[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

[[Page S12106]]

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

[[Page S12108]]

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

[[Page S12114]]

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

[[Page S12115]]

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.

[[Page S12116]]

  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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