 
     produces results.

  My point is this. We go out and negotiate trade agreements and don't 
even keep track of them let alone enforce them. We can't even get a 
list of them. No Federal agency had a list of the trade agreements we 
had with Japan. Does that tell you they are probably not being 
enforced, aside from the fact they were not negotiated well? I can give 
chapter and verse on negotiations with Japan on which we are able to 
lose almost in a nanosecond.
  Senator Helms reminded me the other day of something I read 
previously by Will Rogers. He said many years ago, ``The United States 
has never lost a war and never won a treaty.'' That is certainly true 
with respect to trade. Take a look at these records and tell me whether 
you think this country is moving in the right direction in trade.
  So, what is this about? One of the columnists for whom I have very 
high regard in this town is David Broder. I think he is one of the best 
journalists in Washington, DC, and he writes a column today that could 
have been written by virtually anybody in this town because they all 
say the same thing: If Clinton fails to win fast-track negotiating 
authority, ``it would threaten a central part of his overall economic 
policy, it would signal a retreat by the United States from its 
leadership role for a more open international marketplace.''
  I have great respect for him. I think he is one of the best 
journalists in town. Yet my point is that he says what they all say. 
There becomes a ``speak'' in this town, about these issues. Then 
because everybody says it, they think it is true.
  It is not the case that if this Congress doesn't give fast-track 
trade authority to this President, that we will not be able to have 
future trade agreements and will not be able to expand our 
international trade. It is the case that some of us believe we ought to 
stand up for the economic interests of this country.
  Let me go through a few points because we are going to deal with this 
issue in macroeconomic terms. We are going to be hearing the debate 
about theory, and all of the trade concepts that people have. Then we 
negotiate trade agreements and then the jobs leave and people lose 
their jobs and it doesn't matter, I guess, to some because these are 
just the details.
  Jay Garment Corporation had two plants with 245 jobs in Portland, IN 
and Clarksville, TN. They produced blue jeans. They moved the plants to 
Mexico where they could get people to work for 40 cents an hour.
  For the past 75 years in Queens, NY, workers have been making 
something called Swingline brand staplers. They had 408 workers. They 
are now moving the plant to Mexico. Nancy Dewent is 47 years old. She 
has been working at that plant for 19 years and was making $11.58 an 
hour. Manufacturing jobs are often the better jobs, paying better wages 
and better benefits. That assembly job, now, making staplers, will be 
in Mexico at 50 cents a hour. That plant owner expects to save $12 
million a year by moving that plant to Mexico and selling the products 
back into the United States.
  Borg Warner is closing a transmission plant in Muncie, IN. That means 
800 people will lose their jobs, jobs that were paying an average of 
$17.50 an hour. Production is moving to Mexico.
  Atlas Crankshaft, owned by Cummins Engine, literally put its plant on 
trucks and moved the plant from Fostoria, OH, to San Luis Potosi in 
Mexico; 200 jobs gone south.
  In North Baltimore, OH, the Abbott Corporation produces wiring 
harness for Whirlpool appliances, closed its plant; 117 jobs moved to 
Mexico.
  Bob Bramer, who worked 31 years at Sandvik Hard Metals in Warren, MI, 
watched his plant closed down. The equipment was put on trucks and 
moved to Mexico. Another 26 American jobs gone south.
  People say you don't understand. That is the natural order of things. 
If we can't compete, tough luck for us. If we can't compete we lose our 
jobs.
  The question we ought to ask ourselves in this discussion is not 
whether this is a global economy. It is. Not whether we are going to 
have expanded trade, we should. We are a recipient for massive 
quantities of goods produced in China, massive quantities of goods 
produced in Japan and in Mexico and elsewhere. The question is not 
whether our economy is going to assimilate and purchase much of those 
goods. The question is what is fair trade between us and these 
countries? I hope, in this discussion, we might get to this question. 
Is there anything--is there anything that would concern Members of 
Congress about what is called the free market system and accessing the 
American marketplace with foreign production?
  For example, is it all right to hire 12-year-old kids and pay them 12 
cents an hour and work them 12 hours a day and have them produce garage 
door openers? Is that all right? Is that fair trade? And then ship 
those garage door openers to Pittsburgh, Los Angeles, Fargo, and Denver 
and then compete with someone in this country who produces the same 
garage door openers, hires American workers, has to abide by safety 
laws, by child labor standards, by workplace safety laws, and pay 
minimum wages? Is that fair trade? Is it fair competition?
  The answer clearly is no. If we allow producers to decide that in the 
world marketplace you can pole vault over all the discussions we have 
had for 50 years and you can produce where there is a lot less hassle, 
you can move your plant and move your jobs to a foreign land, and you 
can dump the chemicals in the water, you can pollute the air, hire kids 
and pay a dime an hour and you can bloat your profits and ship that 
product to Delaware, to North Dakota, to Colorado, and to New York, is 
that fair trade?
  It is not fair trade where I come from. That is not fair trade. This 
country ought to be concerned about the conditions of trade and about 
the circumstances of trade that we are involved with. That is why we 
have these swollen trade deficits year after year after year. I know 
those who push fast track and push the current system, the same old 
thing, say, ``We are the ones for expanded trade.'' I don't think so at 
all.
  The reason we have not gotten our products into foreign markets, at 
least not with the success we should have, is this country doesn't have 
the nerve and the will to require it, and the other countries know it. 
They know there are going to be enough in the Senate and enough in the 
House to stand up and make these claims that if you don't support the 
current trade strategy and you don't support expanded trade, that you 
are a protectionist. Other countries know that. This country doesn't 
have the nerve and the will to say to Japan and China, Mexico, and 
others that if our market is open to you, you had better understand 
that your market is required to be open to us. Our country simply has 
not required that of our trading partners. Until it does, we will 
continue to run these huge swollen trade deficits.
  The question that we will get to soon will be a narrower question of 
fast-track trade authority. Very simply, for those who don't know what 
that means, it means that the President will go off and negotiate a 
trade treaty through his trade negotiators, bring it back to the 
Congress, and then fast-track authority means no one in Congress may 
offer any amendments.
  I have been through this with the United States-Canada trade 
agreement. I want to describe for my colleagues why I feel so 
passionate about this.
  The United States-Canada Free-Trade Agreement passed the Congress. I 
was in the House of Representatives at the time and on the Ways and 
Means Committee, where it passed by a vote of 34 to 1. I was told just 
before the vote, ``We have to have a unanimous vote here in the House 
Ways and Means Committee. We need to get everybody voting for this. You 
can't be the only holdout. How would you feel about 34 to 1? What does 
that say, 34 to 1?''
  I said, ``No, that is not a source of trouble to me, that is a source 
of enormous pride, because you are engaging in a trade agreement with 
Canada that

[[Page S11640]]

fundamentally sells out the interests of the American farmers.''
  ``We don't do that,'' they said. ``In fact, we'll provide you 
paper,'' and they shoved all this paper at me saying that we guarantee, 
we promise and they made all the promises in the world, and I still 
voted against it.
  Guess what is happening? The United States-Canada trade agreement 
went into effect and our farmers, especially in North Dakota and the 
northern part of this country, have seen a virtual deluge of Canadian 
grain coming into our country undercutting our markets, taking $220 
million a year out of the pockets of North Dakota farmers--durum wheat, 
barley. So we complain about it and say this is unfair trade. It is 
clearly and demonstrably unfair trade.
  It comes in from a state trading enterprise in Canada called the 
Canadian Wheat Board, which would be illegal in our country. It is 
clearly unfair trade. Just as clearly to me, it violates our 
antidumping laws because every bushel that comes in comes in with 
secret prices. In our country, when you sell grain, prices are fully 
disclosed. With the Canadian Wheat Board those are secret prices by a 
state trading enterprise that would be illegal in this country.
  For 8 years this has gone on, and we can't correct it. Why? Because 
this trade agreement was so incompetently negotiated that we traded 
away our ability to solve the trade problems resulting from it.
  I come here to say this. I have great respect for this President. 
This President has taken some of the few enforcement actions that have 
ever been taken with respect to some of our trading partners. But, 
until this President and until these trade negotiators and others 
involved in our current trade strategy in our country demonstrate the 
nerve, the will and the interest to stand up for the interests of 
American producers and, yes, farmers and manufacturers and workers; 
until they demonstrate a willingness and ability to stand up for the 
interests of this country, I do not intend to vote for fast-track trade 
authority.
  Once we decide as a country we are willing to stand up for our 
economic interests and say to China, ``You cannot continue to run up a 
$50 billion trade surplus with us; we cannot continue to stand a $50 
billion trade deficit with you,'' or say to Japan, ``We will not allow 
you year after year after year every year to have a $50 to $60 billion 
trade surplus with this country''--we have a deficit with them; they 
have a surplus with us.
  What does that mean. The past 21 years of merchandise trade deficits 
contribute a combined nearly $2 trillion to our current accounts 
deficit? It means somebody has to pay the bill some day. When we pay 
the bill, we will pay it with a lower standard of living in this 
country, all because we had a trade strategy that did not stand up for 
the economic interests of this country's producers.
  I know there are people here who say, ``Gosh, look how well things 
are going in this country; things are going so well.'' In fact, we have 
a proclivity in this country to measure how well we are doing every 
month by what we consume. If we have good consumption numbers, boy, we 
are doing well.
  It is not what we consume that measures the economic health of a 
nation, it is what we produce. No country will long remain a strong 
economically healthy country, a country with a strong economy, unless 
it retains a strong, vibrant and growing manufacturing base. That is 
not the case in this country, because we have decided with trade 
agreements that it is fine for American producers to get in a small 
plane, circle the globe, find out where they can relocate their plant 
and pay pennies an hour and not be bothered by child labor laws or by 
environmental restrictions or by minimum wages or all the other things 
we fought about for 50 to 75 years in this country, move the production 
there, produce the same product and ship it back here. The net result 
is a trade loss for this country, a loss of good-paying, important 
manufacturing jobs for this country, and a continued erosion of this 
country's manufacturing base. That, I think, is moving in the wrong 
direction.
  Mr. President, I am not going to take the full hour allotted to me at 
this point. I intend to, at another point in this process, speak more 
about the issue, but I want to finish by saying, once again, that we 
will have, I assume, a discussion that represents the same old 
discussion, and that is an attempt to portray those who don't support 
this fast-track proposal as those who don't support expanded 
international trade.
  Let me portray it the way I think it really is. We have some people 
clinging to a failed trade strategy that has produced the largest trade 
deficits in the history of this country, clinging to it with their life 
because they resist change at every turn. There are those of us who 
understand that this trade strategy does not strengthen this country. 
It weakens this country. Increasing deficits don't strengthen this 
country. They undermine this country. Those of us who believe that it 
is time to change our trade policies.

  Do we want to change by keeping imports out? No. Do we want to change 
by retreating from the international economy? No. We want to change by 
insisting and demanding that it should be fashionable for a while to 
stand up for the economic interests of this country and that those who 
do so should not be called protectionists. Those of us who stand up, do 
so in a way that is designed to strengthen and to expand our country's 
economic opportunity in the years ahead.
  So, Mr. President, we will have many hours this week to talk about 
trade. I come from a State that needs to find a foreign home for much 
of what it produces. I am not someone who wants to retard trade. I want 
to expand trade. But I am someone who believes our Nation's trade 
strategy has not worked. Instead, we need a new trade strategy to 
expand exports, to expand opportunity and to diminish and eliminate 
these bloated trade deficits that threaten, in my judgment, this 
country's economic future. Mr. President, I yield the floor.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER (Mr. Gorton). The Senator from South Carolina.
  Mr. HOLLINGS. Mr. President, in the trial of a case, when you present 
a witness such as a doctor or an engineer, you qualify the witness by 
providing his background and experience. I am in the same position of 
having to qualify myself--not that I am expert on any particular 
thing--because only yesterday in a discussion on the floor, one of my 
esteemed colleagues said, ``I know how you are going to vote with 
respect to fast track because you are against trade.'' Mr. President, 
nothing could be further from the truth.
  Let me say at the very beginning that I was raised and still live in 
a port city. I worked in that port two summers, paying my way through 
college with a coastal geodetic survey before World War II, when we 
were laying submarine nets in the harbor.
  I also was a lawyer later on in life, practicing before the U.S. 
Customs Court with the Honorable Judge Paul Rayall of New York. As an 
attorney, I also represented the South Carolina Port Authority. So I am 
familiar with the field of trade law.
  Later, as Governor of South Carolina, I had the privilege of putting 
in all the expanded facilities for our State ports, such as grain 
elevators for our farmers so that they could compete, but more 
particularly. During my tenure as Governor, I also was one of the first 
elected representatives to take trips abroad to promote trade and to 
encourage foreign companies to open plants in the United States.
  I was just thinking the other day, when the President was going for 
the first time to Latin America, that I took that trip to Buenos Aires, 
Argentina, back in 1960. I have been there a half dozen times since 
then. And I have been not just to Sao Paulo but to the port of Santos 
in Brazil and to Caracas, where we buy now a majority of our oil.
  I learned early on in looking for trade opportunities that my 
hometown of Charleston is 350 miles closer to Caracas, Venezuela, and 
the Latin American markets than New Orleans. Look at it sometimes--the 
offset of the South American continent--and you will see that my 
hometown of Charleston is about on the same latitude as the Panama 
Canal.
  So I went after trade and have been working on trade for at least 40 
years, as an attorney and as Governor. Today,

[[Page S11641]]

my office in Charleston is in the Customs House.
  I have participated in the various trade debates in my 30 years in 
the U.S. Senate. I have heard the same things come up time and time 
again without any understanding of the fact that we do not have a trade 
policy. We have a foreign policy.
  A friend who says you are against trade and he is for foreign aid is 
not for trade. We were fat, rich, and happy after World War II, and, 
yes, we taxed ourselves to the tune of what would be equal to some $80 
billion in today's amounts. We couldn't even get taxes to pay our own 
bills, much less the vanquished enemy in Europe and in the Pacific, but 
we taxed ourselves and we sent over not just the best expertise to tell 
them how to develop industrially, but more particularly, Mr. President, 
the best machinery.
  I have always heard people talk about textile fellows. According to 
critics, we want subsidies and protectionism. Now, we have asked for 
enforcement of and protection under U.S. international trade 
agreements, but we never have asked for subsidies like the airline 
manufacturers receive, for example.
  And of course, much of our technology comes from Defense. Then we 
make sure that it is financed under the Export-Import Bank. And 
incidentally, the $3 billion contract with China, you might as well 
count on only a percentage of that--China is in part trading with 
itself, because it has Boeing China where they make the tail 
assemblies, and they make the electronic parts in Japan, and everything 
else of that kind, so we can look at really where the contract is being 
sourced.
  Unfortunately, Mr. President, we are exporting our most precious 
technology. General Motors, for example, has agreed not only to produce 
cars in the People's Republic of China, but also China has required, 
Mr. President, that they design the automobiles. So the new cars that 
we in America will be buying here at the turn of the century will be 
designed in downtown Shanghai with the finest computerization and 
machinery being installed there now by American companies.
  So we watch this particular trend. And we understand that the 
administration and those championing fast track are totally off-base 
with respect to the welfare of the United States of America, with 
respect to the security of the United States of America.
  Mr. President, the Nation's security rests on a three-legged stool. 
The three legs comprise our defense, values, and economy. And we have 
the one leg that is military power, which is unquestioned. Our troops 
and our military technologies are without equal in the world today. 
This leg is sound.
  The second leg is that of our Nation's values. This leg, too, is 
sound, our values unquestioned. We commit ourselves to freedom, 
democracy, and individual rights the world around--from Haiti and 
Bosnia. We work hard in all the councils of the world to promote the 
health and welfare of the free world. Our commitment to democracy and 
human rights is unwavering and our democratic values still are strong, 
as was noted here just last week on the visitation of Jiang Zemin.
  But, Mr. President, the third leg of our Nation's security--and this 
must be emphasized--is the economic leg. Unfortunately, the economic 
leg has been fractured over the last 50 years, somewhat in an 
intentional manner.
  I mentioned the Marshall plan. I mentioned the expertise we supplied 
to our vanquished foes. I mentioned the attempt to build up freedom and 
capitalism around the world, continuing today with the fall of the wall 
in Europe and the capitalistic trends even in People's Republic of 
China. And we have succeeded in this policy, so we do not regret it. 
But too often over the last 50 years we have given in to our 
competitors.
  When 10 percent of U.S. textile consumption was provided by imports, 
President John F. Kennedy declared an emergency, and under the law he 
appointed a cabinet commission. And he had the Secretaries of Treasury, 
Agriculture, Commerce, Labor and State meet. In May, 1961, complying 
with national security provisions, they determined that before 
President Kennedy could move, he was required to find that the 
particular commodity was important to our national security.
  At the Department of Defense, this particular commission found that 
next to steel, textiles were the commodity most important to our 
national security. After all, our Government could not send our 
soldiers to war in a Japanese-made uniform. So President Kennedy took 
action and formulated a 7-point program with respect to textiles. But 
this program has never been enforced.
  I continue to say that if we were to go back to our dumping laws and 
enforce them, we wouldn't have to have a debate of this kind on the 
floor of the U.S. Senate. But they are not enforced, Mr. President, and 
now two-thirds of the clothing worn here on the floor of the U.S. 
Senate is imported. And 86 percent of the shoes are imported.
  While I am on this subject, Mr. President, we have gradually gone out 
of the role of a productive United States of America to a become a 
consuming people.
  I ask unanimous consent to have printed in the Record a ratio of 
imports to domestic consumption of various items.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                               1996 Data


        Industry/commoRatio imports to domestic consumption in percents
Metals:
  Ferroalloys......................................................52.8
  Machine tools for cutting metal and parts........................44.3
  Steel Mill products..............................................16.7
  Industrial fasteners.............................................29.5
  Iron construction castings.......................................46.2
  Cooking and kitchen ware.........................................59.5
  Cutlery other than tableware.....................................31.8
  Table flatware...................................................63.6
  Certain builders' hardware.......................................19.5
  Metal and ceramic sanitary ware..................................18.2
Machinery:
  Electrical transformers, static converters, and inductors........38.6
  Pumps for liquids................................................29.8
  Commercial machinery.............................................19.7
  Electrical household appliances..................................18.2
  Centrifuges, filtering, and purifying equipment..................51.2
  Wrapping, packing, and can-sealing equipment.....................26.7
  Scales and weighing machinery....................................29.8
  Mineral processing machinery.....................................64.2
  Farm and garden machinery and equipment..........................21.7
  Industrial food-processing and related machinery.................23.0
  Pulp, paper, and paperboard machinery............................34.4
  Printing, typesetting, and bookbinding machinery.................54.8
  Metal rolling mills..............................................61.4
  Machine tools for metal forming..................................61.4
  Non-metal working machine tools..................................44.1
  Taps, cocks, valves, and similar devices.........................27.6
  Gear boxes, and other speed changers, torque converters..........30.5
  Boilers, turbines, and related machinery.........................48.0
  Electric motors and generators...................................21.1
  Portable electric hand tools.....................................27.4
  Nonelectrically powered hand tools...............................34.1
  Electric lights, light bulbs and flashlights.....................31.0
  Electric and gas welding equipment...............................18.4
  Insulated electrical wire and cable..............................30.9
Electronic products sector:
  Automatic data processing machines...............................59.3
  Office machines..................................................48.0
  Telephones.......................................................26.2
  Television receivers and video monitors..........................53.4
  Television apparatus (including cameras, and camcorders).........74.7
  Television picture tubes.........................................33.8
  Diodes, transistors, and integrated circuits.....................60.6
  Electrical capacitors and resistors..............................68.1
  Semiconductor manufacturing equipment and robotics...............21.9
  Photographic cameras and equipment...............................84.0
  Watches..........................................................95.9

[[Page S11642]]

  Clocks and timing devices........................................54.9
  Radio transmission and reception equipment.......................47.9
  Tape recorders, tape players, VCR's, CD players...................100
  Microphones, loudspeakers, and audio amplifiers..................67.6
  Unrecorded magnetic tapes, discs and other media.................48.2
Textiles:
  Men's and boys' suits and sport coats............................39.4
  Men's and boys' coats and jackets................................56.3
  Men's and boys' trousers.........................................37.7
  Women's and girls' trousers......................................47.9
  Shirts and blouses...............................................54.8
  Sweaters.........................................................71.1
  Women's and girls' suits, skirts, and coats......................55.9
  Women's and girls' dresses.......................................26.9
  Robes, nightwear, and underwear..................................51.0
  Body-supporting garments.........................................37.0
  Neckwear, handkerchiefs and scarves..............................55.5
  Gloves...........................................................68.5
  Headwear.........................................................50.5
  Leather apparel and accessories..................................70.2
  Rubber, plastic, and coated fabric material......................86.4
  Footwear and footwear parts......................................83.1
Transportation equipment:
  Aircraft engines and gas turbines................................47.5
  Aircraft, spacecraft, and related equipment......................30.5
  Internal combustion engine, other than for aircraft..............19.9
  Forklift trucks and industrial vehicles..........................21.5
  Construction and mining equipment................................28.6
  Ball and roller bearings.........................................24.9
  Batteries........................................................26.4
  Ignition and starting electrical equipment.......................22.3
  Rail locomotive and rolling stock................................22.8
  Carrier motor vehicle parts......................................19.5
  Automobiles, trucks, buses.......................................39.0
  Motorcycles, mopeds, and parts...................................51.8
  Bicycles and certain parts.......................................54.5
Miscellaneous manufactors:
  Luggage and handbags.............................................76.9
  Leather goods....................................................37.4
  Musical instruments and instruments..............................57.7
  Toys and models..................................................72.3
  Dolls............................................................95.8
  Sporting Goods...................................................32.0
  Brooms and brushes...............................................26.5
*1996 data from ITC publ. 3051

