[Congressional Record Volume 143, Number 156 (Saturday, November 8, 1997)]
[Senate]
[Pages S12105-S12116]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
RECIPROCAL TRADE AGREEMENTS ACT OF 1997
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
A bill (S. 1269) to establish objectives for negotiating
and procedures for implementing certain trade agreements.
The Senate resumed consideration of the bill.
Pending:
Dorgan Amendment No. 1594, to establish an emergency
commission to end the trade deficit.
Inhofe amendment No. 1602, to establish a research and
monitoring program for the national ambient air quality
standards for ozone and particulate matter and to reinstate
the original standards under the Clean Air Act.
AMENDMENT NO. 1594
Mr. DORGAN. Mr. President, the amendment pending on fast-track
legislation, is the amendment I offered 2 days ago. It is an amendment
called the End the Trade Deficit Act. It is S. 465, a piece of
legislation that I previously introduced in the Senate that I now offer
as an amendment.
Let me describe why I bring this amendment to the floor of the
Senate, especially when we are dealing with the fast-track legislation.
Mr. President, this Congress has spent a great deal of time dealing
with the fiscal policy budget deficit, and with some success. I might
add that actions by the Congress and a healthy growing economy have
substantially reduced the budget deficit. But there has been very
little discussion about the other deficit. And that is the trade
deficit.
This country's trade deficit is the largest in history, and growing.
For those who don't know much about the trade deficit, let me explain.
Understandably you do not hear much about it. All we do is crow about
our exports. We talk about how much we exported. Nobody talks about how
much we have imported. It is like a business talking only about their
receipts and refusing to talk about their expenditures.
Here is the merchandise trade deficit. It is 21 years old. For 36 of
the last 38 years we have had an overall trade deficit. For the last 21
years in a row we have had this merchandise trade deficit. This trade
deficit represented here in red is getting worse--not better. The last
3 years in a row have seen record merchandise trade deficits. And this
year it is expected to reach a record merchandise trade deficit.
Some say the trade deficits are really quite good for this country.
They must be ecstatic because these trade deficits are expected,
according to some econometric forecasters, to go from $191 billion in
the last fiscal year to $356 billion by the year 2005. Some will make
the case, I am sure, that it depends on the kind of trade deficits you
have; what the trade circumstances are; what the economic circumstances
are of the various regions of the world. I understand all of that.
But I say this: A trade deficit that is persistent and growing a
trade deficit that represents a chronic 21-year uninterrupted set of
trade deficits is not good for this country.
I propose a piece of legislation, now offered as an amendment, to
establish a commission the members of which would hold hearings and
make recommendations to Congress on how this country can eliminate the
trade deficit by the year 2007.
We are having a discussion about fast track. It is a strategy that
describes a procedure here in the Congress with respect to how we
handle trade agreements. Most of us understand how trade agreements are
negotiated. They are negotiated by trade negotiators sent overseas
somewhere, in most cases. They close the door, have sessions, and come
up with an agreement. They bring it back to the Congress, and they say,
``Here is the agreement. Take it or leave it; up or down; no
amendment.''
But I want to also underscore why I feel so strongly about this
issue, even as I discuss this amendment. I want to once again describe
for my colleagues the dilemma we face with, for example, one free-trade
agreement. This is the one with Canada. It is undoubtedly
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true that there are benefits to the free-trade agreement with Canada. I
am sure that there are sectors in this country that can point to
substantial success.
I would say this with some certainty. Those who negotiated that
United States-Canada trade agreement essentially traded away the
interests of family farmers in our part of the country. And the result
has been that in the post-Canada free trade agreement an avalanche of
unfairly subsidized Canadian grain coming into our country sent here by
a state-controlled enterprise called the Wheat Board--which would be
illegal in this country--sent here with secret prices that they failed
to disclose to anyone undercutting the market for our farmers
especially in the area of Durum wheat, and we can't do anything about
it.
Oh, we can shout about it, and we can complain about it. We can send
people to Canada, and make some noise about it. But the fact is that it
does not get solved. It could have been solved. We could have tacked an
amendment on the trade negotiation instrument that we negotiated with
Canada when it came to the Congress. But fast track prevented any
amendments. It predicted that we were going to have this problem, and
it predicted that we weren't going to be able to do a thing about it--
$220 million a year out of North Dakotans' pockets as a result of this
unfair trade every year and it is growing worse--not better.
Do we think fast track makes sense? Absolutely not. We have seen the
result of bad trade agreements, and we have seen the result of trade
agreements that do not give us the remedies that deal with patently
unfair trade.
Aside from the issue dealing with United States-Canada, I could spend
a lot of time talking about our trade problems with Japan and China. I
will not do it at this point. I have done it previously on the floor.
But I want to say that the chronic, persistent trade deficits that go
on year after year every year in this country are a problem. We need to
address it. To the extent this continues and gets worse, clearly this
trade deficit will be repaid with a lower standard of living in this
country. Now, it is time for us and the Congress to address that issue.
What causes the trade deficit, and what can we do to address the
trade deficit?
That is the reason I propose the establishment of a commission that
would seriously and thoughtfully address this issue.
Mr. President, in the interest of time I will cut short my comments
at this point. We have two on the other side of the aisle who wish to
address it, following which I would like to make a couple of additional
comments.
With that, Mr. President, I yield the floor.
Mr. ROTH. Mr. President, I rise in opposition to the amendment of the
Senator from North Dakota, and I do so for two principal reasons. But
before I discuss those reasons, I would like to point out that in my
judgment the truth is that trade policy has very little to do with our
trade deficit. My esteemed colleague from North Dakota, Senator Dorgan,
has made that point himself. Our trade deficit is a function of simple
arithmetic. We consume more than we produce and save, and the
difference is basically our trade deficit.
It is also true that when we are growing as rapidly as we are, and
our trading partners are not, we are likely to import more and export
less. Because they prefer to hold dollars as a hedge or as an
investment, our trading partners are essentially financing our ability
to live beyond our means.
Now, I do not mean to underestimate the need to get our economic
house in order. Getting our budget deficit under control is a
significant step in that direction.
What I have said does not mean that we should not do everything we
can to ensure that our trade policy does not contribute to our trade
deficit. We should and must insist that our trading partners open their
markets to our goods. The defeat of fast track would do nothing but
hinder that effort. It would offer our trading partners an excuse not
to negotiate with us. It would offer them an excuse to maintain their
barriers to trade and exacerbate whatever impact our trading policies
may in fact have on our trade deficit. We should instead be looking for
every weapon in our arsenal to ensure that we open markets and keep
them open. Fast track is one of those weapons. I do not see the point
of unilaterally disarming if you are seriously concerned about doing
something about the trade deficit.
Now, Mr. President, as I said, I do oppose the amendment by the
Senator from North Dakota, and I do so for two principal reasons.
First, we face many challenges on the international economic front. The
trade deficit is one of them but certainly not the only one, nor even
necessarily the most significant in my view.
To me, the broader question, and, frankly, the one that is most
likely to affect our economic future, is how we come to grips with the
increasing globalization of the world economy. The world economy is
undergoing fundamental changes that have deep importance for our
economic future, and we must decide whether we embrace that challenge
or try to hide from it.
While I do not disagree that it would be useful to look at the
underlying causes of the trade deficit in that context, there certainly
are many other issues of greater significance that have been raised in
this debate alone that would deserve similar attention by such a high-
powered group as that described in the Senator's amendment.
Second, we should also understand that the amendment will require a
hard look at whether we have our own economic house in order. Since the
root cause of the deficit includes our domestic economic policies, we
will be asking the commission to delve deeply into our fiscal and
monetary policies. My point is that there already are a number of
governmental institutions that are involved in these processes where
there is expertise on these matters such as the Treasury, the Commerce
Department, the Federal Reserve, as well as our congressional
committees. I wonder whether the commission is needed given the
resources we already have available.
Third, I am always concerned when we raise a proposal for a
commission or another advisory board that we not use them as a reason
to avoid the responsibilities we have in Congress for addressing these
issues. Plainly, we have the resources here in Congress to examine
these questions in depth, and I am certain we would want to explore
those possibilities before establishing yet another blue ribbon
commission. If the question is how do we eliminate the trade deficit
and our trade policy is part of the answer, then the first step we
should take is to pass this legislation. This bill is, after all, about
breaking down trade barriers abroad, and that is undeniably a step in
the right direction in eliminating trade deficits.
As a consequence, while the concept may have merit in some sense, I
oppose the amendment as offered and will ask my colleagues to do the
same.
Mr. President, I yield back the floor.
Mr. GRAMM. Mr. President, let me begin by outlining the points I want
to make, and I will try to be brief about it so that we can get on with
other business of the Senate.
