[Congressional Record Volume 145, Number 147 (Tuesday, October 26, 1999)]
[Senate]
[Pages S13119-S13122]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    AFRICAN GROWTH AND OPPORTUNITY ACT--MOTION TO PROCEED--Continued

  Mr. GRAHAM. Mr. President, one of the last conversations I had with 
John

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Chafee just a few days ago was about the legislation we are now 
considering. John Chafee, as in all things, was a commonsense 
pragmatist. I do not know how he would have voted on these measures, 
but I think he would have been appealed to by the practical rationale 
for the United States moving forward in the way this legislation 
directs us.
  This legislation, which was a product of the Committee on Finance, on 
which Senator Chafee served with such distinction, a committee in which 
he had voted for this legislation as a member of the committee during 
the time it was being considered there, I believe embodies many of the 
principles for which John Chafee stood. I want to particularly talk 
about one component of this legislation, and that is the United States-
Caribbean Basin Trade Enhancement Act component.
  Since the passage of the North American Free Trade Agreement, our 
Caribbean and Central American neighbors have been at a competitive 
disadvantage. There is now a benefit of in the range of 5 percent to 10 
percent, having the identical production factories located in Mexico as 
opposed to in Central America or Caribbean nations which are members of 
the Caribbean Basin Initiative. It has been stated we should have dealt 
with this issue when the North American Free Trade Agreement was first 
adopted. Unfortunately, we did not. Today, we have the opportunity to 
begin the consideration of the restoration of parity and balance within 
our region.
  I thank Senator Lott for his support in bringing this important 
legislation to the floor. I also thank Senator Roth and Senator 
Moynihan for the leadership which they have provided through the 
consideration of this legislation in the Senate Finance Committee.

  Over the last 5 years, I have worked to enhance and build upon our 
existing trade relationship with our neighbors in the Caribbean Basin 
region. On February 3 of this year, in response to the overwhelming 
devastation and destruction caused first by Hurricane Georges and then 
by Hurricane Mitch, I introduced the Central American and Caribbean 
Relief Act. This bill represented a broad and comprehensive strategy to 
provide immediate disaster relief, economic and infrastructure 
recovery, and long-term trade enhancement that would benefit both the 
United States and the countries in the region.
  On March 23, 1999, we passed legislation that provided immediate 
disaster relief to the countries in the region that were impacted by 
Hurricanes Georges and Mitch. This legislation included $41 million of 
debt relief. We wiped out all of the bilateral debt of these countries 
to the United States and contributed to a Central American relief fund 
which will be beneficial in terms of reducing other forms of 
indebtedness of those countries that were so ravaged by the hurricanes.
  I am pleased that now we are considering a bill that includes many of 
the long-term trade enhancement provisions that were part of the 
Central American and Caribbean Relief Act. Enacting this legislation is 
critical to the continued economic growth and health of our Nation and 
the economic health of our closest neighbors in the Caribbean and Latin 
America. It is also in the national security interest of the United 
States of America.
  Let me review what are some of the compelling reasons for the 
adoption of this legislation.
  First, humanitarian. I have made three trips to Central America and 
the Caribbean since the devastation of Hurricane Georges and Hurricane 
Mitch. As a Floridian, I have had some exposure to the destruction that 
hurricanes can inflict upon a community. I can say I have seen nothing 
the likes of which I saw in Honduras after Hurricane Mitch. I know that 
many of my colleagues have also seen the destruction caused by these 
hurricanes. These two destructive storms caused a level of death and 
devastation not seen in the Western Hemisphere in over 200 years.
  We have all heard of the tremendous loss of life, the economic 
disruption, the human suffering caused by these hurricanes. As a 
neighbor, a friend, and a great Nation, the United States has both a 
history and a current obligation of response with assistance to those 
in need, especially those nations and those peoples who are our closest 
neighbors. Providing enhanced trade benefits will be a significant part 
of that humanitarian response. It will allow nations that had major 
parts of their economies, particularly agricultural economies, 
devastated by these hurricanes to begin to rebuild on a more 
diversified and stable economic basis.
  A second reason to pass this legislation is economic. Caribbean Basin 
enhancements are in the best economic interest of the United States. 
Experience shows us that providing trade benefits to the Caribbean 
Basin is good business for the United States. Following the enactment 
of the Caribbean Basin Initiative in 1983, our trade position with the 
region has improved from a trade deficit of $3 billion with the 
Caribbean Basin, which we suffered in 1983, to today approaching a 
$3.5 billion trade surplus. These are not only good neighbors, but they 
are good trading partners. They are trading partners who, on a per 
capita basis, have consistently outpaced all other regions of the world 
in terms of the U.S. trade surplus.