  Mr. HOLLINGS. Mr. President, my time is limited. It is unfortunate we 
have forced cloture. We have had no debate. This is an arrogant 
procedure: on a Friday afternoon, late on Friday when everyone was 
gone, they put in the so-called bill with the cloture motion, and now 
the world's most deliberative body is not going to have a chance in the 
world to deliberate. We had no debate on Monday, and now after forcing 
a vote on Tuesday they say, ``All right. You've got an hour.'' Oh, 
isn't that fine. Isn't that polite? Isn't that courteous? Isn't it 
Senatorial? Not at all. Not at all.
  What we really need is an extended debate on the most important item 
that faces this country--our economic security.
  Today we practically are out of business in manufacturing. People 
talk about the manufacturing jobs that have been created, but 10 years 
ago we had 26 percent of our work force in manufacturing. We are down 
to 13 percent of jobs now in manufacturing.
  I go right to one of our adversaries, who is one of the finest 
industrialists in the history of man, Akio Morita of Sony Corp. And on 
a seminar in the early 1980's, in Chicago, we were talking about the 
developing Third World countries. And he said, ``Oh, no. They cannot 
become a nation state until they develop a strong manufacturing 
capacity.'' And later on in that seminar he pointed to me and said, 
``By the way, Senator, that world power that loses its capacity of 
manufacturing will cease to be a world power.''
  We are going to have Veterans Day here very shortly. And I think back 
to my the 3-year jaunt overseas in World War II and the invasion of 
North Africa, and Corsica, and Southern France. And I remember well how 
valiant our fighting men were. And I take pride in average citizens 
from the main streets and farms of America volunteering to fight and 
die for our Nation.
  In those days, when we looked up at the skies we saw our wonderful 
Air Force. And we saw them bombing the adversary into smithereens, to 
the point where they had no productive industrial manufacturing 
capacity. We, in contrast, were turning out five B-29's a day at the 
Marietta plant just outside of Atlanta. They were not turning out any 
planes at all. Their plants had been destroyed. And so we had a 
superiority of equipment and everything else as we moved forward 
through Alsace and across the Rhine.
  And as much as congratulating all the veterans on Veterans Day, I 
will be making talks like other politicians. I want to emulate Rosy the 
Riveter who, back home, kept things going. It was the wonderful 
productive capacity of the United States of America that kept this 
world free. Let us never forget it. So when we talk of trade, we are 
talking of something of historic proportions here.
  I will go to the history here in the unlimited time because in a few 
hours--in an hour and a half, to be exact--the Commerce Committee, with 
the Capitol Historical Society, will celebrate the 181st anniversary of 
the Committee of Commerce, Space, Science, and Transportation.
  That brings us back to our earliest days and the mistaken idea that 
there is somewhere, somehow, other than here in the United States, free 
trade, free trade, free trade, free trade. There is absolutely no free 
trade in the world. Trade is reciprocal and competitive. The word 
``trade'' itself means something for something. If it is something for 
nothing, it is a gift.
  I know some people talk about different subsidies and different 
nontariff trade barriers, and that is what they mean. But what has come 
about, as we have been setting the example by just that, with free 
trade with Chile, our average tariff was 2 percent. The average tariff 
in Chile is 11 percent. So the people in Chile now almost have free 
trade. We have almost nothing left to swap in order to bring them to 
terms to open their markets.
  As long as we cry and moan and grown, ``free trade, free trade,'' 
like the arrogant nonsense that somehow our way is the only way, we are 
going to wake up in America like the United Kingdom. They told Great 
Britain at the end of World War II, ``Don't worry, instead of a nation 
of brawn, you're going to be a nation of brains. And instead of 
producing products, you're going to provide services. And instead of 
creating wealth, you're going to handle it and be a financial center.'' 
And England has gone to hell in an economic handbasket; downtown London 
is an amusement park. Poor Great Britain: it is not great any longer. 
And that is the road that we are on here in the United States.
  I want to get off that road and sober these folks up and let them 
stop, look, and listen to what they are talking about. I would like, 
Mr. President, to emphasize what the global competition is. Some act as 
if it's something new, and we have just come into it. No. We started 
220-some years ago, in the earliest days of our republic.
  Thinking today about this particular celebration we are going to have 
this evening, I realized that in 1816, when the Commerce Committee was 
first started, it was started as the Committee of Commerce and 
Manufacturing. Commerce and Manufacturing was the name of it.
  That was foremost in the minds of the Founding Fathers when they 
thought about our relations with Great Britain, the mother country, 
once we had won our freedom and were a fledgling colony. The British 
wanted to trade with us under the doctrine of competitive advantage. 
They said at that particular time that what you ought to do back in the 
colony is trade with what you can produce best and we will trade back 
with the little fledgling colony from the United Kingdom what we 
produce best--free trade, free trade, Adam Smith, Adam Smith, free 
trade, consumption.
  Well, Alexander Hamilton wrote ``Report on Manufactures,'' and there 
is one copy left that I know of over at the Library of Congress under 
lock and

[[Page S11643]]

key. I won't read it--I would if we had extended time where we can 
debate this and begin to understand the Founding Members. In a line in 
that booklet, Alexander Hamilton told Great Britain essentially, bug 
off, we are not going to remain your colony. The second act ever 
enacted by Congress--which had a mindset of competition and building, 
rather than buying votes with consumption and tax cuts and free trade 
and all that kind of nonsense--passed a tariff of 50 percent on some 60 
articles, which included textiles, iron, and just about everything 
else.
  What we said was ``no, thank you.'' We are going to follow Friedrich 
List, who said that the strength of a nation is measured not by what it 
can consume but rather by what it can produce. And the Founders said 
that they we going to produce our own industrial backbone, beginning 
with tariffs and instituting a Committee of Commerce and Manufactures.
  This mindset continued through President Lincoln. His advisors told 
the President during the construction of the transcontinental railroad, 
``Mr. President, we ought to get that steel cheap from England.'' And 
he said ``No, we are going to build the steel mill, and when we get 
through we not only will we have the transcontinental railroad but we 
will have a steel capacity to make the weapons of war and the tools of 
agriculture.''
  And in the darkest days of the Depression we passed price supports 
for America's agriculture which this Senate supports. It is not like we 
are against the farmer. I have had the pleasure of being elected six 
times, and each time the farm vote has either put me over the top or 
saved me. I have been elected six times. I have the greatest respect 
and we had not only the price supports but protective quotas, import 
quotas.
  Eisenhower, in 1955, put in oil import quotas so we could build up 
our own capacity of oil production. So we have been practicing that 
until we have been overcome, so to speak, with the multinational 
singsong.
  You see the policy of building up capitalism the world around has 
worked. I was with the manufacturers in the early 1950's. They hated to 
fly all the way to the Far East and come back. But after a while they 
found out they could produce cheaper by producing overseas.
  We had this testimony and we had the hearing before the Finance 
Committee which is a procedure of parliamentary fix. We had hearings 
that proved that 30 percent of the cost of manufacturing is in labor 
and you can save as much as 20 percent of your labor costs by moving 
offshore to a low-wage country. In other words, if you have a volume or 
sales of $500 million, you can keep your headquarters and sales force 
here but move your production overseas and save tens of millions of 
pretax dollars; or you can continue to stay home and work your own work 
force and go bankrupt.
  That is the jobs policy of this Congress. That is the jobs policy of 
this fast track. That is the jobs policy of President Clinton and his 
administration. That is why I am so strongly opposed to this kind of 
nonsense.
  They come around here with talking about consulting and retraining 
and everything else of that kind but the truth of the matter is, I will 
take them down to Andrews or some other towns in my State of South 
Carolina. We have lost, since NAFTA, some 23,500 jobs when counted last 
May and over 25,000 jobs easily since then.
  Go to where they make simple T-shirts, in Andrews, SC, where they had 
487 workers. The age average is 47 years. And let's do it Washington's 
way, let's retrain the 487 workers so tomorrow morning they are all 
computer operators. Are you going to hire the 47-year-old computer 
operator or the 21-year-old computer operator? You are not going to 
take on the health care costs, the retirement costs of the 47-year-old. 
Andrews is drying up. They are gone with all this retraining. We don't 
need retraining. I have the best training facilities. That is how I get 
Hoffmann-La Roche, BMW and all the sophisticated plants, Honda and 
otherwise, that are coming into my State.
  So we say with knowledge that we are not against trade; we have 
experience in this field. In South Carolina, we have the best 
industries on the one hand, 2.8 percent unemployment in Greenville 
County. But go down to Williamsburg County and you have 14 percent 
unemployment.
  On October 28, one week ago, the Washington Post published an 
editorial by James Glassman. Obviously, Mr. Glassman does not 
understanding exactly what is at issue here.
  I ask unanimous consent to have the article printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Oct. 28, 1997]

                            Consumers First

                         (By James K. Glassman)

       We work in order to eat, not vice versa. In other words, an 
     economy should, first and foremost, benefit consumers, not 
     producers--individuals rather than the established interests 
     of business and labor.
       This simple truth, which is regularly ignored by 
     politicians and the media, is at the heart of many of our 
     current debates--over free trade, taxes and, most recently, 
     the antitrust action against Microsoft.
       Adam Smith said it best in 1783: ``Consumption is the sole 
     end and purpose of all production, and the interest of the 
     producers ought to be attended to, only in so far as it may 
     be necessary for promoting that of the consumer.''
       That's why free trade is so beneficial. If we make it easy 
     for Italy to export inexpensive shoes to us, then U.S. 
     shoemakers may have to find jobs in other fields. But, 
     meanwhile, the 260 million Americans who wear shoes every day 
     get a bargain. The money they save can be used to buy other 
     things and start businesses, such as software, in which 
     Americans have a clear advantage.
       In its defense of fast-track to boost trade deals, the 
     Clinton administration has completely ignored this approach: 
     that the main reason we trade is to get good, low-priced 
     imports, which, incidentally, help keep down inflation. 
     Politicians have spent so much of their time helping producer 
     interest groups (a term that always includes big labor) that 
     they've forgotten the best argument for free trade--that it's 
     a tremendous boon to consumers.
       But consumers, who, by their very nature, are unorganized, 
     are consistently given short shrift--even by groups, such as 
     Ralph Nader's, that purport to represent them. Take Attorney 
     General Janet Reno's million-dollar-a-day fine against 
     Microsoft, hailed by Nader and based on her claim that the 
     company is ``forcing PC manufacturers to take one Microsoft 
     product as a condition of buying a monopoly product like 
     Windows 95.''
       Yes, producers are forced to do something they may not 
     like, but consumers get something free--a browser that helps 
     them move around the Internet. It's difficult to see how the 
     aggressive, even vicious, competitive tactics of companies 
     like Microsoft and Intel have hurt consumers, who now enjoy 
     more and more computer power for less and less money.
       It's nonsense to believe that a computer industry in a 
     constant state of revolution will thwart individuals unless 
     government steps in. It's consumers who determine whether a 
     product succeeds or fails. For an economy to reward the best 
     producers, consumers have to be given free rein to make 
     choices and send signals about what they really want.
       Unfortunately, the history of antitrust--not to mention 
     trade policies like high tariffs, quotas and anti-dumping 
     rules--reveals a pattern of enforcement that benefits 
     politically powerful producers, while paying only lip service 
     to consumers.
       If I seem overly agitated about producer-favoritism, it's 
     because I've seen the deadly results. I just returned from a 
     trip to Germany, a country which, only a few years ago, U.S. 
     politicians held up as an ideal. Today, there's a complacency 
     and hopelessness about the economy. Unemployment is 11.7 
     percent. ``This has little to do with the business cycle,'' 
     Otto Graf Lambsdorff, the respected former economics 
     minister, told me. ``It is structural unemployment.''
       Germans are--stereotypically and actually--precise, 
     diligent, well-educated and technically proficient. But 
     between 1990 and 1996, their total industrial output actually 
     declined by 3 percent while that of the United States rose 17 
     percent. (Output in Japan, another producer-oriented economy 
     that's in the dumps, fell 5 percent.)
       Why? One reason is the drag imposed by the sheer size of 
     the German welfare state, but at least as important is an 
     economic policy that consistently stymies the interests of 
     consumers.
       For instance, wage agreements, enshrined in law, are set by 
     the big manufacturers and their unions, then imposed on 
     smaller companies--a process that prevents serious 
     competition that would drive down prices and help Germans 
     live better.
       German regulations also keep new entrants out of the 
     marketplace. The medieval guild system still rules, and it's 
     hard to start a business without the certification of 
     companies that are already in it. Three people told me the 
     same story: Bill Gates never could have launched Microsoft in 
     Germany because it's illegal to work in a garage--no windows.
       The most glaring example of producers-first is the law that 
     sets nationwide operating hours for retail businesses. 
     Exactly a

[[Page S11644]]

     year ago, those hours were finally extended--for just 90 
     minutes. Now, businesses have to close Monday through Friday 
     at 8 p.m. and on Saturdays at 4 p.m. On Sundays, only 
     bakeries can open.
       Why have such a law at all? While some in the Bundestag 
     argued that longer hours hurt family life and church-going 
     (then why not ban telecasts of soccer games?), the main 
     opposition came from producers themselves (and their 
     attendant unions). Cartels love the status quo. Allow 
     innovation, and new firms might drive us out of business. In 
     other words, the consumer be damned.
       Economic policy really isn't as complicated as it seems. 
     Since, as Adam Smith pointed out, the consumer comes first, 
     then the first question should always be: Does this help 
     consumers, not in some imagined future but in the here and 
     now? Free trade does. Microsoft's free browser does. A tax 
     system that stresses low rates, simplicity and no breaks for 
     special interests does.
       The people who run Germany may never learn this important 
     axiom, but most Americans know it instinctively. Now, if only 
     the politicians and the press would catch on.

  Mr. HOLLINGS. ``Since as Adam Smith pointed out, the consumer comes 
first.''
  Come on, that is historically inaccurate. If we would have done that, 
we would still be a colony. He doesn't know what he is talking about. 
They didn't land here from the Mayflower looking for consumption and a 
cheap T-shirt. They came here to build a nation. You don't build it 
without a strong manufacturing capacity and you can find more silly 
articles running around loose. There is one by David Broder. He was 
quoted by my distinguished colleagues from New York and from North 
Dakota on both sides of the issue, but I want to read one paragraph, 
and I ask unanimous consent this article be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, Nov. 4, 1997]

                       Fast Track, Heavy Freight

                          (By David S. Broder)

       For President Clinton, the big trade vote scheduled later 
     this week represents ``Double Jeopardy.''
       If Clinton fails to win the same ``fast track'' negotiating 
     authority that previous presidents have carried into 
     international bargaining, it would threaten a central part of 
     his overall economic policy and rattle already jumpy world 
     stock markets. It would signal retreat by the United States 
     from its leadership role for a more open international 
     marketplace and--by the sober judgment of the embassies of at 
     least two key allies--could set off serious trade wars.
       Chances are, it won't come to that. The Senate, which is 
     scheduled to vote first, seems likely to approve the fast-
     track procedure in which trade agreements are voted up or 
     down by Congress but are not subject to amendment. In the 
     House, which is slated to follow on Friday, Clinton faces an 
     uphill struggle, but one he might still win.
       The cost of victory may be high, however. By every 
     calculation, more than two-thirds of the affirmative votes 
     will have to come from Republicans. The more Clinton has to 
     turn to Speaker Newt Gingrich and his allies, the higher the 
     price they can extract on other issues. Gingrich, still 
     trying to shore up his own shaky position after last summer's 
     failed coup, simply cannot afford to be altruistic.
       The reason Clinton may have to pay a high price is that he 
     has signally failed to persuade his own party of the 
     rightness of his trade policy. In 1993, after a vigorous 
     campaign by Clinton, only 40 percent of House Democrats 
     supported NAFTA--the free trade agreement with Mexico and 
     Canada. ``On fast track, he will lose 20 or more people who 
     voted for NAFTA,'' House Democratic Whip David Bonior of 
     Michigan, an ardent opponent, told me over the weekend. A key 
     House Democratic Supporter conceded that Clinton is unlikely 
     to get many more than 30 percent of the 206 Democrats to go 
     along--a figure low enough that it could prove fatal.
       Clinton aides blame the problem on organized labor, which 
     has led the fight against ``fast track,'' just as it did 
     against NAFTA. ``This is the most blatant example of the 
     corrupting effect of campaign finances on Washington policy-
     making I know,'' one high administration official said.
       Even if you accept AFL-CIO lobbyist Peggy Taylor's 
     assurance that ``we have not threatened to cut off 
     contributions to anyone,'' there is no doubt the dependence 
     of most congressional Democrats on unions for their bedrock 
     financing makes them receptive to the arguments Taylor and 
     other labor lobbyists offer.
       But there's more than money involved. In the 1994 midterm 
     election, a year after the NAFTA vote, union activists, stung 
     by losing that fight to Clinton and by the president's 
     failure to get a Democratic Congress even to vote on his 
     promised health care reform, deserted their posts. Phone 
     banks went unmanned; the turnout of union families plummeted; 
     40 percent of those who bothered to vote backed GOP 
     candidates, and the Democrats lost the House for the first 
     time in 40 years.
       In 1996, by contrast, labor, under new leadership, targeted 
     Gingrich and the GOP early, boosted its share of the 
     electorate and helped the Democrats to a 10-seat gain. 
     Understandably, its arguments are heeded.
       Labor is less monolithic than it appears, however. The 
     growing unions--notably those representing public employees 
     and service industries--care much less about the trade issue 
     than do the teamsters or the big industrial unions. Vice 
     President Al Gore, despite his pro-NAFTA and pro-fast-track 
     stance, has at least as many allies among top unionists as 
     his prospective opponent for the 2000 nomination, Minority 
     Leader Dick Gephardt of Missouri, who is leading the fight 
     for labor.
       What Clinton and the White House have been slow to realize 
     is that Gephardt has convinced many of his colleagues that 
     demanding stronger worker and environmental protections as 
     part of future trade agreements is a way of helping their 
     constituents--not undercutting a successful Clinton economic 
     policy. Until very recently, the president let the opposition 
     dominate the public debate.
       As a result, Cliton will not get the votes of such 
     thoughtful Democrats as Rep. Ron Kind, a moderate freshman 
     from a marginal district in Wisconsin, who concedes he is 
     adopting the ``parochial concern'' of dairy farmers 
     frustrated by their post-NAFTA dealings with canada. ``Very 
     few of us oppose giving the president the authority to 
     negotiate,'' he said, ``but he should have elevated this to a 
     national debate on what the rules of trade should look like 
     in the 21st century. That is what Ronald Reagan would have 
     done.''
       As a result of that failure, Clinton will pay Gingrich a 
     high price if he is to avoid a truly devastating defeat.

  Mr. HOLLINGS. The article reads in part:

       Clinton aides blame the problem on organized labor which 
     has led the fight against fast track just as it did against 
     NAFTA. ``This is the most blatant example of the corrupting 
     effect of campaign finances on Washington policy-making I 
     know,'' one high administration official said.