First of all, I want to talk about why I oppose this amendment. I
want to talk about the two principal problems it has. I want to outline
changes that could be made that would make it possible for us to
support the amendment and to see us proceed on a bipartisan basis. And
then, without getting into a long oration or, as a critic would say, a
lecture on international economics, I want to talk a little bit about
trade deficits, about the sources of America's trade deficit, and talk
a little bit about the history of the trade deficit in our country, and
I intend to do all of this while trying to deviate from my background
as an old schoolteacher and be brief.
First of all, there are two problems with the amendment. No. 1, we
are not going to adopt a proposal to create any commission that is
going to be stacked on a partisan basis. There is no way we are going
to adopt a commission that has three more Democrat members than
Republicans when we have a Republican majority in both Houses of
Congress. So I think the first thing we are going to have to do, if we
are going to have a commission, is to have the same number of
Republicans as Democrats.
I think it would be a good idea to try to set some parameters on the
kinds of
[[Page S12107]]
people that should participate on this commission. If we do not want
this to turn into a political commission with a bunch of political
hacks on it, it would be helpful to have people who are genuine
financial, economic, and international trade experts, and ones who
could bring with their expertise a high degree of objectivity. I think
the degree to which we could set some parameters as to who would be on
the commission would probably be helpful. I do not think we achieve
anything by appointing a partisan commission with a bunch of political
hacks on it who have an ax to grind and are simply looking for a forum
to try to promote their own political interest, their special interest,
or their individual agenda.
Second, I cannot see how we could adopt a commission that was given a
mandate that without regard to any other policy, our goal should be
simply to eliminate the trade deficit by the year 2007. I believe there
are things we could do and should do that would be beneficial to the
elimination of the trade deficit. And I will talk about them. But the
idea that without doing those things we should simply set out to build
walls around America, drive up costs to consumers, drive down living
standards, disrupt economic growth, is something I think we have to be
very careful about.
So I think we could have an agreement here if we have a genuine
bipartisan commission. I think we could have an agreement if we could
try to focus the membership of the commission so that we are seeking
advice from people who actually know something about the subject rather
than a bunch of politicians who are simply going to express their
special interest. And I think we need a little bit broader objective
than simply to say that we should eliminate the trade deficit by the
year 2007.
To listen to those who oppose fast track and who are talking about
gloom and doom on the trade deficit, you would not realize that
yesterday the unemployment rate was announced and it is 4.7 percent,
which is the lowest unemployment rate we have had since the early
1970s. In other words, today, with the largest trade deficit in
American history, we have the lowest unemployment rate we have had in
almost a quarter of a century.
Let me say a little bit about trade deficits. Trade deficits in and
of themselves are not good or bad. They are simply an indication of a
lot of other things that could be good or could be bad. Let me give you
an example. From the moment that the first settler stepped on the North
American continent at Jamestown, VA, until the end of World War I, for
all practical purposes colonial America and the United States of
America ran a trade deficit nearly every single day--every single day.
And yet we had the most sustained period of economic growth in the
history of mankind.
Why were we running a trade deficit from the time the first American
stepped off the boat at Jamestown until the end of World War I? We were
running a huge trade deficit because with this vast continent, with its
boundless natural resources, with its fertile land and limitless
forests, with its harbors and rivers, and with people who had more
freedom than any people had ever had in the history of mankind, people
from all over the world wanted to send their money here to invest in
our economy. So the British sent the money to build our railroads.
Investors from all over the world not only sent their money but their
children to come and participate in the American miracle, and so as a
result we had a trade deficit practically every single day from 1607 to
roughly 1920. And to listen to our colleague from North Dakota, with
all due respect, it should have been a bleak, dark, doomed place, this
America. But the plain truth was we had more growth, more opportunity,
more freedom and more prosperity than any place in the history of the
world, then to now.
Deficits are like debt. They can be a path to prosperity or they can
be a path to disaster. And it all depends on what you use it for, why
it comes about. Borrowing money can make you rich, if you invest the
money and earn a rate of return bigger than what you have to pay to
borrow the money. It can also make you poor if you invest the money
poorly or simply go out and spend it until you have to pay the money
back.
Now, let me try, as briefly as I can be brief, to explain why we have
a deficit. We need to understand that the exchange rate between the
dollar and other currencies is set every day on an international
exchange market where there are literally hundreds of billions of
dollars of transactions every single day.
Now, on this market people are buying and selling dollars, sometimes
by the billions of dollars per transaction. Why do people buy dollars?
People buy dollars to buy American goods. They buy dollars to invest in
America or to repatriate earnings to America from American investment
abroad. They buy dollars to hold as an international currency. In fact,
the dollar has become the international currency of the world, and,
remarkable as it sounds, we have printed hundreds of billions of
dollars and people all over the world hold them to use them in their
own economies. And we have been a huge beneficiary of that.
Now, why do Americans buy other currencies? We buy other currencies
with dollars because we want to buy foreign goods, because we want to
invest abroad, because we want to repatriate earnings abroad, but by
and large we do not use other currencies as an international exchange,
not nearly as much as the dollar is used. Now, what this means is every
day on the market for international currency, the value of the dollar
relative to the yen, the value of the dollar relative to the pound, is
set exactly at that point where the dollars that are being demanded to
buy American goods and to invest in America are exactly equal to the
dollars that we are supplying to try to buy that currency, to buy its
goods, or to invest in that country.
If that isn't so, then the exchange rate moves. Why is that
significant? It is significant because what it really says, for all
practical purposes, is that anytime you have a trade deficit you have
either a capital surplus and/or people overseas are, for some reason,
holding our currency. This last factor is not nearly as relevant for
any other country in the world, but because our economy is the
strongest in the world, because our dollar is the soundest in the
world, people want to hold American dollars. As long as people want to
invest in America--and today we are having a huge level of investment
in America from all over the world--we are going to have a trade
deficit because we have a capital inflow. Those who would like to see
it otherwise are trying to repeal double-entry bookkeeping, because
basically what we are seeing here with the trade deficit is accounting
more than it is economics.
We are seeing the accounting of the fact that we have high real
interest rates because our Government is still a big net borrower--
because we as a nation don't save very much money. We have the lowest
savings rate of any industrial country in the world, largely because we
have a Social Security system that is pay-as-you-go and discourages
personal savings for retirement. It doesn't have a real trust fund.
Social Security contributions are taxes, not savings. And, so, we have
collectivized retirement and retirement medical care and converted them
from savings for the future into taxes for consumption today. We are
not building up assets to pay for our future obligations. So, as a
result, we are overspending. This is to say that while at the same time
we have the strongest economic performing economy in the world on one
hand, that people want to invest in, we have the lowest savings rate on
the other. So all over the world people are trying to buy dollars to
invest here because of high equity returns and relatively high real
interest rates.
Now, if we want to do something about that we certainly don't want to
do anything about the high equity returns. We don't want to prevent
American businesses from growing and providing jobs. We certainly don't
want to pass a law that says to people all over the world, ``Don't send
your capital to America to put it to work.'' One of the principal
reasons we have the lowest unemployment rate we have had in 24 years is
that literally tens of billions of dollars of foreign capital flow into
America every year. And our foreign investors are, in the process,
helping to put our people to work.
But, if we really are concerned about the trade deficit, we ought to
deal with the deficit in our budget, not just the
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on-budget deficit but all the money we are borrowing for off-budget
accounts. We ought to restructure Medicare and Social Security and have
an investment-based system where real capital is being built up so we
can have real savings to match our growing future liabilities. We can
lower interest rates by encouraging people to save more. The chairman
of the Finance Committee, with his Roth IRA--and, by the way, Mr.
Chairman, I heard a radio commercial yesterday morning from some
securities firm advertising Roth IRA's. Those are ways that we can
encourage people to save, bringing about lower interest rates, and
reducing our reliance upon foreign sources of capital to America. And
maybe that is something that this commission ought to look at.
What we are looking at here with this amendment, to try to sum up and
be brief, is we are looking at a symptom and not a cause. We have a big
trade deficit because we have the strongest economy in the world and
people want to invest here. We don't want to do anything about that. We
have a trade deficit because we have very high real interest rates, and
with very high real interest rates people want to come here to get
those returns on their savings. We could do something about that if we
encouraged people to save more, and if we did something about the
underlying deficit, including the real, unfunded long-term deficits in
Social Security and Medicare.
