[Congressional Record Volume 144, Number 37 (Friday, March 27, 1998)]
[Extensions of Remarks]
[Pages E506-E507]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 IMF RECIPIENTS MUST MAINTAIN FREE AND OPEN MARKETS AND THE BURDEN OF 
            PROVIDING IMF ASSISTANCE MUST BE EQUALLY SHARED

                                 ______
                                 

                          HON. JOHN D. DINGELL

                              of michigan

                    in the house of representatives

                         Friday, March 27, 1998

  Mr. DINGELL. Mr. Speaker, I an introducing legislation today which 
will require the Administration to monitor Asian countries that receive 
financial assistance from the International Monetary Fund (IMF) or from 
the U.S. Exchange Stabilization Fund, to ensure that these countries 
comply with commitments they have made to the IMF, that they fully 
implement market opening commitments they have made under bi-lateral 
and multilateral trade agreements, and that our IMF partners, 
especially Japan and the European Union, open their markets so that 
increased Asian exports are not dumped in the U.S. market, robbing 
American workers of their jobs and American firms of hard won market 
share. In addition, the legislation directs the Commerce Department to 
determine the appropriate application of U.S. antidumping and 
countervailing duty laws in light of currency devaluations in Asia, in 
order to prevent the dumping of subsidized and price-devalued Asian 
exports in our market.
  I am happy to have my Colleagues, Congressman John Murtha and 
Congressman Ralph Regula, joining me in the introduction of this 
legislation as original cosponsors.
  Mr. Speaker, the House may soon consider legislation that would 
appropriate $18 billion for the IMF, which has recently entered into 
assistance agreements with the troubled Asian economies of Korea, 
Indonesia, and Thailand. The Appropriations Committee has already 
conditioned the obligation of this funding on compliance by these Asian 
nations with their trade agreement obligations, and on the elimination 
of Government directed lending. This is an important step in the right 
direction, but more is needed.
  Without the kind of careful monitoring required by the legislation I 
am introducing, we cannot be certain that the American taxpayers' 
contribution to Asian stability will be used to tear down already 
existing market restrictions and industrial policies in these 
countries, as well as subsidies, the irrational allocation of resources 
and other non-market decisions that caused this economic collapse in 
the first place. We must also make sure that our major IMF partners, 
particularly Japan and the European Union, do their part both to 
support the IMF effort and to open their markets to Asian exports.
  Under the agreements that have been negotiated, the IMF is requiring 
these Asian countries to terminate national industrial policies and to 
undertake a number of other economic and financial reforms that should 
strengthen their economies. True economic stability can only be 
achieved in Korea and the other troubled Asian countries allow free 
markets to direct their national investment and resource decisions. 
Competitiveness is the key to stability in Asia, and investing in 
industries that are already producing far in excess of demand will not 
contribute to the long-term competitiveness of Asian industries.
  Despite this fact, Korea has continued to invest heavily in 
automobile production, despite worldwide excess capacity in the 
production of motor vehicles. The IMF must be careful, therefore, that 
its funding is not misused by those in Korea who may be inclined to 
pursue the failed policies of the past in which the Korean government 
tightly restricted foreign motor vehicle imports (the foreign share of 
the Korean auto market is only 0.6%) and heavily promoted investment in 
Korean auto production.
  Not only would significant new investment in Korean auto production 
provide a very unstable basis for that country's future economic 
growth, but a sharp rise in Korean auto exports to the U.S. could also 
severely threaten the health of U.S. and other foreign auto 
manufacturers and the workers they employ. This is not a remote 
concern. Based largely on the impact of currency devaluations in the 
last few months of last year, Korean automobile exports to the U.S. 
increased 8% in 1997 over their 1996 level. Clearly, there is a need to 
carefully monitor Korea's automobile exports to the U.S. and to other 
IMF partners, so that future IMF funding decisions can promote stable 
commercial and trade, as well as financial relations among nations.
  It is not just Korean motor vehicle exports to the U.S. that have 
risen sharply in recent months, either. Although the U.S. had been 
running a healthy trade surplus with Korea, that surplus turned into a 
substantial deficit during the last three months of 1997, as the U.S. 
market began to be flooded with price-devalued imports from Korea. It 
was reported recently in the Financial Times that in the first 20 days 
of February, Korea's exports to the U.S. jumped 35%. During that same 
period, Korean exports to Japan increased by only 8.3%.
  If a disproportionate share of Korea's exports are directed at the 
U.S. market, American workers and American firms will pay the price 
with lost jobs and lost market share. It is critically important, 
therefore, that Japan, the European Union, and other IMF partners share 
the burden of the new flood of exports coming out of Asia, by promoting 
consumption and opening their markets to exports from Korea and the 
other East Asian economies.
  In this regard, I find it extremely unwise and unfortunate that the 
government of Japan announced last month that it would increase its 
duties from zero to 3 percent on 78 import items from Korea, including 
steel, textiles, and petrochemical products. This move is both harmful 
to the ultimate success of the IMF's efforts to build Asian economic 
stability and a direct threat to industries, like steel, in the U.S. 
and other countries where markets are open. The U.S. market must not 
become the world's dumping ground for price-devalued imports from 
Korea.