  Boy, oh boy, is it. Is it one of the most scandalous, corrupting 
effects of campaign finances. Why? Mr. President, 250 of these 
multinational corporations are responsible for 80 percent of the 
exports. That is the moneyed crowd that came with the white tent on the 
lawn for NAFTA. That is the moneyed crowd and the Business Advisory 
Council that sent around a month ago, ``We are allocating $50,000 for 
this debate.'' Each of your corporate entities, send the money in so we 
can buy the TV to bamboozle those silly Senators in Congress.
  It is one of the most corrupting--not labor. God bless labor. At 
least they are fighting for what Henry Ford said: ``I want to make sure 
that the man that produces the car can buy the car.'' And he brought in 
good, responsible wages. That is what labor is trying to get--a 
responsible wage and working conditions and no child labor and no 
environmental degradations.
  Since I'm talking, I want everyone to know I'm just not reading 
things. I have been there and I have seen, as Martin Luther King, Jr. 
said, the other side. So at Tijuana, Mr. President, you go there and 
you think you are in Korea. Go across from San Diego into Tijuana--
beautiful industries, mostly Korean, and what happens? Then you go out 
to the living conditions, some 150,000 to 200,000 people in that dust 
bowl. The mayor comes up and he says, ``Senator, I want you to meet 
with 12 people if you don't mind.'' I said I would be glad to. ``I 
would like you to listen to what they are talking about.''
  It so happens that in that area, the mills have the flag, whether 
American or Korean, they have a beautiful lawn, a nice, clean factory 
on the outside and the living conditions are squalid--literally, five 
garage doors put together as a hovel to live in, no running water, the 
electric power is one little electric line where I was visiting and the 
fellow had a car battery to turn on his TV because if he turned on the 
light and TV everything blew up.
  There wasn't any sewage, there weren't any roads or streets. When 
they had a heavy rain and when the rains came at the turn of the year, 
it washed down all that mud, dust and what have you, and their homes 
were literally being washed away. Trying to save them, they missed a 
day's work, these 12 workers. Later in February, one of the workers in 
a plastic coat hanger factory--a factory that had moved down from Los 
Angeles, CA, to Mexico, a low-wage thing, maquiladora is the word for 
it--had lost his eyesight from the dust flicked up in his eyes by the 
coat hangers. That caused real concern because they had been docked 
having missed 1 day's work. They were docked under the work rules. They 
lost

[[Page S11645]]

4 days' pay. And now they were losing one of their companion workers 
and his eyesight, and around the first of May the most popular 
supervisor was expecting childbirth and she went to the front office 
and said, ``I'm feeling badly and I have to go home this afternoon,'' 
and the plant managers said, ``Oh, no, you are not, you are working out 
there,'' and she stayed that afternoon and miscarried.
  So these 12 that the mayor had me meet said they were going to get a 
union and they went up to Los Angeles. You know what they found, Mr. 
President? These are labor rights they have down in Mexico. They found 
they already had a union. When the plants had moved down there 3 years 
before they had signed a legal document back there in Los Angeles 
between lawyers for the so-called union that they never saw, never saw. 
The union master or anything else of that kind never visited the plant, 
and under Mexican law, since they had a union, these workers were fired 
because you are not allowed to try to organize a union when you have 
one. That is labor rights in Mexico. So they lost their jobs. And the 
mayor was pointing them out to me.
  Labor is there working so that the United States can go out and 
spread its values. I talked about our values as a Nation, the strength 
of them, and it isn't to get a cheap T-shirt or cheap production. It is 
to extend those rights. We had the highest standard of living here in 
the United States, and we are trying to extend that standard of living 
so that others can buy and purchase. If we had the time, Mr. President, 
I would go into overcapacity. I remember when Bill Greider published 
his book a couple of years ago, ``One World, Ready or Not.'' He talked 
about overcapacity; at the time, commentators ridiculed Greider, but 
now they find that we in the United States have the capacity to produce 
500,000 more cars than we can sell; in the European sector, they have 
the capacity to produce 4 to 5 million more cars than they can sell, 
and with the yen down, you can watch automobiles coming in here like 
gangbusters.
  Now, what are we saying? They don't know what they are talking about. 
We are trying to produce consumers to go and buy those cars. And what 
did we get out of NAFTA? Instead of $1 an hour workers' wages have gone 
down. Read the American Chamber of Commerce report in Mexico earlier 
this year. Instead of $1 an hour they now make 70 cents an hour. They 
can't buy the car. There are no consumers there; that is why there is 
the overcapacity. They act like we have equals; they say in a naive 
fashion that 96 percent of the consumers are outside the United States, 
when all that they are doing is looking at population figures.
  They don't know what they are talking about. They are not consuming. 
They are not able. I wish I had the Boston Globe article about the shoe 
manufacturer. I don't want to mention the name because I want to be 
accurate. But the tennis shoes were being made by three young women who 
slept on the floor, without a window, in a shack down in Malaysia, and 
their monthly salary was less than the cost of one pair of the shoes 
they were making. Now, come on. These are facts we must bring out in 
this debate. Wait a minute here, we know how to compete, how to open up 
markets. Via Friedrich List, we have been trying for 50 years to get 
into Japan and we have had little success.
  If you want to sell textile products, you have to go to the textile 
industry of Korea and get permission or you don't get it. In Europe, 
the VCR's shipped there--there are nontariff trade barriers. They put 
VCR's up in Dijon, France. It took a year to get up there and clear all 
the redtape, get them released from the warehouse. Automobiles stayed 
on the dock in Europe--Toyota--and are still there. If you want to buy 
a 1998 model, you are going to have to wait until October 1, 1998, not 
October 1, 1997, because the '98 models that just came out, they have a 
year to inspect.
  The competition, Mr. President, out there in this global economy is 
the Friedrich List model, not the Adam Smith model. We just need to get 
that through the hard heads of the State Department and the White House 
and the leadership in this Congress. Labor is being derided because 
they are trying to bring the benefits to all so they can become 
consumers, so, yes, as a result all will be able to purchase these 
products. But we are roaring blindly into an overcapacity problem the 
world around and the global economy, and we are headed for deflation. 
Remember that we said it first here in the beginning of November in 
1997.
  Mr. President, I have the article I was mentioning earlier. It was 
Reebok. My staff has just given that to me.
  We have learned the hard way. We know our responsibility. That is 
what really boils me. Here comes this crowd from the White House: 
``Give the President the authority, give him the authority.'' He has 
had the authority to negotiate since 1934 under the Reciprocal Trade 
Act. We delegated that negotiating authority on behalf of the Congress. 
I am reminded of my friend Congressman Mendel Rivers, who used to be 
chairman of the Armed Services Committee. He had a seal in front of his 
desk that said ``Congress of the United States.'' When Secretary 
McNamara would come up, Chairman Rivers would lean over and say to 
Robert McNamara, ``Not the President, not the Supreme Court, but the 
Congress of the United States shall raise and support armies,'' article 
I, section 8. Also in article I, section 8 it says ``the Congress of 
the United States shall regulate foreign commerce,'' not the President, 
not the Supreme Court, but the Congress of the United States. That is 
not only our authority, it is our responsibility. But they say: Fast 
track, fast track, fast track. Forget your responsibility 
constitutionally. Take it or leave it.
  How do they get NAFTA passed? The White House amends the treaty. Mr. 
President, in that particular debate, we remembered there were some 16 
amendments. One Congressman down in Texas got 2 additional C-17's and 
he gave in his vote. Another distinguished Congressman, my good friend 
Jake Pickle, got a trade center. Another group down in Florida got a 
citrus amendment to take care of their concerns, and the Louisiana vote 
was taken care of with sugar, and for the Midwest, up by the border, it 
was a Durum wheat amendment. I could go down the list of the 16 
amendments. What I am saying to this body is that we, the Congress, 
can't amend the treaties, but the White House can. It is the most 
arrogant, unconstitutional assault and usurpation. Said George 
Washington in his farewell address, if in the opinion of the people the 
distribution of powers under the Constitution be in any particular 
wrong, ``then let it be amendable in the way that the Congress 
designates, for in the usurpation may in the one instance be the 
instrument of good, it is the customary weapon by which 
free governments are destroyed.'' And so we are in the hands of the 
Philistines, the multinationals.

  As I started out saying, the program of spreading capitalism has 
worked. That is what defeated the Soviet Union and brought about the 
fall of the wall. We all glory in it. But in the meantime, those who 
had gone abroad spreading that subsidized initiative learned that they 
could produce cheaper overseas, that they could save one-third of their 
sales of volume cost. So they began moving overseas their offshore 
production. And then the banks financing this movement--Chase Manhattan 
and Citicorp, as of the year 1973--I remember that debate--made a 
majority of their profits outside of the United States. IBM is no 
longer an American company. They have a majority of workers outside of 
the United States. We could go down the list. But they had the banks 
and then the nationals were becoming multinationals. Then they had all 
the consultants and the think tanks that they financed to grind out all 
these papers. They come around babbling, ``free trade, free trade.'' So 
you have the multinationals, the banks, the consultants, the think 
tanks, the college campuses--oh, yes, and the retailers.
  Every time we debated the textile bill--five times we passed it--I 
would go down to Herman's and find a catcher's mitt, one made in 
Michigan and one made in Korea, both for $43, the same price. We went 
down to Bloomingdale's and got a ladies' blouse made in Taiwan and one 
made in New Jersey, both for $27.
  My point was that they get their imports, bring it in for the large 
profit, and only give a little bit of the overrun of the particular 
sales to Grand Rapids

[[Page S11646]]

in New Jersey. They are not lowering their price as a result of 
competition. The retailers put out all of this nonsense about Smoot-
Hawley. Paul Krugman said the best of the best--we had some quotes from 
him. We had that debate.
  I will ask, Mr. President, to have printed in the Record the quote 
with respect to Smoot-Hawley because we heard that same thing here a 
little earlier today.
  I ask unanimous consent to have printed in the Record at this point 
the record on Smoot-Hawley made by our distinguished colleague, the 
late Senator John Heinz, in 1983, where he made a studied report of it.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                        The Myth of Smoot-Hawley

       Mr. Heinz. Mr. President, every time someone in the 
     administration or the Congress gives a speech about a more 
     aggressive trade policy or the need to confront our trading 
     partners with their subsidies, barriers to import and other 
     unfair practices, others, often in the academic community or 
     in the Congress immediately react with speeches on the return 
     of Smoot-Hawley and the dark days of blatant protectionism. 
     ``Smoot-Hawley,'' for those uninitiated in this arcane field, 
     is the Tariff Act of 1930 (Public Law 71-361) which among 
     other things imposed significant increases on a large number 
     of items in the Tariff Schedules. The act has also been, for 
     a number of years, the basis of our countervailling duty law 
     and a number of other provisions relating to unfair trade 
     practices, a fact that tends to be ignored when people talk 
     about the evils of Smoot-Hawley.
       A return to Smoot-Hawley, of course, is intended to mean a 
     return to depression, unemployment, poverty, misery, and even 
     war, all of which apparently were directly caused by this 
     awful piece of legislation. Smoot-Hawley has thus become a 
     code word for protectionism, and in turn a code word for 
     depression and major economic disaster. Those who sometimes 
     wonder at the ability of Congress to change the country's 
     direction through legislation must marvel at the sea change 
     in our economy apparently wrought by this single bill in 
     1930.
       Historians and economists, who usually view these things 
     objectively, realize that the truth is a good deal more 
     complicated, that the causes of the Depression were far 
     deeper, and that the link between high tariffs and economic 
     disaster is much more tenuous than is implied by this 
     simplistic linkage. Now, however, someone has dared to 
     explode this myth publicly through an economic analysis of 
     the actual tariff increases in the act and their effects in 
     the early years of the Depression. The study points out that 
     the increases in question affected only 231 million dollars' 
     worth of products in the second half of 1930, significantly 
     less than 1 percent of world trade; that in 1930-32 duty-free 
     imports into the United States dropped at virtually the same 
     percentage rate as dutiable imports; and that a 13.5 percent 
     drop in GNP in 1930 can hardly be blamed on a single piece of 
     legislation that was not even enacted until midyear.
       This, of course, in not to suggest that high tariffs are 
     good or that Smoot-Hawley was a wise piece of legislation. It 
     was not. But it was also clearly not responsible for all the 
     ills of the 1930's that are habitually blamed on it by those 
     who fancy themselves defenders of free trade. While I believe 
     this study does have some policy implications, which I may 
     want to discuss at some future time, one of the most useful 
     things it may do is help us all clean up our rhetoric and 
     reflect a more sophisticated--and accurate--view of economic 
     history.
       Mr. President, I ask that the study, by Don Bedell of 
     Bedell Associates, be printed in the Record.
       The study follows:


                                            Bedell Associates,

                                   Palm Desert, Calif., April 1983

   Tariffs Miscast as Villain in Bearing Blame for Great Depression--
                        Smoot/Hawley Exonerated

                         (By Donald W. Bedell)


             smoot/hawley, depression and world revolution

       It has recently become fashionable for media reporters, 
     editorial writers here and abroad, economists, Members of 
     Congress, members of foreign governments, UN organizations 
     and a wide variety of scholars to express the conviction that 
     the United States, by the single act of causing the Tariff 
     Act of 1930 to become law (Public Law 361 of the 71st 
     Congress) plunged the world into an economic depression, may 
     well have prolonged it, led to Hitler and World War II.
       Smoot/Hawley lifted import tariffs into the U.S. for a 
     cross section of products beginning mid-year 1930, or more 
     than 8 months following the 1929 financial collapse. Many 
     observers are tempted simply repeat ``free trade'' economic 
     doctrine by claiming that this relatively insignificant 
     statute contained an inherent trigger mechanism which upset a 
     neatly functioning world trading system based squarely on the 
     theory of comparative economics, and which propelled the 
     world into a cataclysm of unmeasurable proportions.
       We believe that sound policy development in international 
     trade must be based solidly on facts as opposed to 
     suspicious, political or national bias, or ``off-the-cuff'' 
     impressions 50 to 60 years later of how certain events may 
     have occurred.
       When pertinent economic, statistical and trade data are 
     carefully examined will they show, on the basis of 
     preponderance of fact, that passage of the Act did in fact 
     trigger or prolong the Great Depression of the Thirties, that 
     it had nothing to do with the Great Depression, or that it 
     represented a minor response of a desperate nation to a giant 
     world-wide economic collapse already underway?
       It should be recalled that by the time Smoot/Hawley was 
     passed 6 months had elapsed of 1930 and 8 months had gone by 
     since the economic collapse in October, 1929. Manufacturing 
     plants were already absorbing losses, agriculture surpluses 
     began to accumulate, the spectre of homes being foreclosed 
     appeared, and unemployment showed ominous signs of a 
     precipitous rise.
       The country was stunned, as was the rest of the world. All 
     nations sought very elusive solutions. Even by 1932, and the 
     Roosevelt election, improvisation and experiment described 
     government response and the technique of the New Deal, in the 
     words of Arthur Schlesinger, Jr. in a New York Times article 
     on April 10, 1983. President Roosevelt himself is quoted in 
     the article as saying in the 1932 campaign, ``It is common 
     sense to take a method and try it. If it fails, admit it 
     frankly and try another. But above all, try something.''
       The facts are that, rightly or wrongly, there were no major 
     Roosevelt Administration initiatives regarding foreign trade 
     until well into his Administration; thus clearly suggesting 
     that initiatives in that sector were not thought to be any 
     more important than the Hoover Administration thought them. 
     However, when all the numbers are examined we believe 
     neither. President Hoover nor President Roosevelt can be 
     faulted for placing international trade's role in world 
     economy near the end of a long list of sectors of the economy 
     that had caused chaos and suffering and therefore needed 
     major corrective legislation.
       How important was international trade to the U.S.? How 
     important was U.S. trade to its partners in the Twenties and 
     Thirties?
       In 1919, 66% of U.S. imports were duty free, or $2.9 
     Billion of a total of $4.3 Billion. Exports amounted to $5.2 
     Billion in that year making a total trade number of $9.6 
     Billion or about 14% of the world's total. See Chart I below.

                                 CHART I.--U.S. GROSS NATIONAL PRODUCT, 1929-33                                 
                                          [Dollar amounts in billions]                                          
----------------------------------------------------------------------------------------------------------------
                                                                       1929     1930     1931     1932     1933 
----------------------------------------------------------------------------------------------------------------
GNP................................................................   $103.4    $89.5    $76.3    $56.8    $55.4
U.S. international trade...........................................     $9.6     $6.8     $4.5     $2.9     $3.2
U.S. international trade percent of GNP............................      $.3      7.6      5.9      5.1  $5.6 \1
                                                                                                               \
----------------------------------------------------------------------------------------------------------------
\1\ Series U, Department of Commerce of the United States, Bureau of Economic Analysis.                         

       Using the numbers in that same Chart I it can be seen that 
     U.S. imports amounted to $4.3 Billion or just slightly above 
     12% of total world trade. When account is taken of the fact 
     that only 33%, or $1.5 Billion, of U.S. imports was in the 
     Dutiable category, the entire impact of Smoot/Hawley has to 
     be focused on the $1.5 Billion number which is barely 1.5% of 
     U.S. GNP and 4% of world imports.
       What was the impact? In dollars Dutiable imports fell by 
     $462 Million, or from $1.5 Billion to $1.0 Billion, during 
     1930. It's difficult to determine how much of that small 
     number occurred in the second half of 1930 but the 
     probability is that it was less than 50%. In any case, the 
     total impact of Smoot/Hawley in 1930 was limited to a 
     ``damage'' number of $231 Million; spread over several 
     hundred products and several hundred countries.
       A further analysis of imports into the U.S. discloses that 
     all European countries accounted for 30% or $1.3 Billion in 
     1929 divided as follows: U.K. at $330 Million or 7\1/2\%, 
     France at $171 Million or 3.9%, Germany at $255 Million or 
     5.9%, and some 15 other nations accounting for $578 Million 
     or 13.1% for an average of 1%.
       These numbers suggest that U.S. imports were spread broadly 
     over a great array of products and countries, so that any 
     tariff action would by definition have only a quite modest 
     impact in any given year or could be projected to have any 
     important cumulative effect.
       This same phenomenon is apparent for Asian countries which 
     accounted for 29% of U.S. imports divided as follows: China 
     at 3.8%, Japan at $432 Million and 9.8% and with some 20 
     other countries sharing in 15% or less than 1% on average.
       Australia's share was 1.3% and all African countries sold 
     2.5% of U.S. imports.
       Western Hemisphere countries provided some 37% of U.S. 
     imports with Canada at 11.4%, Cuba at 4.7%, Mexico at 2.7%, 
     Brazil at 4.7% and all others accounting for 13.3% or about 
     1% each.
       The conclusion appears inescapable on the basis of these 
     numbers; a potential adverse impact of $231 Million spread 
     over the great array of imported products which were 
     available in 1929 could not realistically have had any 
     measurable impact on America's trading partners.
       Meanwhile, the Gross National Product (GNP) in the United 
     States had dropped an unprecedented 13.5% in 1930 alone, from

[[Page S11647]]