So, to the extent that this commission could look at these underlying
problems, then I think we could begin to try to do something about the
trade deficit. But I go back and reiterate the point that I made
earlier. Trade deficits in and of themselves do not give you any kind
of effective measure of the strength of the underlying economy. We had
trade deficits from the colonial period to World War I, when we had the
strongest economy in the world. We have had trade deficits in trying to
rebuild Europe and Japan, when we had very, very strong economies. We
have had trade deficits and trade surpluses with countries all over the
world. Some of the countries with the poorest economies have had trade
surpluses. I don't know what the trade surplus or deficit is for North
Korea. It would be a perfect model for many, in the sense that they
don't import many goods, they protect their jobs, but the problem is
they don't have good jobs because they are poor because they don't
trade.
So, what we would like to do, to try to get on with fast track and
hopefully pass it, if the House does, is see if we can work out an
agreement to do three things. First, have a true bipartisan commission
and, if possible, in that bipartisan commission, let's try to put real
experts on the commission--not politicians--who could bring some
expertise to the problem and help us have some constructive ideas as to
what to do about it.
Second, let's look at the underlying causes of the trade deficit.
Let's look at protectionism, both here and around the world. Let's look
at our deficit in the Federal budget. Let's look at our long-term
structural deficit in our two big programs, Medicare and Social
Security. Let's look at what we can do to encourage Americans to save,
and in the process reduce real interest rates, reduce our reliance on
foreign capital, and in the process lower the trade deficit.
So, I think there is room here for a compromise. I hope we can reach
it. But in terms of the way the amendment is now drafted, we are
opposed to it. But if we could refocus it, if we could make it truly
bipartisan, if we could look at the bigger picture, then I think that
we could have the ability to reach a compromise. I think we could adopt
this--either as an amendment or as a freestanding bill, depending on
what happens in the House on fast track--and I think that in the
process we could go a long way toward completing the business of the
Senate.
I yield the floor.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER (Mr. Brownback). The Senator from North Dakota.
Mr. DORGAN. The Senator from Texas whetted my appetite once again on
economic theory. I studied economics, taught economics in college
briefly, and was most interested to hear the Senator from Texas.
Because I did teach economics very briefly, I have heard all of the
stories about economists, as the Senator from Texas has, and all the
definitions.
The one about, you know: An economist is one who can describe with
all great details the workings of the world but can't remember his
phone number.
An economist is someone who looks at something that works in practice
and wonders whether it can really work in theory.
Let me, for a moment, respond to a couple of the points made by the
Senator from Texas. First of all, I am happy to see if we can reach
some agreement on some of these provisions. This does not propose to
establish a commission with a bunch of political hacks, to use the
words of the Senator from Texas. I have no interest in establishing a
commission with political hacks. I am interested in establishing a
commission that might address a real problem and make recommendations
about how to respond to that problem.
A couple of points first. The Senator from Texas mentioned Social
Security several times. I just want to clear up a point. It really
doesn't have very much to do with this. The Senator from Texas was
mentioning Social Security in the context of domestic deficits, as
something that is out of control. This year, Social Security will take
in nearly $70 billion more than it will expend. Social Security is not
running a deficit, it is running a surplus, and a very significant
surplus at that. Why? Because it is one of the few sober things we have
done in the last two decades. We finally required a forced pool of
national savings in Social Security to meet the time when the baby
boomers retire.
So this year, the Social Security system will run about a $70 billion
surplus, and that annual surplus will continue year after year after
year until about the year 2018. So I don't want that reference to pass
unnoticed and allow someone to think, gee, there is a huge deficit in
the Social Security account.
I have a couple of other points. We are told from time to time that
we have a trade deficit because we have a budget deficit, and if we get
rid of the budget deficit, gee, the trade deficit will be no problem at
all. The trade deficit will disappear.
The budget deficit is going down, down, down, way down, and yet the
trade deficit is growing. So I ask those who tell us that the trade
deficit is simply a function of the budget deficit, why does your
theory now seem to be wrong? You said that if the budget deficit
decreases, the trade deficit will vanish. Why, when the budget deficit
not only decreases but nearly goes away, do our merchandise trade
deficits reach the largest level in the history of this country? Is it
perhaps that the theories are all wet?
Then some say, ``Well, we know we talked about the budget deficit
related to the trade deficit. If that's not the case, then its the
strong dollar. The strong dollar is our problem?'' That is what causes
this sea of red ink of merchandise trade deficits that are getting
worse? It is the largest in history and setting new records every day
and getting worse.
When the dollar is strong, we have a trade deficit. When the dollar
is weak, we have trade deficits. What do you say about that? Is maybe
the theory is all wet there as well?
Might it be, at least in part, something no one is willing to discuss
much. That is that we have a free-trade system in which our markets are
wide open and we have expectations of trading partners who open their
markets but they don't open their markets. Their markets are not open
to American goods. Might it be that our markets are open, but the
Japanese markets are not wide open to American goods, the Chinese
markets are not wide open to American goods? Might that not be the
case? Could that conceivably be the reason for part of this or a
significant part of this trade deficit? I think it is.
The Senator also discussed what happened at the turn of the century
and the prior century about trade deficits. Comparing the economic
circumstances of the prior century and its trade deficits to today is
like comparing a teaspoonful of water to a bathtubful of water. These
trade deficits are serious, alarming, and growing. Let me take this
from theory to practice.
[[Page S12109]]
At least a part of this red ink is because we are seeing American
jobs leave this country and move elsewhere, and those jobs then are
used to produce the same products to ship back into this country, and
that contributes to this trade deficit.
Bob Bramer worked for 31 years at Sandvik Hard Metals in Michigan. He
saw his plant close down, saw the equipment put on a truck and hauled
to Mexico. His and 26 other jobs went south. He didn't lose his job in
theory. He lost his job, and his family lost his income. He lost his
career. His job was put on a truck and moved to Mexico.
Nancy Dewent, 47 years old, worked at a plant for 19 years in Queens,
NY. They were making Swingline brand staplers; 408 jobs. Now they are
moving to Mexico. Nancy was 47 years old making $11.58 an hour. Those
staplers will now be produced in Mexico at 50 cents an hour, and that
will help, of course, increase this trade deficit. Nancy didn't lose
her job in theory, she lost her real job. This isn't economic theory,
it is what our current trade strategy is producing.
Fruit of the Loom was scheduled to close plants in Kentucky,
Mississippi, Louisiana, and Texas last month; 5,100 workers, workers
getting up to $10.50 an hour; moving plants and jobs to other countries
for 5 years in a row.
There is Borg-Warner, Muncie, IN, where 800 workers are losing jobs
which pay $17.50 an hour; moving to Mexico. This isn't theory, these
are families, people who have lost their jobs, and it shows up here in
red.
We can give lectures about economic theory forever. But the central
question is, do you think that 21 straight years of trade deficits
produced by this trade policy is troublesome for this country, or do
you think, conceivably, they are good for this country? Do you think
more red ink might be good for this country? Some argue that. They must
be ecstatic if that is the case, because this red ink is growing. They
must be the ones walking around with the widest smiles in town.
But there are those of us who think that trade deficits are
troublesome. We are concerned that markets are closed to this country
when we open our markets to others. We think that we ought to be a
country that cares a little about its manufacturing base and keeping
good manufacturing jobs in this country by requiring that other markets
be open to our products. We should be requiring that others who produce
and ship here be required to respond to the same kind of issues we are
required to respond to such as that you can't hire kids, you can't hire
12 years old, work them 12 hours a day and pay them 12 cents an hour.
That's not fair. We shouldn't be expected to compete with that.
Is it reasonable for us to at least require some important provisions
dealing with labor and the environment and other issues in these trade
agreements? The fact is that we don't. What we say is, ``It doesn't
matter what you do. It doesn't matter how you produce, and ship it
here, we will buy it. By the way, it doesn't matter so much that you
won't let your markets be open to us. We will accept that. Anyone that
stands up and says that is troublesome for the country, we will tell
them they don't know what they are talking about, because it is
conceivable these trade deficits are good for our country.'' Now that's
what they say.
You talk about economic gibberish. This is not good for our country.
This is the other deficit that is the worst it has been in the history
of this country and getting worse every year and one we ought to do
something about. You can name family after family after family in this
country who are already victims as a result of this deficit or whose
lost jobs helped cause this deficit. It is because those jobs used to
be here and now they are there. They used to be in this country, now
they are gone.
Why? Because in the name of profits, the multinational companies in
this country and around the world constructed an economic system
defining production to be available to them in the lowest-cost
production areas in the world. They circle the globe and find out where
can you produce, where at the same time you can hire kids, pay them
pennies, and dump the pollution in the water and ship the product to
Fargo, Los Angeles and other places. They simply look to where can they
produce in those circumstances in order to maximize your profit. It
doesn't matter to them what happens to this country's deficit. It
doesn't matter so much to them what happens to this country's jobs.