  Steel is a good example of why I believe legislation needs to hold 
our other major IMF partners accountable for taking their fair share of 
Korean exports. Although trade agreements have eliminated many of the 
tariffs, quotas, and other formal government barriers to steel imports, 
steel producers in Japan, the European Union, and many other countries 
have entered into private, ``mill-to-mill'' agreements under which 
steel exports are tightly restricted. For example, Japanese steel 
producers have an agreement with the largest steel producer in Korea, 
POSCO, that limits Korea's exports

[[Page E507]]

of carbon steel products to Japan to a little over 2 million metric 
tons per year.
  Korea's POSCO has a similiar agreement with the European Union, the 
so-called London Agreement or the East of Burma Agreement. Under that 
agreement, POSCO has agreed to ship no more than 200,000 tons of steel 
to the European Union in 1995, and steel producers in the European 
Union have agreed to ship no more than 200,000 tons of steel to Korea. 
That same agreement also limits the European Union's steel producers' 
exports to about 150,000 tons per year for Japan and to about 200,000 
tons per year for the other Asian markets east of Burma.
  Trade statistics for 1997 show how these agreements have severely 
restricted Korean steel exports to the European Union and have forced 
those exports into the U.S. market. For 1997, the U.S. was the only, I 
repeat, the only, significant non-Asian importer of Korean steel. On 
the other hand, the European Union imported only 0.6% of all the Korean 
steel sold on the world market during 1997.
  For the U.S., the implication of these unfair and harmful export 
agreements is clear. The U.S., not Japan or the European Union, is most 
likely to become the dumping ground for price-devalued steel exports 
from Korea that, in turn, will rob American workers of their jobs and 
American firms of hard-won market share.
  The only way to prevent this from happening is for Japan and the 
European Union to open, not close, their markets to steel and other 
imports from Korea. Clearly, Japan's recent tariff hike on Korean steel 
goes in exactly the opposite direction of what needs to occur. Failure 
to open markets elsewhere to exports from Korea and the other East 
Asian economies would only force the U.S. to take action under the 
anti-dumping and countervailing duty statutes to prevent the dumping of 
subsidized and price-devalued Asian exports in our market.
  Mr. Speaker, it is essential that IMF funding legislation also 
provide for careful monitoring by the Administration and Congress of 
how IMF assistance is used by Korean and the other troubled Asian 
economies, as well as the extent to which our IMF partners open their 
markets to exports from these countries. Without such information, the 
U.S. cannot know whether IMF assistance is contributing to stable 
financial and commercial relations among nations, or whether future IMF 
assistance should be denied.
  The legislation I am introducing would give this monitoring 
responsibility principally to the U.S. Trade Representative and the 
Secretary of Commerce. The legislation would require these officials to 
consult regularly with key industry groups to share and confirm 
information that is pertinent to the monitoring effort. The monitoring 
results should be submitted bi-monthly to the Congress for as long as 
IMF-assistance is being provided to Korea and the other East Asian 
economies.
  To prevent undermining the effectiveness of U.S. trade remedy laws 
that limit the dumping of imports and that offset the anti-competitive 
impact of subsidized imports, the legislation also requires the 
Commerce Department to take steps to ensure that appropriate 
consideration is given to the currency devaluations and the extension 
of government subsidized loans to manufacturers in those Asian 
countries receiving IMF assistance.
  Mr. Speaker, I know my Colleagues share my concern that the 
generosity and willingness of the American taxpayer to provide 
assistance for the IMF's efforts to build economic stability in Asia 
not undermine the strength and competitiveness of U.S. products in both 
our own domestic market and the world market. American workers and 
American firms have fought hard and long for the success they have 
earned. Let us not take away their hard-won gains.

                          ____________________