     $103.4 Billion in 1929 to $89 Billion by the end of 1930. It 
     is unrealistic to expect that a shift in U.S. international 
     imports of just 1.6% of U.S. GNP in 1930, for example ($231 
     Million or $14.4 Billion) could be viewed as establishing a 
     ``precedent'' for America's trading partners to follow, or 
     represented a ``model'' to follow.
       Even more to the point an impact of just 1.6% could not 
     reasonably be expected to have any measurable effect on the 
     economic health of America's trading partners.
       Note should be taken of the claim by those who repeat the 
     Smoot/Hawley ``villain'' theory that it set off a ``chain'' 
     reaction around the world. While there is some evidence that 
     certain of America's trading partners retaliated against the 
     U.S. there can be no reliance placed on the assertion that 
     those same trading partners retaliated against each other by 
     way of showing anger and frustration with the U.S. Self-
     interest alone would dictate otherwise, common sense would 
     intercede on the side of avoidance of ``shooting oneself in 
     the foot,'' and the facts disclose that world trade declined 
     by 18% by the end of 1930 while U.S. trade declined by some 
     10% more or 28%. U.S. foreign trade continued to decline by 
     10% more through 1931, or 53% versus 43% for worldwide trade, 
     but U.S. share of world trade declined by only 18% from 14% 
     to 11.3% by the end of 1931.
       Reference was made earlier to the Duty Free category of 
     U.S. imports. What is especially significant about those 
     import numbers is the fact that they dropped in dollars by an 
     almost identical percentage as did Dutiable goods through 
     1931 and beyond: Duty Free imports declined by 29% in 1930 
     versus 27% for Dutiable goods, and by the end of 1931 the 
     numbers were 52% versus 51% respectively.
       The only rational explanation for this phenomenon is that 
     Americans were buying less and prices were falling. No basis 
     exists for any claim that Smoot/Hawley had a distinctively 
     devastating effect on imports beyond and separate from the 
     economic impact of the economic collapse in 1929.
       Based on the numbers examined so far, Smoot/Hawley is 
     clearly a mis-cast villain. Further, the numbers suggest the 
     clear possibility that when compared to the enormity of the 
     developing international economic crisis Smoot/Hawley had 
     only a minimal impact and international trade was a victim of 
     the Great Depression.
       This possibility will become clear when the course of the 
     Gross National Product (GNP) during 1929-1933 is examined and 
     when price behaviour world-wide is reviewed, and when 
     particular Tariff Schedules of Manufacturers outlined in the 
     legislation are analyzed.
       Before getting to that point another curious aspect of the 
     ``villain'' theory is worthy of note. Without careful 
     recollection it is tempting to view a period of our history 
     some 50-60 years ago in terms of our present world. Such a 
     superficial view not only makes no contribution to 
     constructive policy-making. It overlooks several vital 
     considerations which characterized the Twenties and Thirties:
       1. The international trading system of the Twenties bears 
     no relation to the interdependent world of the Eighties 
     commercially, industrially and financially in size or 
     complexity.
       2. No effective international organization existed, similar 
     to the General Agreement for Tariffs and Trade (GATT) for 
     example for resolution of disputes. There were no trade 
     ``leaders'' among the world's nations in part because most 
     mercantile nations felt more comfortable without dispute 
     settlement bodies.
       3. Except for a few critical products foreign trade was not 
     generally viewed in the ``economy-critical'' context as 
     currently in the U.S. As indicated earlier neither President 
     Hoover nor President Roosevelt viewed foreign trade as 
     crucial to the economy in general or recovery in particular.
       4. U.S. foreign trade was relatively an amorphous 
     phenomenon quite unlike the highly structured system of the 
     Eighties; characterized largely then by ``caveat emptor'' and 
     a broadly laissez-faire philosophy generally unacceptable 
     presently.
       These characteristics, together with the fact that 66 
     percent of U.S. imports were Duty Free in 1929 and beyond, 
     placed overall international trade for Americans in the 
     Twenties and Thirties on a very low level of priority 
     especially against the backdrop of world-wide depression. 
     Americans in the Twenties and Thirties could no more 
     visualize the world of the Eighties than we in the Eighties 
     can legitimately hold them responsible for failure by viewing 
     their world in other than the most pragmatic and realistic 
     way given those circumstances.
       For those Americans then, and for us now, the numbers 
     remain the same. On the basis of sheer order of magnitude of 
     the numbers illustrated so far, the ``villain'' theory often 
     attributed to Smoot/Hawley is an incorrect reading of history 
     and a misunderstanding of the basic and incontrovertible law 
     of cause and effect.
       It should also now be recalled that, despite heroic efforts 
     by U.S. policy-makers its GNP continued to slump year-by-year 
     and reached a total of just $55.4 billion in 1933 for a total 
     decline from 1929 levels of 46 percent. The financial 
     collapse of October, 1920 had indeed left its mark.
       By 1933 the 1929 collapse had prompted formation in the 
     U.S. of the Reconstruction Finance Corporation, Federal Home 
     Loan Bank Board, brought in a Democrat President with a 
     program to take control of banking, provide credit to 
     property owners and corporations in financial difficulties, 
     relief to farmers, regulation and stimulation of business, 
     new labor laws and social security legislation.\1\
---------------------------------------------------------------------------
     \1\ Beard, Charles and Mary, New Basic History of the United 
     States.
---------------------------------------------------------------------------
       So concerned were American citizens about domestic economic 
     affairs, including the Roosevelt Administration and the 
     Congress, that scant attention was paid to the solitary 
     figure of Secretary of State Cordell Hull. He, alone among 
     the Cabinet, was convinced that international trade had 
     material relevance to lifting the country back from 
     depression. His efforts to liberalize trade in general and to 
     find markets abroad for U.S. products in particular from 
     among representatives of economically stricken Europe, Asia 
     and Latin America were abruptly ended by the President and 
     the 1933 London Economic Conference collapsed without result.
       The Secretary did manage to make modest contributions to 
     eventual trade recovery through the Most Favored Nation (MFN) 
     concept. But it would be left for the United States at the 
     end of World War II to undertake an economic and political 
     role of leadership in the world; a role which in the Twenties 
     and Thirties Americans in and out of government felt no need 
     to assume, and did not assume. Evidence that conditions in 
     the trade world would have been better, or even different, 
     had the U.S. attempted some leadership role cannot 
     responsibly be assembled. Changing the course of past history 
     has always been less fruitful than applying perceptively 
     history's lessons.
       The most frequently used members thrown out about Smoot/
     Hawley's impact by those who believe in the ``villain'' 
     theory are those which clearly establish that U.S. dollar 
     decline in foreign trade plummeted by 66 percent by the end 
     of 1933 from 1929 levels, $9.6 billion to $3.2 billion 
     annually.
       Much is made of the co-incidence that world-wide trade also 
     sank about 66 percent for the period. Chart II summarizes the 
     numbers.

                                CHART II.--UNITED STATES AND WORLD TRADE, 1929-33                               
                                          [In billions of U.S. dollars]                                         
----------------------------------------------------------------------------------------------------------------
                                                                       1929     1930     1931     1932     1933 
----------------------------------------------------------------------------------------------------------------
United States:                                                                                                  
    Exports........................................................      5.2      3.8      2.4      1.6      1.7
    Imports........................................................      4.4      3.0      2.1      1.3      1.5
Worldwide:                                                                                                      
    Exports........................................................     33.0     26.5     18.9     12.9     11.7
    Imports........................................................     35.6     29.1     20.8     14.0   a 12.5
----------------------------------------------------------------------------------------------------------------
a Series U Department of Commerce of the United States, League of Nations, and International Monetary Fund.     

       The inference is that since Smoot/Hawley was the first 
     ``protectionist'' legislation of the Twenties, and the end of 
     1933 saw an equal drop in trade that Smoot/Hawley must have 
     caused it. Even the data already presented suggest the 
     relative irrelevance of the tariff-raising Act on a strictly 
     trade numbers basis. When we examine the role of a world-wide 
     price decline in the trade figures for almost every product 
     made or commodity grown the ``villain'' Smoot/Hawley's impact 
     will not be measurable.
       It may be relevant to note here that the world's trading 
     ``system'' paid as little attention to America's revival of 
     foreign trade beginning in 1934 as it did to American trade 
     policy in the early Thirties. From 1934 through 1939 U.S. 
     foreign trade rose in dollars by 80% compared to world-wide 
     growth of 15%. Imports grew by 68% and exports climbed by a 
     stunning 93%. U.S. GNP by 1939 had developed to $91 billion, 
     to within 88% of its 1929 level.
       Perhaps this suggests that America's trading partners were 
     more vulnerable to an economic collapse and thus much less 
     resilient than was the U.S. In any case the international 
     trade decline beginning as a result of the 1929 economic 
     collapse, and the subsequent return by the U.S. beginning in 
     1934 appear clearly to have been wholly unrelated to Smoot/
     Hawley.
       As we begin to analyze certain specific Schedules appearing 
     in the Tariff Act of 1930 it should be noted that sharp 
     erosion of prices world-wide caused dollar volumes in trade 
     statistics to drop rather more than unit-volume thus 
     emphasizing the decline value. In addition, it must be 
     remembered that as the Great Depression wore on, people 
     simply bought less of everything increasing further price 
     pressure downward. All this wholly apart from Smoot/Hawley.
       When considering specific Schedules, No. 5 which includes 
     Sugar, Molasses, and Manufactures Of, maple sugar cane, 
     sirups, adonite, dulcite, galactose, inulin, lactose and 
     sugar candy. Between 1929 and 1933 import volume into the 
     U.S. declined by about 40% in dollars. In price on a world 
     basis producers suffered a stunning 60% drop. Volume of sugar 
     imports declined by only 42% into the U.S. in tons. All these 
     changes lend no credibility to the ``villain'' theory unless 
     one assumes, erroneously, that the world price of sugar was 
     so delicately balanced that a 28% drop in sugar imports by 
     tons into the U.S. in 1930 destroyed the price structure and 
     that the decline was caused by tariffs and not at least 
     shared by decreased purchases by consumers in the U.S. and 
     around the world.
       Schedule 4 describes Wood and Manufactures Of, timber hewn, 
     maple, brier root, cedar from Spain, wood veneer, hubs for 
     wheels, casks, boxes, reed and rattan, tooth-picks, porch 
     furniture, blinds and clothes pins among a great variety of 
     product categories. Dollar imports into the U.S. slipped by 
     52% from 1929 to 1933. By applying our

[[Page S11648]]

     own GNP as a reasonable index of prices both at home and 
     overseas, unit volume decreased only 6% since GNP had dropped 
     by 46% in 1933. The world-wide price decline did not help 
     profitability of wood product makers, but to tie that modest 
     decline in volume to a law affecting only 6\1/2\% of U.S. 
     imports in 1929 puts great stress on credibility, in terms of 
     harm done to any one country or group of countries.
       Schedule 9, Cotton Manufactures, a decline of 54% in 
     dollars is registered for the period, against a drop of 46% 
     in price as reflected in the GNP number. On the assumption 
     that U.S. GNP constituted a rough comparison to world prices, 
     and the fact that U.S. imports of these products was 
     infinitesimal, Smoot/Hawley was irrelevant. Further, the 
     price of raw cotton in the world plunged 50% from 1929 to 
     1933. U.S. growers had to suffer the consequences of that low 
     price but the price itself was set by world market prices, 
     and was totally unaffected by any tariff action by the U.S.
       Schedule 12 deals with Silk Manufactures, a category which 
     decreased by some 60% in dollars. While the decrease amounted 
     to 14% more than the GNP drop, volume of product remained 
     nearly the same during the period. Assigning responsibility 
     to Smoot/Hawley for this very large decrease in price 
     beginning in 1930 stretches credibility beyond the breaking 
     point.
       Several additional examples of price behaviour are 
     relevant.
       One is Schedule 2 products which include brick and tile. 
     Another is Schedule 3 iron and steel products. One 
     outstanding casualty of the financial collapse in October, 
     1929 was the Gross Private Investment number. From $16.2 
     Billion annually in 1939 by 1933 it has fallen by 91% to just 
     $1.4 Billion. No tariff policy, in all candor, could have so 
     devastated an industry as did the economic collapse of 1929. 
     For all intents and purposes construction came to a halt and 
     markets for glass, brick and steel products with it.
       Another example of price degradation world-wide completely 
     unrelated to tariff policy is Petroleum products. By 1933 
     these products had decreased in world price by 82% but Smott/
     Hawley had no Petroleum Schedule. The world market place set 
     the price.
       Another example of price erosion in world market is 
     contained in the history of exported cotton goods from the 
     United States. Between 1929 and 1933 the volume of exported 
     goods actually increased by 13.5% while the dollar value 
     dropped 48%. This result was wholly unrelated to the tariff 
     policy of any country.
       While these examples do not include all Schedules of Smoot/
     Hawley they clearly suggest that overwhelming economic and 
     financial forces were at work affecting supply and demand and 
     hence on prices of all products and commodities and that 
     these forces simply obscured any measurable impact the Tariff 
     Act of 1930 might possibly have had under conditions of 
     several years earlier.
       To assert otherwise puts on those proponents of the Smoot/
     Hawley ``villian'' theory a formidable challenge to explain 
     the following questions:
       1. What was the nature of the ``trigger'' mechanism in the 
     Act that set off the alleged domino phenomenon in 1930 that 
     began or prolonged the Great Depression when implementation 
     of the Act did not begin until mid-year?
       2. In what ways was the size and nature of U.S. foreign 
     trade in 1929 so significant and critical to the world 
     economy's health that a less than 4% swing in U.S. imports 
     could be termed a crushing and devastating blow?
       3. On the basis of what economic theory can the Act be said 
     to have caused a GNP drop of an astounding drop of 13.5% in 
     1930 when the Act was only passed in mid-1930? DId the entire 
     decline take place in the second half of 1930? Did world-wide 
     trade begin its decline of some $13 Billion only in the 
     second half of 1930?
       4. Does the fact that duty free imports into the U.S. 
     dropped in 1930 and 1931 and in 1932 at the same percentage 
     rate as dutiable imports support the view that Smoot/Hawley 
     was the cause of the decline in U.S. imports?
       5. Is the fact that world wide trade declined less rapidly 
     than did U.S. foreign trade prove the assertion that American 
     trading partners retaliated against each other as well as 
     against the U.S. because and subsequently held the U.S. 
     accountable for starting an international trade war?
       6. Was the international trading system of the Twenties so 
     delicately balanced that a single hastily drawn tariff 
     increase bill affecting just $231 Million of dutiable 
     products in the second half of 1930 began a chain reaction 
     that scuttled the entire system? Percentage-wise $231 Million 
     is but 0.65% of all of 1929 world-wide trade and just half 
     that of world-wide imports.
       The preponderance of history and facts of economic life in 
     the international area make an affirmative response by the 
     ``villain'' proponents an intolerable burden.
       It must be said that the U.S. does offer a tempting target 
     for Americans who incessantly cry ``mea culpa'' over all the 
     world's problems, and for many among our trading partners to 
     explain their problems in terms of perceived American 
     inability to solve those problems.
       In the world of the Eighties U.S. has indeed very serious 
     and perhaps grave responsibility to assume leadership in 
     international trade and finance, and in politics as well.
       On the record, the United States has met that challenge 
     beginning shortly after World War II.
       The U.S. role in structuring the United Nations, the 
     General Agreement on Tariffs and Trade (GATT), the 
     International Monetary Fund, the Bretton Woods and Dumbarton 
     Oaks Conference on monetary policy, the World Bank and 
     various Regional Development Banks, for example, is a record 
     unparalleled in the history of mankind.
       But in the Twenties and Thirties there was no acknowledged 
     leader in International affairs. On the contrary, evidence 
     abounds that most nations preferred the centuries-old 
     patterns of international trade which emphasized pure 
     competition free from interference by any effective 
     international supervisory body such as GATT.
       Even in the Eighties examples abound of trading nations 
     succumbing to nationalistic tendencies and ignoring signed 
     trade agreements. Yet the United States continues as the 
     bulwark in trade liberalization proposals within the GATT. It 
     does so not because it could not defend itself against any 
     kind of retaliation in a worst case scenario but because no 
     other nation is strong enough to support them successfully 
     without the United States.
       The basic rules of GATT are primarily for all those 
     countries who can't protect themselves in the world of the 
     Eighties and beyond without rule of conduct and discipline.
       The attempt to assign responsibility to the U.S. in the 
     Thirties for passing the Smoot/Hawley tariff act and thus set 
     off a chain reaction of international depression and war is, 
     on the basis of a prepondance of fact, a serious mis-reading 
     of history, a repeal of the basic concept of cause and effect 
     and a disregard for the principle of proportion of numbers.
       It may constitute a fascinating theory for political 
     mischief-making but it is a cruel hoax on all those 
     responsible for developing new and imaginative measures 
     designed to liberalize international trade.
       Such constructive development and growth is severely 
     impeded by perpetuating what is no more than a symbolic 
     economic myth.
       Nothing is less worthwhile than attempting to re-write 
     history, not learning from it. Nothing is more worthwhile 
     than making careful and perceptive and objective analysis in 
     the hope that it may lead to an improved and liberalized 
     international trading system.

  Mr. HOLLINGS. Mr. President, the crash occurred October 29, and 
Smoot-Hawley passed June 19, 8 months later. It didn't cause any crash. 
It didn't have any affect on the economy. Neither President Hoover nor 
President Roosevelt had any particular concern with it, because it was 
less than 2 percent, a little over 1 percent of GNP. Trade now is 18 
percent of the GDP. But it was less than 2 percent at that particular 
time, and two-thirds of the trade was duty free. The two-thirds duty 
free was affected the same as the Smoot-Hawley tariff type trade. While 
in the year 1933, under reciprocal free trade, reciprocity, we came 
back with a plus balance of trade. So we have to listen to these things 
about we are going to start a domino effect with Smoot-Hawley again 
coming in.
  I can tell you that right now, I would be glad to debate Smoot-Hawley 
at any particular time.
  Well I just read the book called ``Agents of Influence.'' This takes 
place 7 or 8 years ago. The gentlemen was a Vice President of TRW and 
he lost his job because he wrote the truth. He said one country, Japan, 
had over 100 law firms, consultant firms in Washington representing 
itself, at the cost of $113 million. The consummate salary of the 100 
Senators and 435 House Members is only $73 million. The people of 
Japan, by way of pay, are better represented in Washington than the 
people of America.
  When are we going to wake up? I have been sitting on the Commerce 
Committee for 30 years and I see the front office fill up on every kind 
of trade matter that comes about. Why? Because the multinationals. Now, 
by gosh, not just 41 percent, but the majority, let's say over 50 
percent of what they are producing has been manufactured offshore and 
brought back in. So if they are going to lead the cheer ``free trade, 
free trade, Japan, Korea, People's Republic of China, right on, 
brother, you lead the way, we will follow you.''
  Do you blame the People's Republic of China for not agreeing to 
anything? I have to note one agreement. Oh, boy, it turned everybody 
upside down in this town 2 weeks ago. We had an agreement with Japan 
relative to our maritime services, and our ships would go into the 
ports of Tokyo and the other ports in Japan. And they had finally came 
around agreeing to the same privileges that we grant them, the 
stevedores. They actually handle the goods and so forth. The Japanese 
ship that comes into Charleston can have its own stevedore, but the 
American ships going in to Japan could not,

[[Page S11649]]

up until this time. And we have been trying for years--and they have 
all kinds of controls over us in shipping that are absolutely 
burdensome. They agreed--Japan and the United States--in April. At that 
particular time in April, when they agreed, we sat down and said, fine, 
let's go with it. They passed four deadlines, in June, July, August and 
September. Every time we added a drop-dead date, when are you going to 
do it? Oh, we are going to do it. So we stopped the ships coming in. 
You know what happened? My phone rang off. The 100 lawyers, the ports 
authority lawyers, the lobbyists--Christmas wasn't going to happen, 
children weren't going to get any toys, the world was going to end, but 
we had one distinguished gentlemen with his maritime commission, Hal 
Creel, the chairman, who I want to praise this afternoon. He held his 
guns. The State Department later came in, and I will credit Stuart 
Eizenstat with sticking up for the United States. But it was many times 
that they came before we got them finally to agree.
  So, we stuck to the guns, and who was on our side? The shipping 
industry of Japan, because organized crime had taken over, in many 
instances, in these ports. And they, the shipping industry in Japan, 
had been trying to do something, too. It wasn't until we stopped 
veritably the Japanese ship from coming into the American harbor that 
they finally sat down and got to the table. The White House was 
calling: Give in, give in. Oh, this is going to be a hard incident. 
This is going to be terrible. Chicken Little, the sky is falling, we 
are going to start a trade war and everything else of that kind.
  Mr. Creel stuck to his guns. That is what I am talking about on 
trade. That is the global competition.
  The other day former Majority Leader Dole wrote an op-ed regarding 
fast track. Don't give me Bob Dole writing the thing is a fact. The 
distinguished gentleman should put under there that he represents the 
Chilean salmon industry. Don't give me our good friend, Jay Berman. 
Everyone knows he lost out for the recording industry on the last two 
agreements. He said, I'm not going to lose out, I am going to be the 
President's handler, I am going to handle the Congress for the White 
House.
  We are in the hands of the Philistines. The country is going down the 
tubes and all they are doing is the rich folks are hollering, give the 
President authority. He has the authority, but give me my 
constitutional duty of doing just exactly what we did.
  Come on, we have had, as the Senator from North Dakota said, in 221 
years hundreds of trade agreements. We had one this morning in 
committee. It was an OECD shipbuilding trade agreement that we approved 
between 16 nations at the Commerce Committee just today, without fast 
track. We negotiated the telecommunications agreement, an international 
agreement with 123 countries, without fast track.
  I better stop. I don't know that I have any time left. Mr. President, 
I thank the distinguished body for yielding me this time. I hope I have 
some time left here, because we have plenty more to debate to wake up 
this country and start competing.
  There is nothing wrong with the industrial worker of the United 
States. He is the most competitive, the most productive in the world. 
Look at any of the figures. What is not producing and not competitive 
is the Government here in Washington. It has to stop.
  I yield the floor. I reserve the remainder of my time.


                         Privilege Of The Floor

  Mr. ROTH. Mr. President, I ask unanimous consent that full floor 
privileges be granted to Grant Aldonas during the pendency of S. 1269 
and the House corresponding bill, H.R. 2621, during this Congress, and 
that, too, the privilege of the floor be granted to Robert M. Baker 
with respect to the same bills during the first session.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BYRD addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. BYRD. Mr. President, I have enjoyed listening to my friend, the 
distinguished Senator from South Carolina, who knows this subject up 
and down, back and forward, around and around. I thank him for the 
contribution he has made to the debate. I wish he had another hour.
  Mr. President, there has been a great deal of discussion during the 
past several months about fast track. Sadly, little of that discussion 
has been enlightening or informative. The administration, which 
submitted the Export Expansion and Reciprocal Trade Agreement Act of 
1997 in September, has apparently decided that misleading, exaggerated, 
and vacuous rhetoric is necessary if it is to win fast track renewal. 
Thus, the U.S. Trade Representative--for whom I have great respect--has 
described the President's fast track proposal to the Senate in the 
following terms:

       What is at stake in your consideration of this proposal is 
     nothing less than whether the United States will continue to 
     be at the forefront of nations seeking the reduction of trade 
     barriers and the expansion of more open, equitable and 
     reciprocal trading practices throughout the world.