That is why I am concerned about all this. That is why I asked in
this limited circumstance for a commission to consider ways that we can
address the trade deficit, ways this country can begin to end this
hemorrhaging of red ink.
Mr. SARBANES. Will the Senator yield?
Mr. DORGAN. I will be happy to yield.
Mr. SARBANES. I ask the Senator from North Dakota, in fact, what has
happened to the U.S. trade balance is a marked deterioration in our
position in the post-World War II period. In other words, beginning
after World War II, we ran a modest trade surplus year in and year out,
and beginning in the mid-1970s and continuing thereafter, as the
Senator indicates on his chart and indicated on this chart, we have
been running these very large negative trade balances, sometimes as
much as $150 billion, $180 billion in a single year. The consequence of
running these trade balances year in and year out cumulatively is about
$1.5 trillion. The result of that is a deterioration in the U.S.
position from being a creditor nation to now we are a debtor nation.
Mr. DORGAN. Is it not the case that we are the largest debtor nation
in the world?
Mr. SARBANES. The United States is the largest debtor nation in the
world. People say, look, if we were a developing country just setting
out on the process of development, there is an argument that can be
made that you run a trade imbalance. And if you are smart in your trade
imbalance, you bring in investment to develop your economy for the
future. That is what the United States did in the 19th century.
But the United States now is supposedly the most developed country in
the world. The most developed country in the world, supposedly the
world's leader, ought not to be a debtor nation and ought not to be
running these large trade imbalances.
I say to the Senator from North Dakota, here is what happens. You
know, people say, ``Well, people are losing jobs.'' And they say,
``Well, they're losing jobs, but other people are gaining jobs from the
exports, and, as a consequence, we're strengthening ourselves as a
nation.'' We are not strengthening ourselves as a nation. We are
running these very large trade deficits year in and year out.
This represents a marked deterioration in the American position. We
did not do this between the end of World War II and into the 1970's. It
is only over the last 20 years that we started running, year in and
year out, these very large trade deficits.
As the Senator from North Dakota points out, the reason for them, I
think, is fairly simple. Our market is very open for other countries to
send goods into the United States. And many of those markets are
relatively closed to us. We export $12 billion a year to China, to the
PRC, and take from the PRC $52 billion a year; $12 billion goes that
way and $52 billion comes this way, for a net imbalance of $40 billion.
And it is growing year to year to year. Every year it keeps going up.
Mr. DORGAN. Let me ask the Senator to respond to this.
China, the People's Republic of China, dealing with American movies,
allows 10 movies a year in China, no more, just 10. They cut it off at
10.
China does not allow nearly enough American pork. In fact, we send
very little pork into China. The Chinese consume one-half of the
world's pork, but we send very little pork into China. We used to be
the world's largest wheat supplier to China. Now we are displaced as
the largest wheat supplier to China even as they ship increasing
quantities of Chinese goods to this country.
In addition, the Chinese have ratchetted up this huge surplus with
us--or we a deficit with them--to very significant levels. What they
need are airplanes. They only produce--as I understand it, they produce
one airplane that I think holds 50 or 60 passengers. They need
airplanes. In fact, they need a couple thousand airplanes that they are
going to need in the years ahead.
Guess what China says? China says, ``Well, what we'd like to do is
we'd like
[[Page S12110]]
to consider buying your airplanes, but you must manufacture your
airplanes in China.'' This is at a time when we are already running a
huge trade deficit with China.
My feeling is: China sends its goods to this country to our
marketplace, and American consumers buy them. We make something China
needs. China has a responsibility to buy from us wheat, pork, and
airplanes.
But that is not the way the world currently works, because this
country does not have the nerve, the will, or the courage to stand up
to trading partners--China, Japan, Mexico, Canada, and others--and say,
``Here's what's fair for the American economy. Here's what's fair for
American workers.'' If we don't have the nerve to stand up for this
country's economic interests and demand fair trade, then we are going
to continue to see this sort of hemorrhaging year after year as far as
the eye can see.
Mr. SARBANES. The Senator is absolutely right. The question is not
whether you are going to trade; it is the terms on which you will
trade. What are the rules going to be? Of course, China's trade surplus
with the United States finances China's trade imbalance with the rest
of the world. So, in effect, we make it possible for China to purchase
from other developed countries, the European countries, for example,
who are very careful to keep their trade relationship with China in
much more of an even balance.
So, year after year, we run these large trade deficits, and everyone
says, ``Well, it doesn't matter.'' It does matter. It does matter. It
affects the standing of the United States as a world power. You cannot
long be a world power if you are the world's largest debtor country.
This chart makes a difference. The United States for decades was a
creditor nation--others owed us. Now we have deteriorated to where we
are now the largest debtor nation in the world to the tune of $1
trillion--a $1 trillion debtor nation.
People get up on the floor of the Senate, and they make these
expansive speeches about what a great power we are, and so forth and so
on, and yet our economic status continues to deteriorate year after
year.
This is the issue that needs to be addressed. This is exactly what
this commission would try to do. The fact of the matter is that in this
trade debate there is an effort to frame it as though the people that
are losing their jobs are screaming, which they well should be, but
then it is argued, well, this has to happen when you have trade
development and, you know, there are people who get jobs in the export
industry.
The fact of the matter is, we are losing far more jobs on the import
side than we are gaining on the export side. I mean, if the trade was
roughly in balance, then you'd have a different set of circumstances.
But we have been running, as the Senator has pointed out, these very
large trade deficits, year after year after year.
That is a deterioration in the American position. I defy anyone to
try to make the case that it is a good thing for the United States in
present circumstances to be running these large trade deficits, that it
is a good thing for the United States, supposedly the world's most
highly developed economy, to go from being a creditor nation to being a
debtor nation. It is obviously not a good thing. We need to address
this issue. This commission would be one way of trying to do that.
Mr. DORGAN. Mr. President, if I might reclaim my time.
The Senator from Maryland is an extraordinarily effective advocate
for that point of view. And it is one that I share. He, along with
Senator Byrd from West Virginia, is a cosponsor of this amendment and
the legislation that mirrors it that we had introduced earlier in this
Congress.
I must leave the floor, and I don't know whether the Senator from
Maryland has other thoughts to continue with, but I know that under the
spirit of the unanimous-consent request, upon disposition of my
amendment, Senator Reed from Rhode Island would be recognized to offer
an amendment. My understanding is that he would not require that it be
voted on today, but he does want to offer it and have some discussion
about it.
The disposition of my amendment would be this. What I would like to
do is engage the staff of the Senator from Delaware and the Senator
from Texas, who spoke earlier, to see if there are ways to deal with
the questions they raised about the commission.
As I understand, the Senator from Texas indicated that he would not
necessarily object to the establishment of a commission if we could
reach some compromises on the conditions of such a commission or the
makeup of the commission.
Would that be the understanding of the Senator from Delaware with
respect to Senator Reed?
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I would like to see if it is possible for us
to reach agreement on your amendment. I think in general principle we
can work with you. But I do think there are some significant changes
that have to be made, including the makeup of the commission itself. So
it would be my understanding that tonight, at the staff level, we could
probably work and see if we cannot reach agreement and try to do that
so we can complete it at the earliest possible time.
But my understanding is that the distinguished junior Senator from
Rhode Island would seek to introduce his amendment, but it would be
with the understanding that there would be no votes on that amendment
tonight but merely to introduce it.
Mr. REED. That is correct.
Mr. ROTH. With that understanding, that is satisfactory to me. So we
will lay your amendment aside.
Mr. DORGAN. Mr. President, I ask unanimous consent my amendment be
laid aside in order that the Senator from Rhode Island may offer his
amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 1613
Mr. REED. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Rhode Island [Mr. Reed] proposes an
amendment numbered 1613.
Mr. REED. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
Amend section 2(b) after section 2(b)(15) to add the
following new paragraph:
(16) The principal negotiating objective of the United
States regarding the environment is to promote adherence to
internationally recognized environmental standards.
Amend section 10 at the end, to add the following new
definition:
(7) Internationally Recognized Environmental Standards--The
term ``internationally recognized environmental standards''
includes--
(A) mitigation of global climate change;
(B) reduction in the consumption and production of ozone-
depleting substances;
(C) reduction in ship pollution of the oceans from such
sources as oil, noxious bulk liquids, hazardous freight,
sewage, and garbage;
(D) a ban on international ocean dumping of high-level
radioactive waste, chemical warfare agents, and hazardous
substances;
(E) government control of the transboundary movement of
hazardous waste materials and their disposal for the purpose
of reducing global pollution on account of such materials;
(F) preservation of endangered species;
(G) conservation of biological diversity;
(H) promotion of biodiversity; and
(I) preparation of oil-spill contingency plans.