  Let me say that again:

       What is at stake in your consideration [meaning the 
     consideration by the Congress] of this proposal is nothing 
     less than whether the United States will continue to be at 
     the forefront of nations seeking the reduction of trade 
     barriers and the expansion of more open, equitable and 
     reciprocal trading practices throughout the world . . . . 
     This is not the time to shrink from the future, but to seize 
     the opportunities it holds.

  Let me assure you, Mr. President, that I am fully in favor of 
``seizing the future.'' I, too, seek the reduction of trade barriers, 
and I long for ``more open, equitable and reciprocal trading 
practices.'' That is why I am firmly and implacably opposed to fast 
track.
  Mr. President, I did not come here today to add to the miasma of 
confusion that fast track supporters have created with their murky 
logic and overheated rhetoric. My purpose is to shed a little light, if 
I may, into the murk by exploring the institutional and practical 
problems that fast track presents. I believe that it is my duty toward 
my colleagues and my constituents to lay out in clear, simple and 
direct language the reasons for my opposition to fast track.
  I haven't been invited down to the White House. I presume that my 
good friend from South Carolina has not had an invitation down there.
  Mr. HOLLINGS. No.
  Mr. BYRD. I haven't been invited down. I am not looking for an 
invitation. I do not expect any invitation to change my mind. I have 
had the master of arm twisters ahold of my arm, Lyndon B. Johnson. He 
was the master arm twister. But I said no to him.
  When my first grandchild was born I gave to my daughter, the mother 
of that grandchild, a Bible. In that Bible I wrote these words: ``Teach 
him to say no.'' That's all I wrote, ``Teach him to say no.''
  Mr. President, it doesn't make any difference if you have a 
vocabulary of 60,000 or 600,000 words. If you can't say no, then all 
these other words at some point or another in your lifetime are going 
to find you sadly lacking--if you can't say no. I am telling this story 
in my autobiography, of how I said no to Lyndon B. Johnson on more than 
one occasion. It was hard to do, because he put me on the 
Appropriations Committee when I first came here. And I felt as though I 
had been put through a wringer after going through a 30-minute skirmish 
with Lyndon Johnson but still saying, ``No. No, Mr. President.''
  So, I haven't been invited down to the White House. But I can still 
say no and would be glad to.
  So, if the President wants to hear me say no, all he has to do is 
call me on this. He doesn't have to invite me down to the White House. 
I'll bet the Senator from South Carolina won't get any invitation 
either.
  Mr. HOLLINGS. No.
  Mr. BYRD. I don't blame those who accept the invitation. I assume 
some of them will say no likewise.
  I don't expect to convince my colleagues, all of them or maybe any of 
them. But I do hope to lay the groundwork for the healthy, open and 
honest debate about fast track that this Chamber and this country 
sorely need.
  So let me start by making clear that Congress has and must continue 
to have a central role in regulating trade with foreign countries. The 
Constitution--here it is, right out of my shirt pocket. Here is the 
anchor of my liberties, the Constitution. Let's see what it says.
  Article I, section 8 assigns to the Congress the power ``to regulate 
Commerce with foreign Nations, and among the several States, and with 
the Indian

[[Page S11650]]

Tribes,'' assigns the power ``to regulate Commerce with foreign 
Nations,'' and to ``lay and collect * * * Duties, Imposts, and 
Excises.'' Pursuant to this authority, Congress may, for example, 
impose tariffs, authorize reciprocal trade agreements, grant or deny 
most-favored-nation status, and regulate international communication. 
All this Congress can and must do according to the Constitution of the 
United States.
  Nor is this the extent of Congress' involvement in matters of foreign 
trade. It scarcely needs to be pointed out that Congress' central 
function--Congress' central function as laid out in the first section 
of the first article of the Constitution, the very first sentence--
its central function is to make the laws of the land. This means that 
any trade agreements that are not self-executing, meaning that they 
require changes in domestic law, can only take effect if and when 
Congress passes implementing legislation codifying those changes.

  So it should be clear from the Constitution that the framers assigned 
Congress broad authority over foreign trade agreements. Even Alexander 
Hamilton, who so often championed the President's supremacy in foreign 
affairs, acknowledged in the Federalist Papers that Congress' authority 
to regulate foreign commerce was essential to prevent the President 
from becoming as powerful as the King of Great Britain.
  Given the President's responsibilities in conducting relations with 
foreign powers, Hamilton argued that Congress' regulation of foreign 
trade was a vital check upon Executive power. But look what we are 
doing, look what we are about to do. We are, through fast track, just 
as we did with the line-item veto, handing off the few powers that we 
have to check the Executive. Let me say that again.
  We are, through fast track, just as we did with the line-item veto, 
handing off the few powers that we have to check the Executive. We are 
making a king. He already has his castle with his concrete moat. I can 
see it out there. The Senator from Delaware can see it. Here he has 
this concrete moat out there, and with the king's guard standing watch 
in dark glasses--you know how they wear those dark glasses--with ears 
glued to wrist radios, and little implements on their lapels, he has 
his own private coach, his own chef and royal tasters, his retinue of 
fancy-titled king's men. You read ``All the King's Men''?
  So what are we waiting for? What are we waiting for? Just call in the 
jeweler, contact the goldsmith, let's make the crown; let's make the 
crown. Crown him king. That is the road on which we are traveling.
  We gave away the line-item veto. The Roman Senate did the same. It 
gave away the power of the purse, and when the Roman Senate gave away 
the power of the purse, it gave away its check against the executive. 
So Sulla became dictator in 82 B.C. He was dictator from 82 to 80 B.C., 
and then a little later, the Senate--it wasn't under pressure to do 
it--voluntarily ceded the power over the purse to Caesar and made him 
dictator for a year. That was in 49 B.C.
  Then in 48 B.C., it made him dictator again. And in 46 B.C., it made 
him dictator for 10 years, just as we are going to do with fast track 
now for 5 years. We don't do it a year at a time. The Roman Senate made 
Caesar dictator for 10 years. That was in 46 B.C. But the very next 
year, in 425 B.C., it made him dictator for life.
  I don't know when we will reach that point, but we have already ceded 
to this President great power over the purse. It has never before been 
done in the more than 200 years of American history. It was never given 
to any President, the power over the purse. Now we are going to give 
the President fast track. So we are just waiting, just waiting for the 
jeweler! We are on the point of contacting the goldsmith! Let's now 
make the crown!
  From 1789 to 1974, Congress faithfully fulfilled Hamilton's dictate, 
and the dictate of the Constitution that it regulate foreign trade. 
During those years, Congress showed that it was willing and able to 
supervise commerce with other countries. Congress also proved that it 
understood when changing circumstances required it to delegate or 
refine portions of its regulatory power over trade. For example, 
starting with the 1934 Reciprocal Trade Act, as trade negotiations 
became increasingly frequent, Congress authorized the President to 
modify tariffs and duties during his negotiations with foreign powers. 
Such proclamation authority has been renewed at regular intervals, most 
recently in the 1994 GATT Reciprocal Trade Act, which I voted against.
  I mentioned that Congress fulfilled its obligation to regulate 
foreign trade from 1789 to 1974. Well, what, you may wonder, happened 
in 1974?
  Mr. President, it was in 1974 that Congress first approved a fast-
track mechanism to allow for expedited consideration in Congress of 
trade agreements negotiated by the President. Fast track set out limits 
on how Congress would consider trade agreements by banning amendments, 
limiting debate and all but eliminating committee involvement.
  So we relegated ourselves to a thumbs-up or thumbs-down role. Thumbs 
up, thumbs down. Under fast track, Congress agreed to tie its hands and 
to gag itself when the President sends up a trade agreement for our 
consideration.
  Why on Earth, you might ask, would Congress agree to such a thing? 
What would convince Members of Congress to willingly relinquish a 
portion of Congress' constitutional power over foreign commerce? What 
were Members thinking when they agreed to limits on the democratic 
processes by which laws are made? And why, if extensive debate and the 
freedom to offer amendments are essential to all of the areas of 
lawmaking, would Congress decide that when it comes to foreign trade, 
we can do without such fundamental legislative procedures?
  Mr. President, the answers to these questions are straightforward. 
When Congress established fast track in 1974, it did so at a time when 
international commercial agreements were narrowly--narrowly--limited to 
trade. Consider the first two instances in which fast track was 
employed.
  The first was for the 1979 GATT Tokyo Round Agreement. The 
implementing bill that resulted dealt almost exclusively with tariff 
issues and required few changes in U.S. law.
  The second use of fast track was for the U.S.-Israel Free Trade 
Agreement of 1985. The implementing language for that agreement was all 
of 4 pages--all of 4 pages--and it dealt only with tariffs and rules on 
Government procurement.
  If its first two uses were relatively innocuous, starting with its 
third use, fast track began to change and to develop an evil twin. I 
refer to the 1988 U.S.-Canada Free Trade Agreement which, despite its 
title, extended well beyond trade issues to address farming, banking, 
food inspection and other domestic matters. One has only to see the 
size of the agreement's implementing bill, covering over 100 pages now, 
to see how different this was from the first two agreements approved 
under the fast-track mechanism.
  By the time of the NAFTA agreement in 1993 and the GATT Uruguay Round 
of 1994, the insidious nature of fast track was becoming apparent for 
all to see.
  NAFTA required substantial changes in U.S. law, addressing everything 
from local banking rules to telecommunications law to regulations 
regarding the weight and length of American trucks. And these changes 
were bundled aboard a hefty bill numbering over 1,000 pages and 
propelled down the fast track before many Members of Congress knew what 
was going on.
  I doubt that many of my colleagues realized the extent to which, 
first, NAFTA and then GATT would alter purely domestic law.
  Most of us thought of GATT as related to trade and foreign relations, 
but through the magic mechanism of the fast-track wand--presto--trade 
legislation became a vehicle for sweeping changes in domestic law.
  So what had happened? What had happened? Mr. President, Socrates, in 
his Apology to the judges said ``Petrifaction is of two sorts. There is 
a petrifaction of the understanding, and there is also a petrifaction 
of the sense of shame.'' I fear that with respect to the Constitution, 
there is not only a petrifaction of our understanding of that document, 
but there is also a petrifaction of reverence for the document, and a 
petrifaction of our sense of duty toward that organic law. So 
petrifaction has set in.

[[Page S11651]]

  Mention the Constitution to Members: ``When did you last read it? 
What did you mean when you swore that you would support and defend the 
Constitution of the United States against all enemies, foreign and 
domestic? What did you have in mind? Did you have in mind some foreign 
invader that was about to set foot on American soil? Was that it? Or 
did you think about emasculating the Constitution by passing line-item 
veto legislation or by passing fast track?"
  Has a petrifaction of our sense of duty to the Constitution set in? 
Has a petrifaction of our understanding of the Constitution set in? Has 
a petrifaction of our caring about the Constitution taken over?
  Well, fast track served to bind and gag the Senate, preventing much 
needed debate and precluding the possibility of correcting amendments. 
Think about that. We give up our right to amend. And the result, as 
many observers today would agree, is hardly a triumph for free trade or 
American workers.
  How much time do I have remaining, Mr. President?
  The PRESIDING OFFICER. The Senator from West Virginia has 36 minutes 
remaining.
  Mr. BYRD. I thank the Chair.
  Mr. President, it was our first and, in my opinion, greatest 
President, George Washington, who analogized the Senate to a saucer, we 
are told, into which we pour legislation so as to cool it. Washington 
foresaw that a country as young, as aggressive and at times as 
impatient as ours needed some institutional curb to prevent it from 
rashly throwing itself into action without sufficient reflection.
  Indeed, Mr. President, the Senate has more than once lived up to this 
role by providing a forum where cool minds and level intellects 
prevailed.
  Alas, the Senate did not fulfill this role when NAFTA and GATT came 
along. And the fault lies with the adoption of the artificial and 
unwise procedure now known as fast track--fast track. That is what the 
administration is telling Members of Congress we have to have. Instead 
of scrutinizing these proposals closely, instead of engaging in 
prolonged and incisive debate, we were forced to play our parts in ill-
considered haste. Rather than patiently and thoughtfully evaluating the 
pros and cons--what did we do?--we buckled--buckled--in the face of 
administration pressure.
  And that is what we will do again. That is what we will do again. We 
are not going to think about the Constitution. How many of us cared a 
whit about what the Constitution said?
  Rather than pouring over the trade agreements, we peered at them from 
afar like tourists gawking at a distant and rapid train thundering down 
a very fast and very slick track indeed.
  The GATT and NAFTA experiences suggest that fast track--like the fast 
lane--can be risky business for U.S. trade policy. Fast track was 
Congress' response to a time when trade agreements were just that--
trade agreements, agreements on trade and trade alone.
  Now that time has passed--it is gone--as huge, sprawling agreements 
like GATT and NAFTA propose changes in trade policy whose ramifications 
spill outwards into all aspects of domestic law and policy. Now what is 
our duty? What is our duty? Where does our duty lie?
  It is time that we in Congress wake up and resume a more traditional 
role of treating trade agreements with the care and the attention that 
they deserve and the care and attention that the Constitution requires 
that we give them.
  Now, Mr. President, I have tried to shine a few rays of truth through 
the murky rhetoric that surrounds this contentious issue. I have 
patiently laid out the history of foreign trade regulations in order to 
emphasize the important role that tradition and the Constitution 
assigned to Congress and to show how fast track has impeded our recent 
efforts to fulfill that role. But I would be remiss in my duties if I 
did not take the time to address some of the supposedly compelling 
justifications that fast track supporters have advanced.
  So let me start with the first myth--the first myth--of fast track, 
which posits that no country will negotiate with the United States 
unless the administration has fast track in place. How laughable, how 
preposterous.
  In the President's words:

       Our trading partners will only negotiate with one America--
     not first with an American President and next with an 
     American Congress.

  Well, what did the framers say about that? What did the framers say 
about that? They said that Congress shall regulate, have the power to 
regulate foreign commerce. The Constitution placed the duty upon us 100 
Senators and upon the other 1,743 Members of this body who have walked 
across this stage in the more than 200 years. So we 100 need to 
remember that this document--this document--places the responsibility 
on us.
  Do not be blinded by the glittering gewgaws in the form of words that 
come from the White House. Do not let a call from the President of the 
United States, his ``Eminence,'' as John Adams wanted to refer to the 
President, do not let a call or a handshake or a look in the eye from 
the chief executive, awe one--he puts his britches on just like I do, 
one leg at a time. And when he nicks himself with a razor, he bleeds 
just like I do.
  So the President said:

       Our trading partners will only negotiate with one 
     American--not first with an American President and next with 
     an American Congress.

  What does the Constitution say?
  As I suggested earlier, the absence of fast track in the years before 
1974 did not seem to discourage nations from negotiating trade 
agreements with the United States. Moreover, even since 1974, fast 
track has been used so infrequently that it can scarcely be said to 
have affected prospective trade partners.
  Listening to the administration might lead one to conclude that every 
trade agreement since 1974 could not have been concluded--just could 
not have been concluded--without fast track. To hear them tell it down 
on the other end of Pennsylvania Avenue, the western end, where the Sun 
rises--but not according to this, not according to this Constitution. 
The Sun does not rise in the west.
  But listening to the administration might lead one to conclude that 
every trade agreement since 1974 simply could not have been concluded 
without fast track. Well, nothing could be further from the truth. Of 
the hundreds and hundreds of trade agreements that we have entered into 
over the past 23 years, only--only--the five that I mentioned earlier 
have used fast track.
  ``What? Are you out of your head?'' Only the five that I mentioned 
earlier have used fast track? That is right.
  Fast track has been used on a grand total of five occasions. Indeed, 
the current administration alone has entered into some 200 trade 
agreements without the benefit of fast track.
  Mr. President, the divine Circe was an enchantress. And Homer tells 
us that Odysseus was urged by Circe to stay away from the sirens' isle. 
``Don't go near it,'' the sirens' isle, with their melodious voices 
that came from lips as sweet as honey. ``Odysseus alone must hear them. 
Don't let your companions hear them.'' So plugging his companions' ears 
with wax, Odysseus ordered his companions to bind him to the mast of 
the ship with ropes, and that if he should ask them to untie him and 
let him go, to bind him even tighter.
  And so they bound him, hand and foot, with ropes to the mast of the 
ship. And he instructed them to disregard his order. ``Don't follow my 
orders,'' he said. ``Tie them tighter than ever,'' until they were a 
long way past the sirens' isle.
  That is what we have been hearing--these voices, the sirens. They 
come out of the west, down where the Sun rises at the western end of 
Pennsylvania Avenue. That is where the Sun rises, believe it or not, in 
the west.
  I say to my colleagues, plug your ears with wax if you are invited 
down to the White House. Plug your ears with wax or, better still, find 
somewhere else to go. Just do not go. Do not go down there. Tie 
yourselves with ropes to the columns of the Capitol. Do not go down 
there in the land of the rising sun, the western end of Pennsylvania 
Avenue. Do not go. But if you do go, plug your ears with wax, lest you 
fall victim to the blandishments of the sirens.
  Mr. President, I sincerely doubt that any country will hesitate to 
negotiate

[[Page S11652]]

trade agreements with the dominant economic and political power of our 
time out of concern that that country's legislative procedures will 
impede a proper agreement. So do not listen to that argument. Do not 
listen to the argument of the administration when they say, if they do 
not have a fast-track agreement other countries simply will not 
negotiate with us.
  No country--no country--in my judgment, will hesitate to negotiate 
trade agreements with this country, the dominant economic and political 
power of the age out of concern that this country's legislative 
procedures will impede a proper agreement. If any country does 
entertain such concerns, then I suspect that the fault lies with the 
administration, whose alarmist statements and doom-laden prophecies 
have doubtless misled many foreign and domestic observers into thinking 
that fast track is the only key to open trade. The administration's 
Chicken Little impersonation has succeeded in whipping up false fears 
and phony worries that never existed before. One has only to ignore 
this rhetoric and look at the administration's actual trade record to 
see that the sky, far from falling, is still solidly secured to the 
heavens.

  Mr. President, how much time have I consumed?
  The PRESIDING OFFICER. The Senator has consumed 40 minutes and has 20 
minutes remaining.
  Mr. BYRD. I thank the Chair.
  The record speaks for itself: Over 200 trade agreements entered into 
without fast track--and I am talking about the record which speaks for 
itself. The administration's actual trade record, over 200 trade 
agreements entered into without fast track versus 2 trade agreements 
entered into with fast track--200 without fast track, 2 with fast 
track. I might add that the latter 2 agreements have probably generated 
more controversy than the other 200 combined. I suspect that many of my 
colleagues rue the day that they allowed the administration to speed 
GATT and NAFTA through Congress.
  The other great myth of fast track is that the possibility of 
Congress' amending trade agreements will seriously hamper future 
negotiations. Lest I be accused of distorting the administration's 
position, let me quote the President's words on trade negotiations 
verbatim.

       . . . I cannot fully succeed without the Congress at my 
     side. We must work in partnership, together with the American 
     people, in securing our country's future. The United States 
     must be united when we sit down at the negotiating table.