Mr. REED. Mr. President, my amendment would, within the context of
fast track, direct the President to undertake as a principal
negotiating objective to promote the adherence of internationally
recognized environmental standards.
Essentially, what we have to do to improve the legislation before the
Senate is to recognize that environmental quality is an important
issue. It is an important issue for us, all of us who breathe the air,
swim the waters, eat the bounty of our land, but it is also a very
important issue in terms of economic competition because in many
respects what we are seeing in countries that are trading with us is a
conscious and at times very committed and deliberate attempt to use
environmental quality and the lack of environmental quality to gain
advantage over American workers.
[[Page S12111]]
The underlying legislation circumscribes the ability of the President
to deal effectively and forcefully with the issues in environmental
quality within our potential trading partners. That, I think, is
essential. Indeed, the experience of NAFTA should convince us very
persuasively that we have to deal with the environment in order to set
up a reasonable, fair, balanced trading regime between one country and
another. The experience of NAFTA has shown us that there are trading
partners who are using the environment, environmental laws,
preferential environmental treatment of their companies, to attract and
to lure American businesses to their country.
For example, the Canadian Province of Alberta, which was one of the
only two Canadian Provinces to sign the side agreement with respect to
the environment in NAFTA, adopted legislation in May 1996, prohibiting
citizens from suing environmental officials to enforce environmental
laws. In effect, limiting the authority, the enforcement capability of
their own environmental laws. As a result, Alberta has since been
advertising its lax regulatory climate as ``the Alberta advantage.''
Now, that might be an advantage for Alberta but it is definitely a
detriment to the men and women of America who have to follow
environmental laws which we pass in this body.
In October 1995, Mexico indicated that they would no longer require
environmental impact assessment for investments in highly polluting
sectors such as petrochemicals, refining, fertilizer, steel. Now, we
all recognize and realize that any company in the United States that
was investing or proposing to invest in one of these facilities would
have to go through a very rigorous environmental impact assessment
process. So when you have a multinational company making a decision of
whether to go and respect and follow the law of the United States or go
to a country that has announced they don't do environmental
assessments, I think it is very difficult to see why some of these
countries stay in the United States.
At the heart of our fast-track efforts should be a strong commitment
to the environment, not just because it is the right thing to do but
because it is the most consistent way that we can make our companies as
competitive as we can with companies around the world.
There is another example in Mexico. After NAFTA, a series of
multinational companies built a technology center in Ciudad Industrial.
Now, these are state-of-the-art factories, state-of-the-art facilities,
but what they are doing is taking all their waste and dumping it right
into the sewers without any treatment or hardly any treatment at all,
something we could not do in the United States, something you couldn't
do in Europe, but something that is done every day there. Again, an
advantage to these companies in terms of costs they must pay for
environmental quality and inducements for companies like that to leave
countries like the United States and other countries that have high
environmental quality standards and go overseas to these particular
areas.
We have to take strong, purposeful steps to ensure that environmental
quality is at the heart of our trade policy. Again, it is not just
altruism or idealism. It is cold, hard, economic facts that we have to
recognize. You don't have to go very far to find examples of how
multinational companies are taking advantage of lax enforcement around
the world in environmental quality. In today's New York Times on the
front page there was a story about the Nike corporation. In January of
this year, Ernst & Young, the auditing company, prepared a report to
Nike about one of the factories in Ho Chi Minh City in Vietnam. It
found that the workers there were exposed to carcinogens that exceeded
local legal standards by 177 times. That is, 77 percent of the
employees suffer from respiratory problems. Moreover, when they looked
further into the plight of these employees, it found that they were
working 65 hours a week for a grand total of $10. That is 15 cents an
hour. If you look at those low wages, together with lax environmental
standards, that is a very potent combination that makes it very
difficult for our manufacturing companies in the United States to be
competitive at all.
Now, some proponents of free trade say that is one of the
consequences of free trade, that lower wages will attract investment.
But the benefit to the people in America is low-cost goods. Nike
sneakers are about $125 a pair or $150 a pair. These are not exactly
low-cost goods. Last year, Nike made $800 million on total sales of
$9.2 billion.
The workers in Vietnam certainly are not benefiting from this great,
tremendous, volume of sales, and in fact, American consumers are not
benefiting from low-cost sneakers. They are very high-priced, prestige
sneakers. What has happened is that our footwear manufacturing industry
has been decimated. Growing up in Rhode Island, I was quite familiar
with surrounding communities, particularly Brookline, MA, where most of
the shoes in the world at one time were made. Those factories are empty
and idle and those workers have gone off to do other things, but not to
compete in the footwear industry.
It is absolutely critical to recognize the reality of international
trade where environmental quality--I should say the lack of it--is a
strong competitive inducement to move capital into these countries. The
result in some cases is very frightening, not only in terms of the
impact on our workers but certainly the impact on the workers who are
working in these facilities.
Let me summarize the Ernst & Young report as reported in the New York
Times. They painted a dismal picture of thousands of young women,
mostly under age 25, laboring 10\1/2\ hours a day, 6 days a week, in
excessive heat and noise and in foul air, for slightly more than $10 a
week. The report also found that workers with skin or breathing
problems had not been transferred to permanent chemical-free areas, and
half of the workers that dealt with dangerous chemicals did not wear
protective masks or gloves. We could say well, gee, I feel sympathetic
to the worker and as a humanitarian and as a kind, decent person that
shouldn't happen, but that is their country. That is their culture.
Those are their decisions.
But it is hard when, as I do, you go into a Rhode Island jewelry
factory, for example, and look at individual entrepreneurs whose
families have built a business over two generations, who invested their
sweat and their time and their fortune to try to build a big company,
good company, and you find out that they have to pay a minimum wage,
they have to ensure that their workers, if they are exposed to
chemicals follow rigid procedures, they have to ensure that their waste
is pretreated, and you ask those business men and business women how
they are doing, and they say poorly because of international
competition. Then you know that reports like this are not merely
academic journalistic humanitarian conclusions. They strike at the very
heart of whether small business men and women in this country can
continue to compete.
They are not asking for protective tariffs. They are not asking for
us to withdraw from the world trade as some of the proponents of this
legislation might suggest. But what they are saying is, give us a
chance to be competitive on an even basis. When you negotiate treaties,
raise the standards, the environmental standards and the working
conditions so that we can try to use our talents, our ingenuity, our
skill, and our resources to be competitive.
If you don't do that, not only are you doing a disservice to these
people who are trapped in these 10-hour days, in poor health-
threatening environments, you are striking at the very competitiveness,
the very survivability of so many small businesses around this country,
particularly in my part of the world.
Mr. SARBANES. Will the Senator yield for a question?
Mr. REED. Yes.
Mr. SARBANES. Isn't it a fact that if you can't bring in the
environmental standards and the working conditions, you are not going
to be able to compete on a level field? Either one of two things will
happen. You will remain at a competitive disadvantage, as the Senator
has noted, I think, very perceptively; or there is going to be a
tremendous downward pressure to lower environmental standards because
people will say, well, we are at a competitive disadvantage, we can't
have these environmental standards.
[[Page S12112]]
Now, we have been through the whole debate about the environmental
standards, and they are clearly necessary if we are not going to befoul
the very world in which we live.
This legislation doesn't make the environmental concerns a legitimate
objective. The Senator made a very thoughtful speech the other evening
about the difficulty with this legislation, about, as I recall, setting
out what our negotiating goals ought to be. It seems to me that this is
a clear example of such failure, because the legislation does not
permit environmental considerations to be a central negotiating goal,
as I understand it; is that correct?
Mr. REED. The Senator's understanding is correct. My reading of the
legislation would allow certain discussions about environmental
standards, along with other standards, if they directly related to
trade. But they would not provide the President with the instructions,
the support, and the direction to go out there and make environmental
quality in these foreign countries a centerpiece, an important part of
our negotiations.
Mr. SARBANES. If the Senator will yield further, my further
understanding is that, to the extent this legislation deals with
environmental standards, it simply says the countries cannot lower
their current environmental standards in order to gain a trade
advantage; is that correct?
Mr. REED. I think that's right. Again, I think it's probably not even
that clear in terms of what they can do because, essentially, as I read
the restrictive language directly related to trade, it could be read to
simply say that we have a product, for example, that we are sending in
with a label on it, and if the country objects to it or wants more
labeling, then we can say, well, that is impermissible. But as far as
whether they have pretreatment of their waste, as far as whether the
respirators in their factories, as far as whether they have
environmental standards--air quality and water quality--that seems to
be totally off the table. But that is what impacts on the quality of
the workplace. Also, it is an inducement for capital to go from our
country into these countries because, essentially, they are avoiding
costs.