  Mr. President, I fully agree with the notion of a partnership between 
the executive and legislative branches, and I assure you that I will 
work with this President and with future Presidents to ensure our 
mutual trade objectives. But I will not accept the argument that 
America's trade interests are best served by Congress taking a walk, 
abdicating its responsibility to consider, abdicating its 
responsibility to debate, abdicating its responsibility to amend, if 
necessary, trade proposals.
  Now, the Constitution gives this Senate the right to amend and we 
ought not give away that right. We ought not to agree to anything less 
than that. This Constitution says that when it comes to raising money, 
those measures shall originate in the other body but that the Senate 
may amend as on all other bills. So there you are. The Constitution 
recognizes the right of the Senate to amend. The Senate may propose or 
concur with amendments as on other bills. There it is. That is the 
Constitution.
  So Congress ought not take a walk. Congress ought not abdicate its 
responsibility to consider, debate, and, if necessary, to amend trade 
proposals.
  The President asked that we trust him alone to make trade decisions. 
Now, I like the President and I respect the President, but our 
political system was not built on trust. The Constitution did not say 
``trust in the President of the United States with all thy heart, with 
all thy mind, and with all thy soul.'' Our political system was built 
on checks and balances, on separation of powers, on each branch of 
Government looking carefully and meticulously over the other branch's 
shoulder. That is how much trust the system has built into it.
  Our Constitution's Framers realized that the surest way of preventing 
tyranny and achieving enlightened rule was to divide power among 
distinct coordinate branches of Government. As Madison famously 
observed, men are not angels. Accordingly, the Framers devised a 
``policy of supplying, by opposite and rival interests, the defect of 
better motives'' in which ``the constant aim is to divide and arrange 
the several offices of Government in such a manner as that each may be 
a check on the other.''
  Mr. President, that was a good reply that Diogenes made to a man who 
asked him for letters of recommendation. ``That you are a man, he will 
know when he sees you. Whether you are a good man or a bad one he will 
know, if he has any skill in discerning the good and the bad. But if he 
has no such skill, he will never know though I write to him 1,000 
times.''
  ``It is as though a piece of silver money desired someone to 
recommend it to be tested. If the man be a good judge of silver, he 
will know. The coin,'' said Diogenes, ``will tell its own tale.'' And 
so will the Constitution, Mr. President. It needs no letters of 
recommendation.
  The President asks for a ``partnership'' with Congress. He asks the 
country to be united at the negotiating table. But I'm afraid that what 
he really wants is an unequal partnership in which the administration 
sits at the negotiating table and Congress sits quietly and 
subserviently at his feet while he negotiates. Congress sits 
subserviently.
  Mr. President, I have a different view of the partnership between the 
President, any President, and Congress, a view that is rooted in the 
Congress and in the institutional traditions of this country. I see a 
partnership in which the executive fulfills its role at the negotiating 
table and Congress makes sure that the product of such negotiations 
serves the national interest, not just the interests of a party but the 
national interest. I don't believe that either branch has a monopoly on 
wisdom or a monopoly on patriotism or a monopoly on savvy. That is why 
I believe that each can improve the other's actions. I have no doubt 
that Congress, after careful scrutiny, will continue to approve 
agreements that truly improve trade and open markets.
  Now, I'm not interested in looking at the duties on every little 
fiddle string or corkscrew that is brought into this country, but they 
are overweighing policy matters that Congress ought to be interested in 
and acted about, and it may be that Congress should offer an amendment 
in one way or another.
  Congress must be free to correct possible mistakes or sloppiness or 
oversight in the negotiating process that would harm this country's 
interests and impede truly free trade. Congress knows full well that 
any amendments it may offer could unravel a freshly negotiated 
agreement. It knows that amendments should not be freely offered and 
adopted promiscuously, haphazardly, but should rather be seen as a last 
resort to remedy serious deficiencies in an agreement. I see no reason, 
however, why a legislative procedure that is considered essential in 
all other policy debates should not be used in debating trade 
agreements.
  We amend bills, we amend resolutions on various and sundry subjects, 
we amend legislation that raises revenues, we amend bills that make 
appropriations and public moneys. Why, then, if that legislative 
procedure is essential in all other debates, why should it not be used 
in debating trade agreements?
  Mr. President, I recognize the importance of opening markets and 
removing trade barriers. I also appreciate the tremendous difficulty, 
the tremendous difficulty of negotiating trade agreements that benefit 
all sectors of our society.
  Mr. President, I cannot support fast track. I cannot support 
surrendering the rights and prerogatives and duties and 
responsibilities of this body under the Constitution to any President. 
I cannot support fast track. To do so would prevent me from subjecting 
future trade agreements to the close scrutiny that they deserve on 
behalf of the people of this Nation. I can and will strive to exercise 
my limited powers in pursuit of freer, more open trade which serves the 
interests of everyone in this Nation. But I cannot, in good conscience, 
allow fast track to strip me and my constituents of our constitutional 
prerogatives and strip this

[[Page S11653]]

branch of its rightful role in regulating foreign commerce. I can't do 
that for any President.

  Mr. President, on December 5, 63 B.C. the Roman Senate sat to debate 
and to decide the fate of five accomplices of Catiline. Silaneus 
proposed the death penalty. Julius Caesar, when he was called upon, 
proposed that the death penalty not be applied, but that the five 
accomplices of Catiline be scattered in various towns, that their 
properties be confiscated, and that their trials await another day.
  Cato the Younger was then called upon and asked for his opinion. He 
said to his fellow Senators, ``Do not believe that it was by force of 
arms alone that your ancestors lifted the state from its small 
beginnings and made it a great Republic. It was something quite 
different that made them great, something that we are entirely lacking. 
They were hard workers at home. They were just rulers abroad. And they 
brought to the Senate untrammeled minds, not enslaved by passions.''
  And I say to my colleagues, on this question, we should come to the 
Senate with untrammeled minds, not enslaved by passions--partisan, 
political, or otherwise, keeping uppermost in our minds our duties and 
responsibilities under the Constitution of the United States. That is 
the mast to which we should tie ourselves--the Constitution.
  I close with these final words by Cato: ``We have lost those 
virtues,'' he said--speaking of the virtues of their ancestors--``we 
pile up riches for ourselves while the state is bankrupt. We sing the 
praises of prosperity and idle away our lives, good men or bad; it is 
all one. All the prizes that merit ought to win are carried off by 
ambitious intriguers, and no wonder each one of you schemes only for 
himself, when in your private lives you are slaves to pleasure. And 
here in the Senate the tools of money or influence.''
  Those are Cato's words, and his words are just as fitting today and 
on this question. Cato said, ``The result is that when an assault is 
made upon the republic, there is no one here to defend it.''
  Mr. President, how true are Cato's words today! I urge my colleagues 
to vote no on the motion to proceed.
  I yield the floor.
  Mr. REED addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. REED. Mr. President, I rise today to use my time to discuss the 
fast-track bill. First, let me commend the excellent statement by the 
Senator from West Virginia. His staunch defense of the Senate and the 
Congress is based not only on his unsurpassed knowledge of the 
Constitution, but also his common sense and appreciation that the 
wisdom of the American people expressly represent the best way to make 
a treaty.
  I rise to discuss a number of issues with respect to our trade 
policy, most particularly, the fast-track legislation that is before us 
today. Like all of my colleagues, I understand the importance of 
international trade. Today, the value of trade equals 30 percent of our 
gross domestic product, which is up from about 13 percent in 1970. 
Indeed, trade is of great importance to my State of Rhode Island, which 
exported goods totaling $1 billion in 1996.
  There is nobody on this floor today that is arguing that trade is not 
important and that the United States shouldn't be actively involved in 
international trade. The question today is not whether the United 
States should engage in trade. The question today is whether we will 
establish a framework that will open markets without undermining our 
standard of living. This debate is more than about simply increasing 
our access to cheap goods; it is about our continuing efforts to 
promote employment at decent wages here at home, continuing our efforts 
to protect the environment around the world, and strengthening our 
efforts to promote stable trade and fair trade throughout the world.
  The critical aspects of this fast-track legislation are the goals 
which we set as Members of the Senate. These goals are known as 
principal negotiating objectives. This is the mission we give to the 
President--to go out and negotiate, based on these goals, to reach 
settlements that will advance these multiple objectives: freer trade, 
fairer trade, a rising standard of living here in America and, we hope, 
around the world.
  The rationale for fast track was aptly summarized back in 1974 when 
the Senate Finance Committee wrote its report with respect to the first 
fast-track legislation. This report language bears repeating:

       The committee recognizes that such agreements negotiated by 
     the executive should be given an up-or-down vote by the 
     Congress. Our negotiators cannot be expected to accomplish 
     the negotiating goals if there are no reasonable assurances 
     that the negotiated agreement would not be voted up or down 
     on their merits. Our trading partners have expressed an 
     unwillingness to negotiate without some assurances that 
     Congress will consider the agreement within a definite 
     timeframe.

  The key operative phrase in this passage is the phrase which we have 
highlighted behind me. The negotiated goals. That essentially is what 
we are about today. Charting negotiating goals that will give the 
President of the United States the direction and the incentive to 
conduct appropriate negotiations, to yield a treaty which will benefit 
ourselves, and also to signal to our trading partners what is critical 
and crucial to this Congress and the American people in terms of trade 
agreements. This rationale for fast track makes sense, and only makes 
sense, if we get it right here, if we get the negotiating goals 
correct.

  Unfortunately, the bill before us does not provide the President with 
the full range of goals necessary to increase U.S. trade and enhance 
our standard of living. Indeed, this bill is contrary to some of the 
provisions of the 1988 fast-track legislation which specifically 
recognized workers' rights and monetary coordination as fundamental 
negotiating goals. In addition, the 1988 fast-track bill gave the 
President greater authority to negotiate on environmental issues in the 
context of these trade agreements. The Roth bill limits this authority.
  Fast track is a great slogan. Free trade is a great slogan. But here 
today we are not about sloganizing, we are about legislating. And, as 
such, we must look to this bill, to all of its details and specifically 
to the goal which it lays out for the President of the United States. 
In failing to adequately address issues such as labor and monetary 
conditions, the Roth bill neglects the serious assumptions that 
underlie the whole theory of free trade.
  The theory of free trade evolved over many, many years, based upon 
the economic notions of comparative advantage and specialization, 
notions that were advanced hundreds of years ago by David Ricardo, the 
English economist. At the core of these notions of comparative 
advantage and specialization is that certain nations can produce or 
prepare goods and services better than others, and that if we trade we 
can maximize values throughout the world. These assumptions, though, 
rest on other critical assumptions. As Professor Samuelson, the famous 
economist, pointed out in his 10th edition work on economic theory:

       The important law of comparative advantage must be 
     qualified to take into account certain interferences with it. 
     Thus, if exchange rate parities and money wage rates are 
     rigid in both countries, or fiscal or monetary policies are 
     poorly run in both countries, then the blessings of cheap 
     imports that international specialization might give would be 
     turned into the curse of unemployment.

  We will hear a lot about free trade, but this bill does not give the 
President the direction to establish the underlying environment which 
is necessary for free trade--respect for and recognition of the rights 
of workers to freely associate, to seek higher wages, respect for and 
acknowledgment of the critical role of currencies in the world of 
trade. Because of these reasons and many others, this bill, I think, 
falls far short of what we should in fact pass as a means to achieve 
the goal we all fervently seek, which is free, open trade and fair 
trade throughout the world.
  Now, the debate on trade in the United States is not new. From the 
beginning of our country we have fiercely debated the role of trade in 
our economy. Beginning with Alexander Hamilton's ``Report On 
Manufacturers,'' there has been a constant ebb and flow between those 
that would advise protective tariffs and those that would suggest free, 
open trade is the only route. This battle back and forth between 
opposing views took on, in many respects, the characterization of 
protectionism versus free traders. It reached its culmination, perhaps, 
before World War II when, in 1930, this

[[Page S11654]]

Congress passed the Smoot-Hawley Tariff Act which has become infamous 
because of its effect upon, at that time, the beginning of the world 
depression. And then, in 1934 the protective tariffs embedded in Smoot-
Hawley were reversed. In 1934, the Tariff Act gave the President the 
right to reciprocally negotiate trade and tariff adjustment. So, this 
phase, running from the beginning of the country to the advent of World 
War II, saw a fierce battle between protectionists and open-marketeers.
  The second phase of our debate on trade began in the aftermath of 
World War II where a dominant American economy sought to establish 
rules for freer trade. But from World War II through 1974, particularly 
with respect to the Kennedy and Tokyo Rounds of GATT, our view was more 
or less using trade as a foreign policy device, using trade as a way to 
establish bulwarks against the threats of communism, the threats of 
instability. And in so many respects it was this unintended but 
accumulation of concessions to trading partners around the world that 
has left us where we are today, which in many respects our market is 
virtually open in terms of tariffs and in terms of nontariff barriers, 
but there are many other countries who still maintain barriers to our 
trade.
  Beginning in 1974, we recognized that an important part of access to 
markets was not just the tariff level but those nontariff barriers. As 
a result, we started the fast-track process. In this context that I 
described, fast track makes sense if we get the goals right. Today's 
legislation, I suggest, does not get the goals right. Indeed, since 
1974 international trade has taken on a much more central position in 
our economy in terms of its size and, now, in a variation on some of 
the foreign policy themes we heard during the 1950's and 1960's, as a 
way of some to create the democracies, the markets which we think are 
essential to progress around the world. In any respect, we are here 
today not to stop the progress of free trade but, in fact, to ensure 
that free trade results in benefits for all of our citizens and, 
indeed, benefits for those citizens of the world economy which we hope 
to trade with.
  Some have labeled anyone who opposes this fast-track mechanism as a 
protectionist. I think quite the contrary, those of us--let me speak 
for myself. I certainly think that we represent interventionists, 
because we feel that to get trade right, you can't simply leave the 
country we trade with as we found it. We have to insist that they begin 
to adapt to and accept international standards with respect to workers' 
rights, environmental quality, currency coordination, a host of issues. 
In fact, when we look at the agreement, we see instances within this 
legislation, it is quite clearly acknowledged, where we are pushing or 
trying to push countries to adapt to our way of doing business. But 
they seem to be exclusively with respect to commercial practices--
commercial laws or agricultural policies. So we have in some respects 
the will to try to develop a world system based upon our model, but 
when it comes to critical issues like workers' protections and 
environmental quality, this legislation does not express that necessary 
role.
  The administration has expressed their deep desire for this 
legislation. Indeed, I hope we could pass a fast-track legislative bill 
this session to open up markets to American firms, to compete in a 
global economy. With under 5 percent of the world's population living 
in the United States, we certainly have to find ways to sell to the 
remaining 95 percent of the world's population. It is no secret that 
economies in many parts of the world are growing faster than we are and 
offer tremendous opportunities for our investment and our exports. It 
is indeed predicted that economies in Asia and economies in Latin 
America will continue to grow at significant rates and we have to be 
part of this.
  But we have to be part of this growth in trade in a way that will 
ensure that American firms and American workers are in the best 
position to compete and win in this global economy, this battle for 
success in the global economy. But I don't think, as I mentioned 
before, that this bill will set the goals necessary to win that 
competition.
  Now, as Senator Byrd indicated so eloquently, this legislation also 
represents a significant expansion in the authority of the President to 
conduct the foreign policy of the United States and the commercial 
policy of the United States. In fact, since the adoption in 1974, the 
President's ability to negotiate and enter into trade agreements to 
reduce or eliminate tariff and nontariff barriers has increased 
significantly. But because it is such a significant delegation of 
authority, we have to, as I indicated before, make sure that we get the 
general goals correct, because we won't have the opportunity, as we do 
in other ways, to second-guess or correct the President's decision as 
we go forward.

  So, again, as the Senator from West Virginia indicated, this is the 
opportunity for us, and maybe the only opportunity, to set the 
appropriate agenda for discussions going forward on international 
trade. I think, as I said, the current bill before us does not 
establish the appropriate negotiating goals so that we do ensure the 
President not only has the authority but the appropriate direction to 
serve the interests of the American people in establishing a regime of 
free and open trade throughout the world.
  Now, as I indicated before, the Roth bill that is before us today is 
deficient in many specifics. First, let me take one specific and that 
is the notion of providing a very active negotiating goal to seek ways 
to improve and enforce labor relations in other countries around the 
world. In 1988, fast-track legislation stated that one of the 
administration's principal negotiating objectives in trade agreements 
was:

       To promote respect for worker rights; to secure a review of 
     the relationship between worker rights to GATT articles, 
     objectives, and related instruments with a view to ensuring 
     that the benefits of the trading system are available to all 
     workers; to adopt as a principle of the GATT, that the denial 
     of worker rights should not be a means for a country or its 
     industries to gain competitive advantage in international 
     trade.

  This legislation before us eliminates this workers' rights provision 
as a principal negotiating objective in trade agreements. I dare say if 
we read that to any Member of this Senate, they would say of course 
that has to be a goal of our trade negotiators. Yet in this legislation 
it is not such a goal.
  As a result, it will limit the President's ability to try to 
negotiate improvements of labor standards and, as such, it will cast 
aside the interests of millions of American workers as well as the 
interests of workers worldwide.
  It is no secret that income inequality has risen substantially in the 
United States in recent years. For nearly 2 decades the real wages and 
compensation of American blue-collar workers have been declining. 
Hourly compensation for nonsupervisory production workers fell by 
approximately 9.5 percent between 1979 and 1995.
  There are many reasons for this. Some would cite declining rates of 
unionization, some the erosion of the real value of the minimum wage. 
But others would cite the increasing globalization of trade. Although 
it is difficult to determine exactly the composition, the factors that 
are influencing this phenomena, there is an emerging consensus by 
economists that approximately 30 percent of the relative decline in the 
wages of noncollege-educated workers, and even a larger share in the 
decline with respect to production-wage workers, is a result of 
international trade and its effects. And I should say even though the 
President has suggested Executive initiatives in the last 2 days to try 
to correct some of these incongruities, it is not likely to do so. In 
fact, if we want to ensure that our wages remain comparable with our 
increases in productivity, we have to ensure that when our negotiators 
go to the table and negotiate arrangements, they are conscious of the 
rights of American workers and conscious of the rights of those workers 
in the countries with which we are attempt to go negotiate these trade 
agreements. Indeed, in light of these trends it is imperative that this 
provision be part of our fast-track legislation. It is not such a part 
of the legislation.
  We have the recent experience of NAFTA to further inform the debate 
on these issues. It has been estimated that since enactment of NAFTA in 
1993, trade with Canada and Mexico has cost the United States 
approximately 420,000 jobs, including 2,200 in my home State of Rhode 
Island. As a minimal estimate of job loss, the Labor Department has 
certified approximately

[[Page S11655]]

143,000 workers as being eligible for assistance because of trade 
dislocation.
  The list of companies that have made NAFTA-related layoffs is a 
veritable ``Who's Who'' of American industry. It includes General 
Electric, Allied Signal, Sara Lee, Black and Decker, TRW, Georgia 
Pacific, Johnson & Johnson--and the layoffs continue.
  Indeed, I don't think one can point the finger merely at these 
companies because they are certainly just taking advantage of something 
which we created, the opportunity legally--in fact some would argue the 
incentive legally--to move production out of the United States to other 
areas, in this case Mexico.
  But the effect is not simply in the jobs lost. The effect perhaps is 
more decisive in the suppression of wages. There are reports that 
companies will either explicitly or implicitly threaten to relocate to 
places like Mexico if wage concessions are not made. In fact, during 
the debate last year on NAFTA, a Wall Street Journal poll of executives 
found a majority of executives from large companies intended to use 
NAFTA, as they indicated, as ``a bargaining chip to keep down wages in 
the United States.''
  And this is borne out by numerous anecdotes. For example, workers at 
a plant in my home State in Warwick, RI, agreed to freeze wages and 
work 12-hour shifts without overtime pay because the company threatened 
to move production to Mexico. Similarly, 4,000 workers in a plant in 
Webster, NY, accepted 33-percent cuts in base pay to avoid a threatened 
plant relocation. A company in Georgia threatened to move 300 jobs at a 
lighting plant to Mexico unless workers took a 20-percent cut in pay 
and 36-percent cut in benefits. Mr. President, 220 workers at a plant 
in Baltimore agreed to take a $1-an-hour pay cut to keep the plant 
open. And the list goes on and on and on.
  The negative implications of NAFTA has been felt by U.S. workers and 
it should give us renewed energy and commitment to ensure that in the 
next round of fast-track legislation we at least replicate the 1988 
goal of actively trying to ensure that worker protection, workers' 
rights are a central part of our negotiating strategy. Once again, this 
legislation does not do that.
  It is important also to note that in the context of NAFTA, the 
benefits for Mexican workers have not been what they were advertised 
as. Since the passage of NAFTA, real manufacturing wages of Mexican 
workers have declined 25 percent. Part of this decline is attributable, 
of course, to the peso crisis. However it is important to recognize 
that real wages were stagnating prior to the peso crisis, while worker 
productivity in Mexico continued to grow. So, despite increased 
productivity, wages in Mexico continue to stagnate or decline. In fact, 
the percentage of Mexicans considered extremely poor rose from 31 
percent in 1993 to 50 percent in 1996, after NAFTA. And two out of 
three Mexicans report that their personal economic situation is worse 
now than before NAFTA.
  Following NAFTA, we have the benefit of these experiences which we 
did not have when we were considering the legislation back in 1988. 
Again, it seems inconceivable that seeing what has taken place in 
NAFTA, seeing how important--not only to our workers but to the workers 
of the country we hope to trade with--how important it is to negotiate 
and to reach principled agreements on worker protections and worker 
rights, that we are neglecting to do that in this legislation. And, as 
such, we have left a huge hole in our responsibility to give the 
President the responsibility and the direction to do what is best for 
the working men and women of this country, do what is best for the 
overall welfare of this country.
  Now, with respect to the environment, that is another area where this 
legislation is deficient. It restricts the ability of the President to 
negotiate environmental issues and trade agreements by requiring that 
they be ``directly related'' to trade. And this differs from the 1988 
fast-track bill which provided greater latitude for the President to 
negotiate on environmental issues. I would assume that ``directly 
related to trade'' means that if we have a problem getting a good into 
a country because they object to an environmental rule, that we might 
say, for example, labeling of a can, of a product, that that might be 
actionable. But it is not actionable if the country has absolutely no 
environmental enforcement; that it allows pollution to run rampant, 
that it actually encourages the relocation of factories and production 
facilities because of lax environmental rulings, because one I assume 
would argue that's not directly related to trade, it's not directly 
related to a good we are trying to get into the economy. But in fact, 
and again the NAFTA experience is instructive, this is precisely one of 
the ways in which countries undermine our environmental laws at home on 
the standard of living of our workers here in the United States. 
Indeed, after NAFTA we should be much more interested in including 
strong environmental protections. For the examples that the NAFTA 
experience has given us.