The Senator probably was contacted, like I was, by individuals
concerned about the proposed ambient air quality regulations in the
United States. Some representatives of major companies have bluntly
told me, ``If these pass, we are going to Mexico. They don't have these
ambient air quality standards, and we will avoid millions of dollars in
costs. We will just move out.''
Now, that might simply be a bluffing tactic, a negotiating ploy to
try to stop these regulations. But at some point, if we continue to try
to have a clean and healthy and safe environment, these costs add up
and companies can avoid them by going elsewhere.
Mr. SARBANES. The Senator is absolutely right. Of course, the reason
we put in the environmental standards is we went through a long debate
that indicated we were paying a very heavy health cost because we
didn't have clean air and clean water. So we made the effort to get
clean air and clean water, which I very strongly support. But now if
you are going to go into international trade and your competitors are
free of having to meet any of those standards, then they are, as you
say, at a competitive advantage in dealing with you. That is one of the
things we are facing. I can't, for the life of me, understand why it is
unreasonable or impermissible to bring the environmental concerns into
the middle of the trade negotiations as well.
Mr. REED. The Senator is exactly right, in my view. Let me add
another point that I think is very important. We have talked about the
inducements for capital investment because of low environmental quality
around the world. We have talked about the effects on working men and
women who are there in those factories in Ho Chi Minh City, Malaysia,
throughout the East, and in Mexico. I suggest that this has a real
impact in our own home communities, such as Baltimore, MD, and
Providence, RI, where small business men and women are struggling to
apply the environmental quality standards that we all passed and they
agree with. We all see the benefits to our society and culture, but it
is detrimental to their economic viability versus these countries
across the sea.
There is another factor, too. Just a few weeks ago, Senator Hagel and
Senator Byrd came before this Senate with a resolution, Senate
Resolution 98. It essentially said that we are not going to tolerate an
environmental regime internationally that puts the burden of
remediation and cleanup on the United States to the detriment of our
economy. We are going to demand that developing countries also stand up
and share the burden of cleaning up the environment. It passed with
overwhelming support.
It seems just common sense that, of course, we are not going to
prejudice ourselves in an international regime by saying we will add
further burdens to us, as the developing world keeps spewing out bad
air, polluting the waters, et cetera.
But in trade agreements, which are the focal point of most of our
strong, bilateral and multinational relationships, we have completely
ignored that point. So, on one hand, we are saying we have to get tough
with these countries down there and make them start cleaning up their
environment. But when it comes to the point where the rubber meets the
road, where we are negotiating, we have leverage, and we want them to
change behavior, we say it is not important. We are talking out of both
sides of our mouth.
Mr. SARBANES. Will the Senator further yield?
Mr. REED. Yes.
Mr. SARBANES. Actually, at the very point when we have something we
can use as leverage to get the higher standard, which is access into
the American market, we are refusing to do it in order to achieve
greater equalization of these environmental standards. I can't, for the
life of me, understand why we are leaving the environmental matters out
of the trade negotiations. I understand that it will not be the only
thing in the trade negotiation; there will be other considerations as
well. But why it should be, as it were, excluded outside of that
parameter, I can't, for the life of me, understand.
Mr. REED. I am equally amazed--if I may reclaim my time --by leaving
this out. Certainly the jewelry manufacturers in Rhode Island would
say, ``Put it in because I want them to clean their waste like I have
to.'' Working men and women who have seen jobs lost because companies
moved out of their communities would say, put it in. But my suspicion
is that many people who are promoting this legislation are supportive
of those multinational corporations who say: Listen, we want to avoid
environmental policy because we want to get our production out of the
United States and get into these countries, and we don't want them to
have tough environmental standards.
Mr. SARBANES. Will the Senator yield further on that point?
Mr. REED. Yes.
Mr. SARBANES. That leads to this: Many people have said these are not
really trade agreements that are being negotiated, or the impetus for
them is not trade; it is investment. These are investment agreements.
Among other things, a result of these agreements is extended protection
for American investment in other countries; in other words, as the
Senator said, for the multinationals to be able to establish their
production abroad rather than in this country. Well, of course, if they
are going to do that, then they don't want the higher environmental or
working-condition standards.
Mr. REED. Again, I indicate that the Senator, I think, is absolutely
right. Let me give an example within the text of the agreement. Part of
the negotiating objectives is to develop internationally agreed rules,
including settlement procedures, which are consistent with the
commercial policies of the United States. So when it comes to
commercial law, dispute resolution, we want our American laws down
there because they are balanced, fair, they work, are effective, and
are comfortable to the investors going to these countries.
I daresay, if we tried to substitute our ideas consistent with the
environmental policy of the United States, we would draw the unalloyed
opposition of the proponents of the fast-track procedure. In our view,
I believe environmental quality is one important factor in terms of
economic competition between our country and other countries. So, in
effect, I think you are right. I think that the thrust of this
agreement
[[Page S12113]]
is that it is unbalanced. You and I--I will speak for myself--we
believe that we have to have sensible rules about investment.
We have certain guarantees that our investors are protected. We have
to have protection for intellectual property. We have to have
protections for dispute settlement. We certainly don't want to have a
situation where American companies go into a foreign land, make
investments, and then can't repatriate their profits or, in fact, go to
court and solve commercial disputes. That is fine. But we have to take
the next step. We also have to negotiate with those countries so that
their environmental policies are not inconsistent with ours and at
least move toward an international standard.
Mr. SARBANES. If the Senator will yield, I agree with the Senator
completely. I think all of the items that he mentioned in terms of
resolving commercial disputes, repatriation of earnings, and so forth
obviously have to be part of a negotiating effort. But the
environmental considerations should also be a part of the negotiating
effort.
I think that is all the Senator's amendment seeks to do. It doesn't
seek to displace those other goals or objectives. It simply seeks to
add to them so that it becomes a part of the negotiating focus and so
that environmental concerns will also be on the agenda instead of left
off the agenda and not have so-called side agreements. We have been
through those side agreements. We know full well--we did the same thing
on environment and on worker conditions--we know full well that in both
instances the side agreements don't amount to anything. Other things
which are put right into the trade agreement become enforceable and
have to be adhered to. If they are not adhered to, they are contrary to
the trade agreement; the remedies that are provided for in the trade
agreement go into effect. But they are not putting the environment and
the working conditions on the same status, the same level.
Mr. REED. The Senator from Maryland is absolutely correct. Recognize
that the major international environmental issues which we face--not
alone, but collectively as a world community--are significant: global
climate change, which we were talking about recently; ozone depleting
substances, which have affected all of us around the world; reduction
in ship pollution of the ocean; international ocean dumping;
transboundary movement of hazardous waste materials and disposal. What
happens to all of this waste in countries where it is being produced?
How does it move from one country to another?
All of these are critical issues. Yet, within a context and scope of
this fast track agreement, they would be relegated, as the Senator from
Maryland said, to side agreements at best. Our experience has been such
that these side agreements are ineffectual in most cases, if not all
cases. If we put them in the center of our concerns as a negotiating
objective, not only will we make progress on these issues, but we will
send a strong signal to all of our potential trading partners that they
have to be prepared to come to the table and talk turkey about the
environment and about how they will improve their environmental
quality. That will result not only in a cleaner environment, which is
an extremely noble objective and one that has very practical
ramifications, but it will also help level that competitive playing
field between those small businesspeople up in Rhode Island and
Baltimore who are doing it already. All they ask us is to ensure, as we
enter the world of international trade, that we try our best to bring
up the standards of their competitors because they are their
competitors. If we do that, then we leave it to them, their ingenuity,
their imagination, and their skill to win the trade battle.
But essentially what we are doing today by taking those off the table
is we are effectively dooming thousands of small businesses across this
country to extinction.
Mr. SARBANES. If the Senator will yield further, I think the Senator
made a very important point when he spoke about the contradiction in
our approach. On the one hand, as he pointed out on the global warming
issue and on the other environmental matters that he talked about, we
are often engaged in negotiating with other countries to try to arrive
at international environmental standards. Everyone says, ``Well, we
have to do that.'' On the other hand, when we come to trade agreements
where we have an enhanced ability, since the entry into the American
market is a very important objective that is sought abroad, we take the
environmental matters out of that context altogether.
So the very place where we are most likely to be able to gain
advances on environmental standards and at the same time, as the
Senator points out, avoid placing our own producers in a
disadvantageous position, we forswear dealing with those environmental
questions.
It just boggles the mind that this approach is being taken in this
legislation.
Mr. REED. I again agree wholeheartedly with the Senator. It is a
situation in which, when we go to table, we have direct one-on-one
negotiations, when we have as our leverage more liberal entry into our
market, the largest market in the world, when we in fact have all of
the force and the power behind these types of negotiations, we simply
say we are not interested in the environment. Yet, when we go to
international conferences, we say how not only must we all collectively
clean up the environment, this Senate weeks ago said, by the way, the
developing world, the world which will be the parties to the bilateral
agreements, they must do their share because we can't do it alone.
Mr. SARBANES. Of course, when we go into the international
environmental conferences, they say, ``You are the biggest offender,''
because we are the most highly developed country and, therefore, we are
put on the defensive in trying to get an agreement on the environmental
standards. We are the most highly developed country, which is why in
the trade negotiations they are so anxious to come into the American
market, but we leave out of the trade negotiations the environmental
issues. It just doesn't make sense. It is diminishing our ability, it
seems to me, to negotiate comprehensive, fair trading arrangements that
do not place our own producers at a significant disadvantage and do not
create a downward pressure and downward movement with respect to
protecting and enhancing the environment.
Mr. REED. I agree with the Senator. I also would suggest that these
goals of better environmental quality, both here in the United States
and worldwide, and increased international trade are not mutually
exclusive.
Mr. SARBANES. The Senator made that point in the opening debate on
this issue where the Senator spoke about, I thought in a very
perceptive way, what was important. What are your goals? What are your
objectives that are going to be focused upon in the trade negotiations?
We all want to arrive at these trade agreements if we can do so. The
question then becomes, What are the goals? What are the objectives? The
Senator pointed out that the goals were too narrowly focused. This is a
dramatic example of that narrow focus.
Mr. REED. I thank the Senator for that kind word. We have an
opportunity to provide balance in this agreement. No one is objecting
to the need for better support for investment overseas. No one is
objecting to the adoption of commercial laws and agricultural policies
that are better, and, in fact, according to this legislation, mirror
U.S. policy.
But what we are saying is, if you simply create an environment for
investment that leads to the opportunity for poor environmental
quality--and I also add the environment--in which workers are hardly
paid anything for hours of work--15 cents an hour is hardly something
that is going to compete with American workers and never should be
something that we would see as a goal. We should raise those. But if we
do not do that, you have a one-sided agreement. You have an agreement
which is a green light for capital to leave the United States and, as a
result, move jobs and production to those other countries. This is
detrimental to our small businesses, particularly some of our older
industries.
I don't believe it is inevitable that our old industries, like the
jewelry industry, the footwear industry, just inherently can't compete.
They can't
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compete if we allow countries of the world to pay 15 cents an hour,
with no real environmental enforcement, turning the other way when
there are regulatory problems, et cetera. But if we sought today to
insist in our trade agreements that environmental quality is raised,
that respect for workers and adequate wages are the order of the day,
then I think you would be surprised at the ability of our industry to
compete.
That is what I believe we are trying to do here today, is put some
balance in this legislation, recognize that unless we can enter into
negotiations on all the critical issues that affect goods coming to the
United States, we will never solve all of the issues that the Senator
talked about.
Frankly, you can look at so many industries. The footwear industry is
a classic example. As I mentioned in my opening remarks, growing up
near Brockton, MA, that was the home of footwear manufacture for the
whole world. There is nothing left there. It is not because the workers
weren't good workers. It wasn't because the managers didn't understand
managerial techniques.
We allowed countries to ship into our country goods that were
produced at 10 cents an hour in conditions which we would not tolerate
here in the United States of America. And unless we recognize that we
will never get a handle on this issue of the trade deficit, the trade
balances that the Senator talked about with Senator Dorgan.
Mr. SARBANES. Will the Senator yield further?
Mr. REED. Yes.
Mr. SARBANES. Of course, the assertion used to be made, well, if we
lost jobs in certain industries because our technology was always
advancing, we would be out doing the more complex, complicated
production techniques and therefore we would gain jobs in those
industries. And if you think about it, there is something to that
theory.
But what has happened, in my perception, that undercuts that theory
and why we are running these large trade deficits as a consequence is,
first of all, as capital moves freely, capital moves into these
undeveloped countries where there are no environmental standards and
there are no real working conditions. So then you have people who are
working 11, 12 hours a day for 15 cents an hour but the machines they
are working on, because the capital has come in, are the same machines
that people would be working on in this country.
And so the ability of capital to move that way makes it even more
imperative that these environmental and working condition issues be
included within the trade negotiations.
Furthermore, even if the capital does not move, as it were,
voluntarily, some of these countries are demanding that it move as a
condition for having any trade. China has made it very clear that
companies have to bring in their top-line technology and investment so
that they will then be the producers at the next economic turn.
So in order to get a contract, our people get a short-term contract,
they agree as part of selling the goods that they are also going to
move in the technology and the investment which then makes it possible
for them to produce the goods the next economic go-round. So no longer
will we not be able to sell to them, but it is my prediction they will
then become our competitors in other markets as well. So we are being,
as it were, coerced into, in effect, providing technology, and yet we
are told, well, we can't have as part of the trade negotiation evening
up the environmental and the worker landscape, economic landscape.
Mr. REED. Again, the Senator is absolutely perceptive about these
particular issues. I noted before the article in today's New York Times
about Nike and Vietnam and one of the officers of Nike indicated that
the factory that was inspected was ``among the most modern in the
world,'' in fact directly competitive, ``but there are a lot of things
they could get better,'' according to the spokesman. But the point the
Senator makes is well taken. This is not some old rattrap that was
built in the 1930's and has some ad hoc machines there. This is a
modern facility. It is a modern facility, the best technology to
produce footwear, but it is obvious from this report no thought or
concern was there to protect the workers to do the things we insist
must be done in our factories.
So the Senator is absolutely right. So far as the new machines to
make the product cheaper, better, faster, of higher quality, they are
there, but all of the other concerns that go to the bottom line of any
company, environmental quality being a major one, they can be avoided,
and that is what we are facing.
I believe that unless we elevate environmental considerations to a
major negotiating objective, not only will we see the further
deterioration of the world's environment, not only will we be in a
situation where we go to international conferences with the rest of
world asking us to do more and more and more to raise our standards,
making us less competitive, we are going to see the impact in our trade
balance dramatically and directly. This is not about altruism alone.
This is not about ecopolitics. This is not about sensitivity to the
environment alone. It is all of those things, but it is something else.
It is something about having a system of trade laws which recognizes
the important bottom line impact of environmental quality here and with
respect to our trading partners.
I yield the floor.
Mr. WARNER addressed the Chair.
The PRESIDING OFFICER. The Senator from Virginia is recognized.
(The remarks of Mr. Warner pertaining to the introduction of S. 1486
are located in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, let me start out by saying that I am a
strong supporter of the environmental laws. Frankly, I would be willing
to put my record as such up against any other Member of the U.S.
Senate. And, as a supporter of environmental laws, I am, of course,
anxious to see other countries, especially the developing countries,
adopt similar policies to protect and strengthen the environment. But,
having said that, I must say that I am forced to oppose the amendment
offered by our distinguished junior Senator from Rhode Island.
His proposal would include authority, under fast track, to negotiate
environmental standards and enforce those standards through trade
sanctions. Fast track was never intended as a means to rewrite
fundamental aspects of our domestic laws, such as the environmental
laws. I would point out that the basic rule of international trade is,
of course, one of nondiscrimination. Where our laws fail to meet that
test, and do not otherwise benefit from an exception to a trade
agreement, we are obliged to eliminate the discriminatory aspects of
our law. That does not mean we have to weaken our laws. It does not
mean that we have to lower our standards. It simply means that our laws
have to treat imported goods and services as they do competing U.S.
products, in terms of the applicable taxes, the regulatory standards,
and the other conditions of sale.
Fast track was designed solely for the purpose of allowing, when
needed, the conforming of our laws to our trade agreement obligations
and the basic rule of nondiscrimination. The purpose of fast track is
not to craft legislation or regulatory standards from whole cloth, and
then run them through the legislative process under the guise of a
trade agreement.
I would have thought that all sides in the debate over trade and the
environment could agree on that much. This bill would not allow the
President to negotiate trade agreements that either raise or lower our
environmental standards.
I would, of course, point out that the President does have that
general authority. And of course any agreement reached by his
negotiation is subject to the normal process of the Congress.
Mr. SARBANES. Will the Senator yield on that point? Is the normal
process that we would be able to amend it?
Mr. ROTH. That is correct. The normal process would be that it would
be subject to amendment.
Mr. SARBANES. So what we are doing here with the fast track is
denying the normal process?