  Subsequent to the passage of NAFTA the Canadian province of Alberta, 
which was only one of two Canadian provinces to sign the NAFTA 
environmental side agreement, adopted legislation in May 1996 
prohibiting citizens from suing environmental officials to enforce 
environmental laws. And, in fact, since that time, to attract corporate 
investment, Alberta has advertised its lax regulatory climate as part 
of ``the Alberta advantage.''
  Now, it might be an advantage to Alberta. Certainly I don't think it 
is to many residents of Alberta. And it is not an advantage to U.S. 
companies or U.S. workers who are faced with laws that we passed, and 
rightfully so, that demand high-quality environmental controls in the 
workplace.
  In October 1995 Mexico announced that it would no longer require 
environmental impact assessments for investments in highly polluting 
sectors such as petrochemicals, refining, fertilizers and steel.
  (Mr. BROWNBACK assumed the chair.)
  Mr. REED. Mr. President, Mexican officials said they were eliminating 
these environmental impact assessments to increase investment, which 
may well be an apparent violation of NAFTA because it prohibits, 
apparently, the weakening of environmental laws to attract investment.
  So our experience with NAFTA should tell us that we must redouble our 
efforts to have the principal negotiating objective of environmental 
concerns. Yet, again we have constrained and circumscribed the ability 
of the President by simply saying they have to be directly related to 
trade, and many environmental problems are not directly related to 
trade.
  For example, near the United States-Mexican border, there is an area 
known as Ciudad Industrial, where a number of sophisticated, highly 
automated manufacturing plants have been established since NAFTA. These 
manufacturing plants discharge hazardous waste through a nearby sewer 
outfall which adjoins a river that is used for washing and bathing. The 
Mexican Government has enacted a number of institutional barriers to 
environmental progress to prevent pollution abatement. For example, 
Mexican law prohibits the local government from taxing these state-of-
the-art factories to pay for sewers, to pay for cleaning up.
  In these ways, unrelated directly to trade, there are advantages to 
relocating production in countries. These are the type of actions which 
we should be concerned about, that we should, in fact, direct the 
President to be concerned about, that we should, in fact, insist the 
President bring to the table as a significant negotiating goal.
  There is a final point I would like to make with respect to the 
specific deficiency of these goals, and that is the issue of monetary 
coordination. The 1988 fast-track bill included monetary coordination 
as a principal negotiating objective. Specifically the bill stated:

       The principal negotiating objective of the United States 
     regarding trade in monetary coordination is to develop 
     mechanisms to ensure greater coordination, consistency and 
     cooperation between international trade and monetary systems 
     and institutions.

  The bill before us today eliminates monetary coordination as a 
principal negotiating objective, thereby limiting the President's 
ability to address issues of currency valuation, fluctuating currency, 
all of the issues that have become tangible and palpable in the last 
few days, as we witnessed the gyrations of currency and the stock 
market throughout the Orient.

[[Page S11656]]

  Currency valuation is a key component of trade policy because it 
affects the price of imports and exports. For example, as the U.S. 
dollar gets stronger relative to other currencies, U.S. exports to a 
foreign country will likely become more expensive in that country and 
the country's imports will become cheap in the United States. 
Inversely, as the U.S. dollar gets weaker relative to other currencies, 
U.S. exports to a foreign country will become cheaper in that country, 
and that country's imports will become more expensive in the United 
States. As a result, and quite clearly, currency valuation affects 
trade flow between countries and, consequently, the trade deficit.
  We have to be terribly conscious of these currency valuations. It is 
evident in recent statistics on the valuation of the dollar in trade 
that there is a high correlation between the two. Since mid-1995, the 
dollar has risen against a number of foreign currencies, and during 
this period, the United States trade deficit rose also. It is estimated 
the trade deficit will increase to $206 billion by the end of 1997. 
Also, currency valuation affects direct investment into our country by 
foreign investors, and that is something that we also have to be 
sensitive to.
  Again, the NAFTA experience gives us further evidence--if we didn't 
know about it before--it gives us further evidence. As you know, NAFTA 
was enacted and shortly thereafter, the peso collapsed. What we thought 
were significant reductions in Mexican tariffs were wiped out by a 40-
percent reduction in the value of the peso.

  This reduction was part of inevitably the continuing strategy of 
Mexico, and the strategy of many countries, to have export-led growth 
to reduce the cost of their goods to United States consumers, and one 
way they did this was through the devaluation of the peso.
  If we continue to be indifferent to the notion of currency and its 
role in our international trade, we are going to continue to see these 
problems and others like them.
  It turned out that before the negotiation of NAFTA, Mexico was 
running a trade deficit of $29 billion with the United States, a very 
large trade deficit, 8 percent of its gross domestic product. By 1994, 
after the onset of NAFTA and towards 1996, their deficit had turned 
into a surplus, again, in many respects because of the currency changes 
that took place because of the peso prices.
  So we do have to be very, very conscious of these currency effects. 
Once again, this is not a part of the major negotiating goals for this 
legislation.
  Reduced currency values in Mexico has prompted increased investment 
there. In the past year, investment in maquiladora plants in the 
Mexican State of Baja California, have increased by more than 35 
percent. In effect, because of their policies, because of our adoption 
of NAFTA, we have created monetary incentives to move and invest in 
Mexico and not just for the United States but for other countries 
around the world who are using Mexico as a platform for low-cost 
production which, in turn, is imported into the United States without 
duties.
  Over the horizon, there is another major trading partner whose 
currency manipulations, if you will, can cause us significant problems, 
and that is China. As part of its strategy to encourage exports and 
discourage imports, China has engaged in an effort to reduce the value 
of its currency relative to the dollar. These currency valuations wipe 
out many of the concessions that we think we have sometimes with the 
Chinese with respect to their trade and our trade.
  It puts, of course, downward pressure on the wages of U.S. workers as 
we cannot produce here the items that can be produced overseas more 
cheaply, not because of differences in productivity, but, in many 
cases, in part at least in the very calculated manipulation of 
currencies by foreign countries.
  Again, the absence of such a major negotiating provision within the 
bill, I think, is a fatal flaw.
  Overall, the bill before us continues a policy of protecting capital 
without, I think, sufficient protection for workers, protecting the 
ability of capital to relocate throughout the world, without 
recognizing that there must be commensurate protections for workers, 
workers both here in the United States and workers worldwide.
  Because of the incentives now to deploy capital almost everywhere, we 
are beginning to recognize the phenomena of excess capacity in 
production facilities around the world, and many economists fear that 
this will lead to a massive deflation, and this massive deflation could 
be the major economic challenge that we face in the year's ahead.
  The lack of work protections, the fact that countries can manipulate 
currencies, the lack of sensitivity to environmental policies has been 
an incentive, a very powerful incentive, to move production from the 
United States into these developing countries. For example, Malaysia's 
booming electronics industry is based on the explicit promise to 
American semiconductor companies that workers will effectively 
prohibited from unionizing. In fact, when Malaysia considered lifting 
this ban on unionizing, American companies threatened to move to China 
or Vietnam, more receptive countries. This competition for cheap labor 
continues to put downward pressure on wages in developed countries as 
companies use the threat of relocation to leverage or reduce the pay of 
their workers.
  These trends, related to labor and technology, are creating 
a situation, as I indicated, of overcapacity in many respects which may 
outstrip the ability of the workers to afford the very goods they are 
producing. The economic journalist, William Grieder, characterized the 
situation as follows:

       The central economic problem of our present industrial 
     revolution, not so different in nature from our previous one, 
     is an excess of supply, the growing permanent surpluses of 
     goods, labor and productive capacity. The supply problem is 
     the core of what drives destruction and instability. 
     Accumulation of factories, redundant factories as new ones 
     are simultaneously built in emerging markets, mass 
     unemployment and declining wages, irregular mercantilist 
     struggles for market entry and shares in the industrial base, 
     market gluts that depress prices and profits, fierce contests 
     that lead to cooperative cartels among competitors and other 
     consequences.

  That is an outline of a world which faces increasing prices. The oil 
companies are a good example potentially of that world. By the year 
2000, the global auto industry will be able to produce nearly 80 
million vehicles. However, there will only be a market for 
approximately 60 million buyers. These imbalances, created by excessive 
supply, will put downward pressure on prices, and reduced profits and 
begin a deflationary trend.
  Another commentator, William Gross, is managing director of Pacific 
Mutual Investment Co., which manages more than $90 billion worldwide, 
now pegs the risk of a general deflation at 1 in 5 in the next several 
years. He states:

       My deflationary fears are supported by two arguments: 
     exceptional productivity growth and global glut.

  He cites twin causes. Real wages both in the United States and abroad 
cannot keep up with the rapid growth of new production. That is, there 
will not be enough demand to buy all excess goods and emerging 
economies create aggressive new players eager to outproduce and 
underprice everyone else.
  Overcapacity may be at the heart of the crisis that we have seen in 
Asia, the crisis which is manifested through currency turbulence and 
also through the stock market gyrations. We have seen in Thailand, for 
example, where, fueled by massive capital infusions, the economy in 
Thailand took off at a staggering rate. Between 1985 and 1994, the 
Thais had the world's highest growth rate, an average of 8.2 percent. 
It was prompted by developers who were building office towers and 
industrial parks that were built regardless of demand. They continued 
to build even as the completed buildings were half empty.
  Petrochemical, steel, and cement plants were operating at half 
capacity because of oversupply. To address the oversupply issue, 
currency speculators thought it inevitable that the Thai currency, 
which was pegged to the dollar, would be devalued to boost Thailand's 
exports. Based on those assumptions, currency speculators began selling 
Thai currency and it decreased. The Government was forced to step in. 
They could not sustain their support and the bottom, if you will, 
dropped out of the local Thai currency, the baht. We feel similar 
pressures with the Philippines, Malaysia, and Indonesia.

[[Page S11657]]

  All of this is prompted, in part, by the fact that capital can move 
everywhere, capital is moving everywhere, and we are not, I think, 
recognizing it in terms of our overall trade policy and certainly not 
recognizing in terms of this legislation.
  We have to be conscious, very conscious, that the conditions of 
untrammeled deployment of capital around the world has beneficial 
effects but can have very detrimental effects. It has to be balanced. 
It has to be balanced by similar regimes in terms of workers' rights, 
in terms of environmental quality, in terms of coordinating currency, 
in terms of those factors which will allow free trade to be truly free 
and not allow situations to develop where capital is attracted not 
because of quality of workers, not because of natural resources, not 
because of factories that go to the heart of the production function, 
but because countries consciously try to depress their wages, try to 
suppress enforcement of environmental quality, try to manipulate 
currency, try to lure for short-term growth capital which will end up 
eventually bringing their house of cards down but, in the meantime, 
affecting the livelihood, the welfare and the state of living of 
millions and millions of American workers.

  This bill does not adequately address those capital movements. It 
doesn't adequately understand or recognize that modern technology is 
assisting these capital movements. It does not recognize that we have 
to have policies that comprehend what is going on in the world today. 
This migration of capital, this technological expansion, all of these 
things have an impact on the wages of American workers. All of these 
have an impact on what we should be doing here today in terms of 
developing our response to world trade as it exists today.
  There is another aspect of this capital deployment and this 
technology deployment and that is the notion of forced technology 
transfer which many of our trading allies engage in, specifically 
China. Their trade policies have demanded that companies investing in 
or exporting to China must also transfer product manufacturing 
technology to China.
  A recent article in the Washington Post chronicled this issue. For 
example, to win the right to form a joint venture with China's leading 
automaker, General Motors promised to build a factory in China 
featuring the latest in automotive manufacturing technology, including 
flexible tooling and lean manufacturing process.
  GM also pledged to establish five training institutes for Chinese 
automotive engineers and to buy most of its parts for the Chinese 
venture locally after 5 years.
  Similarly, an unidentified United States manufacturer is planning to 
build a major facility in China instead of the United States in 
response to Chinese pressure. An executive with the company indicated 
that production will be more expensive in China and the quality will be 
worse, but in order to do business in China, they had to conform to 
these demands.
  According to many United States business executives, China's demands 
for technology are simply a cost of doing business with China. However, 
the effect is that our companies are transferring their facilities to 
China, making China not trading partners but ultimately competitors to 
our own world.
  An interesting experience of DuPont. In the late 1980's, DuPont 
negotiated with China's Chemical Industry Ministry to form a joint 
venture to make a rice herbicide called Londax. By the time the venture 
started production in 1992, several factories in China were already 
producing Londax using DuPont technology that it was providing to the 
joint venture. Soon thereafter, approximately 30 Chinese factories were 
making several DuPont proprietary herbicides, all without the explicit 
permission of DuPont.
  So what we are seeing again is not only the deployment of capital 
because of natural market forces, but because of the will and because 
of the negotiating stance of foreign countries that are required as a 
part of free trade, we are seeing the free transfer of our expertise, 
our proprietary information, our technology, and ultimately in many 
cases our jobs.
  The other aspect of this legislation which should be noted, I think 
with some significance, is the fact that this legislation really does 
not recognize the fact that we have been running trade deficits of 
staggering proportions year in and year out.
  It is interesting to hear the proponents of fast track talking about 
this as the great salvation for our trading partners. And we have had 
fast track now since 1974. I would daresay, we were probably running 
trade deficits in 1974. So clearly, fast track is a mechanism--in fact, 
some would argue the way we conduct some of these bilateral Free Trade 
Agreements is not the answer to the most consistent foreign problem we 
face in America today; that is, continued trade deficits. We have to 
address these problems.
  The major trade deficit we run of course is with the Japanese. But we 
are also running significant deficits with the Chinese.
  In some respects, one wonders why we are here today talking about 
fast track when one would argue our major problem is adjusting our 
trade relationship not with emerging countries like Chile, but with 
countries like Japan and China. Once again, I do not know what this 
legislation will do to effect those major problems.
  Let me just suggest that we have entered into a fast-track procedure 
which is flawed because the goals we have established do not reach the 
most important issues that we face in the world today. They do not 
address our trade deficit directly. They certainly do not address the 
issues of work protections, environmental policy, currency issues. In 
fact, also they are sending wrong signals to our allies, our potential 
trading partners.
  By not adopting these as central, important key negotiating goals, we 
are essentially telling our potential trading partners we do not care. 
Oh, yes, we will have side agreements. We will have executive 
initiatives. We will talk a good game about these issues. But they are 
not at the heart of this legislation which is the defining legislation 
for our whole procedure.
  I do not think it takes much for a trade minister in a foreign 
country to figure out pretty quickly it is not important--not 
important--to the American people, not important to Congress, not 
important to our trade effort when, in fact, I would argue it is the 
most important thing that we can and should do.
  We have seen the side agreements mentioned, but the side agreements 
have not, I think, produced anything near the type of mechanism, type 
of framework which is essential to good trade policy throughout the 
country and throughout the world.
  Let me just conclude by saying that the fast-track procedure will 
work if we get the goals right. We have neglected to get negotiating 
goals right. We have neglected key issues with respect to worker 
protections, key issues with respect to environment, key issues with 
respect to the coordination of currency. And the suggestion that we 
can, by side agreements or by legislative initiatives, make up the 
difference I think is mistaken. The experience of NAFTA has been very 
instructive in that regard.

  Today, we are here as Members of this Senate to do what we must do in 
the trade process. And that is, to write legislation which will clearly 
define all the relevant goals that are necessary to not only open up 
markets but to maintain the standard of living of the United States.
  This is a central issue that we face today and will face in the days 
ahead. This bill, sadly, will not give us the kind of direction, give 
the President the kind of direction that he needs and that the American 
people demand.
  I yield back the balance of my time.
  Mr. President, could I reserve the balance of my time?
  The PRESIDING OFFICER (Mr. Allard). That will be reserved.
  Mr. SARBANES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. SARBANES. First, I want to commend the very able Senator from 
Rhode Island for a very thorough and thoughtful analysis of the issues 
surrounding this legislation. Obviously, a great deal of work went into 
that statement, and I think the distinguished Senator touched on a 
number of very important and critical issues.
  Mr. President, I rise in opposition to the motion to proceed to S. 
1269. This

[[Page S11658]]

legislation would provide trade agreement approval procedures, so-
called fast-track procedures, for implementing the results of trade 
agreements that require changes in U.S. law.
  In my view, this is a poorly conceived piece of legislation that does 
not serve the interests of the American people.
  First, let me observe the fast-track procedures are relevant only to 
a narrow range of trade agreements, specifically, those agreements 
which require Congress to make changes in existing U.S. law in order 
for the agreements to be implemented.
  Most trade agreements do not require legislative changes and, 
therefore, fast track consideration would in effect be inapplicable to 
them.
  It is my understanding, for example, that the Clinton administration 
has negotiated over 220 trade agreements. Only two required fast-track 
authority--NAFTA and the GATT Uruguay round agreement.
  So let me just observe at the outset that there is a great deal of 
overstatement going on as to the importance of fast-track authority to 
the administration's ability to negotiate trade agreements and open 
foreign markets to U.S. exporters.
  The fact is that for the overwhelming majority of trade agreements, 
fast-track authority is not needed. And based on its own record, the 
administration has concluded a large number of such trade agreements 
without fast-track authority--not under fast-track authority.
  The question then becomes, for the narrow range of trade agreements 
that will require legislative action by the Congress, because the trade 
agreement reached requires a change in U.S. law, what is the 
appropriate role for the Congress in approving those agreements?
  Now, article II, section 8 of the Constitution explicitly grants 
Congress the authority ``To regulate Commerce with foreign Nations . . 
.''
  The authority of Congress to approve trade agreements is 
unquestioned. And it is very clearly spelled out in the Constitution. 
So the issue is simply, how should the Congress best exercise this 
authority?
  I want to go back just a little bit historically and trace some of 
the evolution of trade negotiating authority in order to bring us to 
set the current situation in context.
  As many have observed, up until a couple of decades ago, most trade 
agreements dealt with setting tariffs on traded goods.
  Up until 1930, Congress passed occasional tariff acts that actually 
set tariff terms. However, Congress became increasingly reluctant to 
set tariff schedules in legislation. And in 1934, in the Reciprocal 
Trade Act--I emphasize the word ``reciprocal'' --the Reciprocal Trade 
Act, Congress granted to the President for the first time so-called 
proclamation authority, the power to set tariffs by executive agreement 
with U.S. trading partners.
  But that was a power with respect to the setting of tariffs that was 
limited, specifically limited within certain limits and for fixed 
periods of time. From the 1930's through the 1960's, Congress extended 
the 1934 act authorizing the President to negotiate reductions in U.S. 
tariffs in exchange for comparable reductions by U.S. trading partners.

  Congress would typically limit how much tariffs could be reduced. In 
other words, we would set the range below which the administration 
could not go. We would give a range how long negotiations could go on, 
and the Congress even exempted specific products from the negotiations. 
But once the reductions were negotiated within the range that the 
Congress had established, the President then issued an order 
proclaiming the new tariffs and trade agreements between 1934 and 1974 
were negotiated pursuant to this authority.
  Now, during the 1960's, trade talks began to expand into nontariff 
trade areas that were governed by existing U.S. law; in other words, 
the trade talks began to involve matters that were not tariff matters 
but matters that were covered by our law. The Kennedy round GATT 
negotiations, for example, required for the first time changes to U.S. 
antidumping laws. We had antidumping laws on the books. The negotiated 
agreement required changes in those antidumping laws. The Congress made 
clear at that time that the executive branch had to obtain authority 
from the Congress to change a U.S. law in a trade agreement. The 
executive branch can't go and negotiate a trade agreement and simply by 
signing off on the trade agreement change an existing law without the 
approval of the Congress.
  Now, proclamation authority for the President, which had been used in 
the reciprocal trade agreements for tariffs, did not extend to 
authority to proclaim all changes to U.S. law called for in a trade 
agreement.
  Fast track was a procedure first enacted by Congress in the Trade Act 
of 1974 to deal with trade agreements that called for changes in U.S. 
law. What fast track provided for was a commitment by the Congress 
before the negotiations started that whenever an agreement came back 
from the trade negotiations, the executive branch could write 
legislation implementing the trade agreement and have that legislation 
voted on by the Congress without any opportunity to change or amend it. 
In other words, it had to be voted as presented by the administration. 
Only 20 hours of debate are allowed and a floor vote must take place 
within 60 days after the legislation is submitted.
  Now, since its initial enactment, fast-track authority has been 
utilized for five trade agreements: The GATT Tokyo round agreement of 
1979; the United States-Israel Free Trade Agreement of 1985; the United 
States-Canada Free Trade Agreement of 1988; the North American Free 
Trade Agreement, NAFTA, 1993; and the GATT Uruguay round of 1994. Fast-
track authority expired in December 1994 at the conclusion of the 
Uruguay round and has not been extended since, and the Congress is now 
confronting that question.
  Now, over that same period of time, hundreds of trade agreements were 
reached by U.S. administrations. Hundreds of agreements were reached. 
Other countries were prepared to enter into them, and they did not 
require fast track and were not submitted under fast-track authority to 
the Congress.
  Now, in examining this grant of authority, I first want to differ 
with one of the assertions that is made by its supporters that the 
executive branch would not be able to negotiate trade agreements if 
those agreements were subject to amendment by the Congress. That is the 
argument that is made. Unless we have this authority, we won't be able 
to negotiate agreements. As I have already indicated, the vast majority 
of trade agreements do not require changes to U.S. law and do not 
utilize fast-track procedures, and the successive administrations have 
been able to negotiate such agreements without any apparent significant 
difficulty.
  Now, the very idea that the Congress should, in effect, delegate to 
the executive branch the authority to write changes in U.S. law and not 
have those changes subject to modification or amendment by the Congress 
represents an extraordinary grant of authority by the Congress to the 
Executive. My very distinguished colleague, Senator Byrd of West 
Virginia, spoke to this issue eloquently earlier in this debate, 
pointing out what a derogation of authority this represents from the 
legislative to the executive branch.

  It is my own view that if changes are going to be made in U.S. 
statutes, those changes ought to be subject to the scrutiny of the 
Congress and amendment by the Congress. That is the role the Congress 
is given under the Constitution. Failure to provide for that 
congressional role, for that discipline, may leave the American people 
without any recourse to change unwise agreements entered into by the 
Executive.
  Who is to say that all of the particular decisions made by the 
Executive in reaching an agreement are the right ones, or that the 
balance struck by the Executive is the right one? Is the Congress, 
then, simply to have to take this package and consider it as an all-or-
nothing proposition? That is not what the Constitution calls for, and I 
don't think Congress ought to be delegating this authority.
  I recognize that a stronger case can be made for the availability of 
fast-track authority to approve large multilateral trade agreements 
involving well over 100 countries, like the Uruguay round of the GATT 
and bilateral trade agreements like NAFTA. There is a plausible 
argument that concluding

[[Page S11659]]

such multilateral agreements might be complicated by the ability of 
individual countries, then, to make legislative changes in the 
agreement. That argument has been asserted and, on occasion, recognized 
by Members of the Congress. However, I point out that argument loses 
any persuasive weight when only two or a few countries are involved in 
the trade agreement. This legislation makes no such distinction between 
multilateral and bilateral trade agreements and would provide fast 
track for both.
  It is worth noting that all major U.S. tax, arms control, 
territorial, defense, and other treaties are done through normal 
constitutional congressional procedures. We negotiated an arms control 
agreement with the Soviet Union. What can be more important? It is 
submitted to the Senate for approval. The Senate has the authority, if 
it chooses to do so, to amend that agreement. There is no fast track on 
an agreement far more important than trade agreements, involving the 
national security of our country, where they say to the Senate, ``You 
must approve this arms control agreement exactly as it was negotiated 
by the administration, and you can only vote for it or against it.'' We 
have never accepted that.
  The argument will be made at the time, ``Don't amend it because we 
don't want to have to go back and have to renegotiate,'' but clearly 
our power to amend it is recognized and it is submitted to us under 
those terms.
  Now, if the agreement can withstand the scrutiny as to why it ought 
not to be amended, then it should not be amended. But to bind ourselves 
in advance that we will only vote it up or down, without the 
opportunity to amend it, is to give away a tremendous grant of 
legislative authority.
  Among the nontrade treaties done under regular procedures during the 
1970's, 1980's and 1990's are the Nuclear Weapons Reduction Treaty, 
SALT I, SALT II, START, Atmospheric Test Ban Treaty, Biological Weapons 
Convention, the Customs Harmonization Convention, dozens of 
international tax treaties, Airline Landings Rights Treaty, Convention 
on International Trade and Endangered Species, Montreal protocol, Ozone 
Treaty, and on and on and on and on.
  No one said at the time that the Congress can only consider these to 
vote yes or no, without the power and authority to amend them; and no 
one said that unless you give us such a grant of authority, we won't be 
able to negotiate these treaties.
  Now let's turn for a moment and examine the question of what benefits 
have we received from this extraordinary grant of authority to the 
executive embodied in the fast-track procedures. The fact of the matter 
is--and I am not necessarily asserting that, because the time period 
corresponds, the whole cause was fast-track authority--but since fast-
track authority was first granted by the Trade Act of 1974, there has 
been a sharp deterioration in the U.S. balance of trade with the rest 
of the world. During the period 1945 to 1975, the United States 
generally enjoyed a positive balance of trade with the rest of the 
world, running for most of the time a modest surplus. Since then, the 
U.S. balance of trade has sharply declined.
  Now, I first want to show a chart that shows the merchandise trade, 
goods traded.
  What this chart shows, Mr. President, is this. It begins back in the 
late 1940's and it comes through to the present day. This is our 
merchandise trade deficit. We ran a modest but positive balance 
throughout the 1940's, 1950's, 1960's, and into the 1970's. Here about 
1975, this trade balance begins to deteriorate, and it's now down here 
at $200 billion a year. In fact, from 1948 until 1970, we had a 
positive merchandise trade balance in each and every year. In 1971 and 
1972, we had a slight minus, but it was back positive in 1973, minus in 
1974, positive in 1975; and since 1975, every year we have had a 
negative merchandise trade balance. We have been in deficit on our 
merchandise trade balance.
  Listen to the numbers. I will just take a few of them. It was $28 
billion in 1977. In 1984, it jumped to $106 billion. It was $152 
billion in 1987. It dropped back down; it was down to $84 billion in 
1992. It went back up. In the last 4 years, it was $115 billion, $150 
billion, $158 billion, and $168 billion--negative trade deficits.
  Now, this incredible deterioration in the merchandise trade balance 
was offset somewhat--by no means anywhere near entirely, but it was 
offset somewhat, to give a full picture--by an improvement in our 
services trade balance. Again, that had run in balance more or less all 
the way, and we have had an improvement here, as you can see, over the 
last few years.
  The total trade deficits--in other words, adding the two together--
however, continues to show a deterioration in the U.S. economic 
position. This is what has happened to the total trade balance. We are 
running along here more or less with a positive balance, and then we 
have had this deterioration in the trade balance. During the first 9 
months of 1997, the United States has been running a trade deficit that 
is outpacing the 1996 rate. The cumulative U.S. trade deficit from 1974 
to 1996, according to the Congressional Research Service, is $1.8 
trillion. Let me repeat that. The cumulative U.S. trade deficit from 
1974 to 1996 is $1.8 trillion. The cumulative current account deficits, 
when you offset the surface improvement during that period, is $1.5 
trillion.
  We are running these enormous deficits. This is what we ought to be 
debating. One argument to turn down this fast-track authority is in 
order to precipitate a national debate on what our trade policy ought 
to be and what our trade position is. We have been running these huge 
trade deficits year in and year out. I defy anyone to assert that that 
is a desirable thing to do--to run trade deficits of the kind and 
magnitude that we are talking about here--$1.5 trillion over the last 
22 years.

  What these mounting trade deficits have done, which have persisted 
over this 20-year period, is they have resulted in the accumulation of 
U.S. foreign debt obligations that will approach $1 trillion by the end 
of this year--$1 trillion in foreign debt obligations. The fact of the 
matter is that our trade deficits over the last 15 years have moved the 
United States from being the largest creditor nation in the world in 
1981 to being the largest debtor nation in the world in 1996. And this 
debtor status is continuing to deepen. Let me repeat that. These large 
trade deficits that we have run successively over the last 20 years 
have moved the United States from being the largest creditor nation in 
the world in 1981 to being the largest debtor nation in the world in 
1996. Just think of that. We have gone from being the largest creditor 
nation to being the largest debtor nation. And then everyone is saying 
that the trade policy is a source of great strength. How can it be a 
source of great strength when we are getting deeper and deeper into the 
hole as a debtor?
  This development has raised concerns about the ability of the United 
States to finance the debt. These are claims that foreigners hold on 
us. For example, Lester Thurow, in his recent book ``The Future of 
Capitalism'' wrote:

       No country, not even one as big as the United States, can 
     run a trade deficit forever.
       Money must be borrowed to pay for the deficit, and money 
     must be borrowed to pay interest on the borrowings. Even if 
     the annual deficit does not grow, interest payments will grow 
     until they are so large that they cannot be financed. At some 
     point world capital markets will quit lending to Americans 
     and Americans will run out of assets foreigners want to buy.

  Now, I am not suggesting that all of the blame for this ought to be 
laid on fast-track authority. There is a complex factor. But what I am 
suggesting is that contrary to the constant assertions, it cannot be 
shown by the statistics that fast-track authority has had a positive 
impact on the U.S. balance of trade. That is what we should be 
debating. We ought to be debating why is this happening? What can be 
done about it? What does it do to the United States to become the 
world's largest debtor country?
  Now, in many respects the assertion that fast track is needed in 
order to resolve some of our trade problems, I think, misses the mark. 
Let me give you a very clear example. The United States bilateral trade 
deficit with China in 1996 was $40 billion, second only to our trade 
deficit with Japan, and that trade deficit is continuing to deteriorate 
in 1997. In other words, the figures for 1997 will be more than the

[[Page S11660]]

$40 billion figure for the 1996 trade deficit with China. Resolving our 
trade deficit with China does not require fast-track procedures. It 
requires a determined effort by our Government to address the type of 
problem described in a recent Washington Post article entitled, ``China 
Plays Rough: Invest and Transfer Technology or No Market Access.''
  ``China Plays Rough: Invest and Transfer Technology or No Market 
Access.''
  That article describes how China forces United States companies to 
transfer jobs and technology as a price for getting export sales. That 
is the so-called offsets issue. Of course, what we are doing is to gain 
a temporary, momentary advantage we are giving away the long run. In 
other words, because of this requirement, companies come in. In order 
to get some exports now, they transfer the technology and make the 
investments in China which will guarantee that they will get no exports 
in the future. And the Chinese are requiring that as part of the trade 
negotiation.
  Those are the kinds of issues we ought to be addressing here. That is 
a serious issue. And that has very severe and consequential long-term 
implications.
  The ongoing deterioration in the international position of the United 
States should raise fundamental questions about our trade posture. I 
defy anyone to look at these charts and this movement in terms of our 
trade balance and not conclude that we are facing a serious problem 
here.
  I am frank to tell you, I think those agreements ought to come to the 
Congress and let the Congress scrutinize them. The Executive makes 
these agreements. They develop the package. They do all the tradeoffs. 
They say, if it goes to the Congress, there will be all kinds of 
tradeoffs, as if there are no tradeoffs downtown, as if the Executive 
is not engaged in all sorts of tradeoffs. Who is to say that their 
tradeoffs better serve the public national interests of the country 
than the judgments or decisions that Congress would make?
  Recently, Kenneth Lewis, the retired chief executive of a shipping 
company in Portland, OR, and a member of the Presidential Commission on 
United States Pacific Trade and Investment Policy, wrote an article in 
the New York Times. In that article, he called for a significant dialog 
on U.S. trade policy and the establishment of a permanent commission 
charged with developing plans to end in the next 10 years our huge and 
continuing trade deficits. In fact, Senators Byrd and Dorgan and I have 
sponsored legislation to establish such a commission. In his article 
Mr. Lewis wrote:

       Full discussion is needed on questions like: What is the 
     purpose of our trade policy and what do we want our domestic 
     economy to look like? Who gains and who loses, and to what 
     extent, from the increases in exports and the greater 
     increases in imports?

  The greater increases in imports, what this chart says. See, everyone 
comes in, and they say, well, we are going to be able to increase our 
exports. Everyone says, well, that's a wonderful thing. No one looks at 
the other side of the ledger, which is this incredible increase which 
has taken place in imports and, therefore, the deteriorating economic 
position of the United States as we run these very large trade 
deficits--$1.5 trillion deficits since 1974, and because of that the 
United States, which has been the world's largest creditor nation into 
the 1970's--and we even survived up to 1980 because we had a creditor 
position before it was worked down. Eventually it was worked down. At 
the end of this year we will be a $1 trillion debtor, with every 
indication that it will continue on out into the future--continue on 
out into the future.
  Let me go back to this quote from Mr. Lewis:

       Full discussion is needed on questions like: What is the 
     purpose of our trade policy and what do we want our domestic 
     economy to look like? Who gains and who loses, and to what 
     extent, from the increases in exports and the greater 
     increases in imports? Do American workers benefit, or only 
     consumers and investors? What conditions must exist--
     concerning human rights, workers rights, or environmental 
     protections--for us to allow other nations' goods to enter 
     our country?

  These strike me as the fundamental questions that we are failing to 
ask about our trade policy, and fast track is not an answer to any of 
those questions. What we really should do here is not do the fast 
track. Launch a major debate on our trade policy, a major examination 
of the trade figures and a major consideration of why the United States 
is running these large trade deficits. I defy anyone to come to the 
floor and suggest that running these large trade deficits is to our 
national interest, that that is a positive situation. It is clearly not 
a positive situation.
  Throughout this whole period we ran modest but positive trade 
balances. In fact, many have said that the United States purposely 
tried to hold down its positive trade balances in order to help the 
rest of the world develop subsequent to World War II. So we ran these 
modest but positive trade balances, and beginning in the mid-1970's--
coincidentally, as I said, about the time we started doing fast-track 
authority--we began to get this deterioration. That's in the overall 
trade balance.
  In the merchandise trade balance, the deterioration was absolutely 
dramatic, as I have indicated earlier. We just had an incredible 
deterioration in the goods balance, as we can see by this chart here. 
This is about a $1.8 trillion deterioration in the trade. Now, it is 
somewhat offset a bit by the improvement in the service balance. But 
the net figure comes out to show this figure on total trade balance.
  Mr. BYRD. Mr. President, will the Senator yield for a question?
  Mr. SARBANES. Certainly.
  Mr. BYRD. It is really difficult to comprehend how much a trillion 
dollars is. And the distinguished Senator has pointed to the trade 
deficit that our country has been running. And he said that up until 
the early part of the 1980's our country was a creditor Nation, the 
foremost creditor Nation on Earth. And that during the 1980's it became 
a debtor Nation, to the tune of $1 trillion.
  Mr. SARBANES. Now we are at a trillion. Each year, if you add $100 
billion, $125 billion, $150 billion, if you run a deficit that year at 
$100 billion to $150 billion, that is another $100 billion or $150 
billion you add to your debtor status. So, unless you get out of this 
status, you are continuing to worsen your position and get deeper and 
deeper into the hole. What it means to be in a debtor status is that 
others abroad have claims on us. When we were a creditor Nation we had 
claims on them. Now they have claims on us. I submit that is a 
weakening, that is a deterioration of the U.S. economic position.
  Then they will come along and say, ``Well, the economy is working 
well.'' The economy is working well now. There is no question about it. 
But the one thing we have not straightened out or addressed are these 
constant trade deficits which get us deeper and deeper into the hole. 
Others continue to finance us. But you wonder how long they are going 
to go on doing it. And even if they continue to do it, we nevertheless 
are more and more at their mercy.
  I mean we are depending on the good will of strangers, is what it 
amounts to, on the economic front. And I am just saying --now, if you 
didn't have fast track, would you correct it? Well, I don't know. At 
least the agreements would be subjected to a much closer scrutiny. In 
any event, we could turn our attention to finding out what the factors 
are that cause this.
  Mr. BYRD. Mr. President, will the Senator yield?
  Mr. SARBANES. Certainly.
  Mr. BYRD. I compliment the Senator on the presentation that he is 
making and on his charts. It is amazing, when one contemplates that, if 
one were to count a trillion dollars at the rate of $1 per second, it 
would require 32,000 years to count a trillion dollars. It is pretty 
amazing. The Senator and his charts point to the road that we are 
traveling. I thank the Senator for his fine statement. He has been a 
student of this matter for many years and on his committee, the Joint 
Economic Committee, I believe it is, he has accumulated a tremendous 
amount of knowledge in this respect. I thank him for his presentation. 
I hope that Senators who are not here will take the time to read it in 
tomorrow's Record.
  I thank the Senator for yielding.
  Mr. SARBANES. I appreciate the comments of my distinguished 
colleague.

[[Page S11661]]

  Mr. President, I have one final point I want to make and that is on 
this matter of protection for workers' rights, health and safety 
standards, and environmental standards.
  Actually, in many respects, this legislation is weaker than the 
legislation which last reauthorized fast track in 1988 in these areas. 
The administration has come in today with a number of so-called 
initiatives and I am sure we will see more tomorrow, more the next day, 
and so forth. But, as I read them, none of those initiatives go right 
to the heart of the fast-track negotiating process in terms of what the 
negotiating goals should be. Let me just point out that under this 
legislation, we drastically limit the extent to which workers' rights, 
health and safety standards, and environmental protection are addressed 
in the principal negotiating objectives of the fast-track authority. 
The fast-track authority sets out principal negotiating objectives. And 
it is those objectives that describe the subject matter of trade 
agreements which are covered by fast-track procedure.
  My very able colleague from Rhode Island, Senator Reed, made this 
point in a very careful and thoughtful way. The bill states that the 
principal negotiating objectives with respect to labor, health and 
safety, or environmental standards only include foreign government 
regulations and other government practices, ``including the lowering of 
or derogation from existing labor, health and safety or environmental 
standards for the purpose of attracting investment or inhibiting U.S. 
exports.''
  ``The lowering of or derogation from existing * * * standards. * * 
*'' Thus the bill would not allow for fast track-consideration of 
provisions to improve labor, environmental and health and safety 
standards in other countries. It, in effect, says they can't lower it. 
But it says nothing about improving it. And one of the problems, of 
course, that we face is that environmental standards, workers' 
standards, health and safety standards in other countries are 
completely inadequate and we are in that competitive environment.
  The principal negotiating objectives, which are what the implementing 
legislation has to be limited to, leave no room for provisions that are 
outside a very narrow range, strictly needed to implement the trade 
agreement. So this provision, despite these assurances now which are 
coming in, all of which are unilateral assurances by the executive 
branch and not included in the negotiating objectives, would be 
included within the fast-track authority. So we are not even going to 
be able to start addressing this very serious and severe question about 
the discrepancy between workers' standards, environmental standards, 
and health and safety standards--between what exists in this country 
and what exists with a number of our competitors.
  What is the answer to that? Are we simply going to accept these lower 
standards, many of which result in lower costs, and then continue to 
experience these growing trade deficits? Are we going to lower our own 
standards, when clearly we put them into place because we perceive that 
they are necessary in order to deal with the sort of problems at which 
they are directed, when we are trying to get the rest of the world to 
come up not to go down? These are many of the questions that I think 
need to be addressed on the trade issue.
  Very quickly in summary, the fast-track authority represents a 
tremendous derogation of the power of the Congress. The Constitution 
gives us the power to regulate foreign commerce and we ought to 
exercise that power. We do very serious consequential arms control 
agreements that are open to amendment when they come to the floor of 
the Senate. We may not amend them. We may decide not to amend them. But 
we don't give away or forswear the power to do so. I don't see why we 
should give away or forswear that power when it comes to trade 
agreements.
  Of course we have had this incredible deterioration in our trade 
situation. That is the issue that ought to be addressed. It would serve 
everyone's purpose if we rejected the fast-track authority and then 
provoked or precipitated, as a consequence, a major national debate 
with respect to trade policy. It is constantly asserted--I understand 
the economic theory for free trade and I don't really differ with it, 
although I do submit to you that many of the countries with which we 
are engaged in trade are not practicing free trade. They are not 
playing according to the rules. They are manipulating the rules to 
their own advantage and to our disadvantage--witness these. In many 
instances the consequence of that is to contribute to these very large 
trade deficits. But those are the matters that we ought to be debating. 
We ought to have a full-scale examination of that and the Congress 
ought not to give away its ability to be a full partner in developing 
and formulating trade policy. This proposal that is before us, in 
effect, requires the Congress to give up a significant amount of its 
authority in reviewing trade agreements. I think, therefore, they don't 
get the kind of scrutiny which they deserve.
  The examination is always on one side. It says, we will get these 
additional exports. No one looks at what is going to happen on the 
import side and what the balance will be between the two.
  As a consequence of not examining the balance, we have had this 
incredible deterioration. We used to not do that. We used to have in 
mind the fact there was a balance and that it was important to us. We 
sought to sustain that balance, as this line indicates. We held that 
line for 25 years after World War II. Since then, we have gone into 
this kind of decline, and I, for one, think it is time to address that 
problem. I think the way to begin is not to grant this fast-track 
authority.
  Mr. President, I yield the floor and reserve the remainder of my 
time. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BENNETT. Mr. 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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