Mr. ROTH. Let me point out to the distinguished Senator from Maryland
that since 1974 it has been the practice and policy of the Congress to
give the
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President authority to negotiate agreements with the assurance that
whatever he negotiates, so long as it meets the goals, the objectives
of the legislation, can be brought to the Congress to be acted upon
without amendment. So it is a special exception that has been used for
purposes of trade negotiation.
And there is a very good reason for that. The good reason for that
is, if we go way back, I think it was in 1974, it became obvious that
if we were going to continue to lower barriers to open the opportunity
to trade, that some device had to be made to make certain that what the
President negotiated would be considered by the Congress and that there
would be a vote upon it. And that is exactly what has been done, down
through the years since 1974. It has been the practice to give the
President authority to negotiate, setting forth the goals and
objectives of those negotiations and with the assurance that he could
tell the other countries that that agreement would come to the Congress
and be voted.
So, yes, it is an exception, a special process to meet the
conditions. I would point out that it seems to me, with all the
problems we have, our economy is doing extraordinarily well today, and
has been for the last 7 years. We have the lowest unemployment.
Inflation is down. I think something like 30 percent of our growth is
dependent upon exports. So I think it has been a worthwhile policy and
one that ought to be continued.
In the past, Democratic Congresses have given it to Republican
Presidents and I propose that this Republican Congress give a
Democratic President the same authority.
Mr. SARBANES. If the Senator will yield just further for 1 minute, it
is since 1975 that our trade balance has deteriorated in this
extraordinary fashion. I understand the point. Everyone says we have
been doing this. The consequence of doing this is--contrary to the
whole period prior to then, when we ran modest surpluses--we have now
been running these very deep deficits. And the consequence of doing
that is that we are now a debtor nation. I defy anyone to say that this
is a welcome trend, in terms of the U.S. economic position worldwide.
We have gone from being the largest creditor nation in the world to now
we are the largest debtor nation, and at the end of this year we will
be a debtor nation to the tune of $1 trillion.
Mr. ROTH. I would just say to my distinguished colleague, that our
economy has been doing extremely well and has been for the last 7
years. So we must be doing something right.
Yes, the deficit joint account has risen in amount. But at the same
time, we are enjoying a growth, a prosperity without inflation, with
very low unemployment. So I think we are doing something right and I
think it is important to ensure that the economy continues to grow and
prosper. I think that means it is important that we give this
President, as we have past Presidents, the necessary authority for fast
track.
Let me point out once again that fast track was designed solely for
the purpose of allowing us, when needed, to conform our laws to our
trade agreement obligations and the basic rules of nondiscrimination.
The purpose of fast track is not to craft legislation or regulatory
standards from whole cloth and then run them through the legislative
process under the guise of a trade agreement. As I said earlier, I
would have thought that all sides in the debate over trade and
environment could, indeed, agree on that much. This bill would not
allow the President to negotiate trade agreements that either raise or
lower our environmental standards. I believe that ensures that fast
track will only be used for the purpose for which it was originally
intended, implementing trade agreements, and not authorizing a
departure from the ordinary course of Senate deliberations that is
absolutely necessary to achieve that end.
Mr. President, I yield the floor.
Mr. REED addressed the Chair.
The PRESIDING OFFICER (Mr. Sessions). The Senator from Rhode Island.
Mr. REED. Mr. President, if I may briefly comment upon the amendment.
First, I recognize certainly the strong commitment of the Senator from
Delaware to environmental quality in the United States. Indeed, because
of his commitment and the commitment of many of my colleagues, we have
environmental laws which are significant, which provide for high
quality in our country. But the problem is that our foreign competitors
do not have anything close to these laws in many, many countries,
particularly countries with which we are endeavoring to establish
bilateral trade relationships.
I agree with the Senator that the purpose of the fast-track procedure
is to conform our laws to the negotiated results that the President
achieves with our trading partners. I also believe and concur with the
Senator that there is no attempt to lower or diminish our environmental
laws.
Simply stated, what my amendment would do is ask the President to go
out and try to bring up, as best he can, foreign environmental laws to
our laws. So, in effect, we would be asking him to go out and take what
we have done in the United States and try to apply it to another
country, not simply because of its decency, its correctness in an
intellectual way, but because of its profound impact in the pattern of
trade between our country and other countries of the world.
It is interesting in other areas of this underlying legislation, we
are quite specific in directing the President to do just that: go out
and bring up the laws of our potential trading partners to our level.
For example, in the section with respect to trade in services, we quite
specifically direct the President to ``develop internationally agreed
rules, including dispute settlement procedures, which are consistent
with the commercial policies of the United States.''
I would be very happy if we had language like this that would say
bring it up to the environmental policies of the United States. That is
the point that I am trying to make. I would be very happy if we changed
not one environmental law of the United States pursuant to fast track,
that we did not try to diminish or decrease any of our environmental
laws, but we simply ask the President to try to bring up their
standards somewhere near to our standards.
Not only would I be happy but, again, returning to the very strong,
in my mind, analogy to my home State, I would be very happy if I could
go back to my jewelry manufacturers--these are small companies; many of
them have family connections over long, long periods of time where
fathers and mothers have passed it on to sons and daughters--I would be
very happy if I could tell them our fast-track agreement has resulted
in increased environmental standards so that they are not exactly like
the United States, but no longer will you have to provide pretreatment
of your wastewater and then see competitors around the world simply
dumping raw solvents into municipal wastewater systems. Not only would
you have to provide ventilation for your workers, but other
entrepreneurs will have to try to do the same thing.
If we do that, I don't think it is violative of the spirit or the
letter of fast track, but it will produce a much more even, competitive
playing field for our manufacturers versus our potential trading
partners.
So I, again, urge that the Senate adopt this amendment that would
move environmental quality to the center of negotiations as a principal
negotiating objective, not because it is an altruistic noble goal
alone, but because it impacts dramatically on the bottom line of
American companies and foreign companies and, in that sense, should be
part of our trading policy, should be a key goal which our President is
seeking to achieve in any negotiations. I yield the floor.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, let me start out by saying that any
agreement that raises environmental standards in a foreign country does
not, of course, need fast-track authority because it does not need any
authority. To make environmental standards subject to fast track,
therefore, means that changes to United States environmental laws would
be subject to an up-or-down vote with no amendments. Frankly, I am too
much of a supporter of our standards to allow them to be changed in
this manner.
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Let me point out that, in any event, as I did make some mention, the
President does have authority now to negotiate whatever he chooses in
the area of environmental laws. Of course, under the Constitution, he
is responsible for negotiating international agreements, or he could
negotiate agreements that raise standards abroad or at home, or lower,
such as he chooses.
But once he reaches an agreement with another country or countries,
if it affects domestic law he, of course, has to bring it to Congress
for action. Of course, under the ordinary process, that legislation can
be amended. It does seem to me that, as a general rule, whether it is
environmental, health, safety or whatever, we do want to have the
process be the normal process where a matter comes up in both Houses
and can be amended according to the rules of either House.
I point out that if someone wants to have fast track in a particular
area beyond trade, that can be done. We had, as a matter of fact, given
what is, in effect, fast track to base closing, because it was decided
that it was important in order to close any bases that the executive
branch propose what bases would close and Congress could vote it up or
down but not amend. So we made another exception in that case.
It can also be pointed out that somewhat the same was done in respect
to the Budget Committee. The budget has to be acted upon within a
certain number of hours. There can be some amendments, but it is very
limited compared with what normally is the process in the U.S. Senate.
Mr. REED. Will the Senator yield?
Mr. ROTH. Yes.
Mr. REED. I understand the Senator's point--it is very well taken--
about the procedures. In a sense, it might prove too much. The idea
that we can do things outside of fast track raises or begs the question
why we do certain things within fast track. Why, for example, are we
saying let's make foreign laws with respect to commercial practices
consistent with our laws, when, in fact, when it comes to the
environment, we are saying, ``Oh, no, don't include environment in this
same context''?
I think perhaps the logic might be that some people either feel the
environment is not important to international trade--and I think our
discussions tonight should have indicated it is very important, indeed
crucial--or others are simply saying we want a trade agreement, an
arrangement with a foreign country which will allow us all the benefits
of commercial practice in the United States, all the protection of
intellectual property laws, all the protections for capital investment
but none of the burdens, if you will, of high-quality environmental
laws.
Again, I just can't understand, with respect, why we can't include
environmental conditions as we have otherwise.
Mr. ROTH. Mr. President, the distinguished chairman of the
Appropriations Committee desires to be recognized at this time.
Mr. STEVENS addressed the Chair.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. STEVENS. I thank the Chair. And I thank the distinguished Senator
from Delaware.
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