  Between 1983 and 1998, U.S. exports to the region increased fourfold, 
while total imports into the U.S. region grew by less than 20 percent. 
In fact, since 1995, U.S. exports to the CBI countries have increased 
by approximately 32 percent. There are over 58 million consumers in the 
24 countries represented by the CBI region. Seventy percent of their 
nonpetroleum imports come from the United States.
  Let me repeat that: 58 million consumers in 24 countries close to the 
United States; 70 percent of their nonpetroleum imports come from the 
United States. Yet there is another reason to strengthen the Caribbean 
economies, and that is the importance of the stability of our closest 
neighbors.
  When the CBI bill was adopted in 1983, the Caribbean Basin, 
particularly Central America, was in flames with violent conflicts and 
rampant drug trafficking. The primary goal of the initial CBI 
legislation was to stabilize the region by building stronger, more 
diverse economies. These economies were seen as a critical element in 
supporting democratic governments.
  Our national security and our continued interest in reducing the 
level of flow of illegal drugs and illegal immigrants into the United 
States was also at stake in the stability of the region.
  According to the Department of State's Bureau of International 
Narcotics and Law Enforcement Affairs, increased law enforcement 
efforts along the Southwest border of the United States have again 
encouraged drug traffickers to reactivate their old, well-established 
smuggling routes in the Caribbean and Central America. Recent cocaine 
seizures in the regions bear this out. In 1998, authorities in the 
Dominican Republic seized 2.4 metric tons of cocaine. During the same 
period, Guatemalan authorities seized 9.2 metric tons of cocaine, and 
Panamanian authorities seized 11.8 metric tons of cocaine. Cocaine 
seizures in the Bahamas during 1998 totaled 3.7 metric tons, the 
highest level in that country since 1992, while at the same time an 
estimated 54 metric tons of cocaine flowed through Haiti.
  Experience tells us the vast majority of this cocaine was destined 
for the United States of America. Without assistance to restart the 
regional economy, without assistance to make it possible for people to 
provide for their families, the nations in this region will be even 
more susceptible to the scourge of drug trafficking. The people of this 
region must have opportunities in the legal economy so they may feed 
their families and resist the financial temptations associated with 
drug trafficking.
  Failing to enact CBI enhancements will increase the pressure for 
illegal immigration into the United States. The people of the CBI 
region must have the real opportunity at home so they are not forced to 
turn to illegal immigration to find employment and feed their families.
  The painful lessons of the 1980s need not be repeated as we move into 
the new century. We can act--we must act--to prevent it.
  Today, I want to focus on yet another reason why passing the 
Caribbean Basin Initiative enhancement legislation is so critical. The 
reason can best be demonstrated by looking at these two shirts. This 
golf shirt is made in

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China. It is made from fabric that was grown by Chinese farmers, woven 
in Chinese textile mills. This shirt costs approximately $4.75 to 
produce. This shirt was made by a Caribbean Basin country, similar 
plant. It was made with fabric that was grown on U.S. farms, and it was 
spun in U.S. textile mills. This shirt costs approximately $5 to 
produce. Both of these shirts were imported into the United States for 
sale at U.S. retail stores. There is no significant difference between 
these shirts, save the location, China and Nicaragua, where they were 
manufactured, and where the components were grown and spun into 
textile--China, the United States of America. Each of these shirts 
sells for approximately $19. That is the price the law of supply and 
demand has set upon these items.

  Mr. President, I ask unanimous consent to be allowed to present these 
shirts before the Senate.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAHAM. One might ask the question of basic economics. If the 
Chinese shirt is identical to the Nicaraguan shirt, if the Chinese 
cotton that is spun into this shirt is to the consumer essentially the 
same as the American cotton, which is spun into the Nicaraguan-
assembled shirt, and yet the Chinese shirt costs 5 percent less to 
produce, sells for the same price, why is it there are any shirts being 
produced in Nicaragua or in the other Caribbean Basin countries?
  Well, there are several reasons why there is a market for the more-
expensive-to-produce CBI shirt. Transportation costs between the 
Caribbean Basin and the United States are less than the transportation 
costs between China and the United States. The proximity of the 
Caribbean Basin to the United States means that transit time for 
textile products manufactured in the CBI region and destined for sale 
in the United States is significantly less than transit time for 
Chinese products. This is a particularly important factor in the 
apparel industry with its rapid style changes. But neither of those are 
the most important reason.
  The most significant reason why there is a market for the Caribbean-
assembled shirt, the shirt which assembles U.S. cotton which is milled 
in U.S. textile mills, the most important is because there is a 
limitation on the number of these shirts which can be imported from 
China.
  In 1999, the import quota for Chinese-manufactured shirts, such as 
the one I hold today, the exact number of these shirts which can be 
imported from China to the United States is 2,336,946 dozen per year. 
Imports of the shirt manufactured in Nicaragua, as well as other 
Caribbean Basin countries, where U.S.-grown and processed cotton is the 
basis of manufacture, are not subject to quota restrictions. The 
difference represented by these two shirts will become much more 
apparent in the year 2005, a watershed year for the textile and apparel 
industry in the United States and the Caribbean Basin.
  Why is 2005 such a significant date on the calendar? The import 
quotas which are currently applicable to textile products of most Asian 
nations, originally imposed under the Multi-Fiber Arrangement, now the 
Agreement on Textiles and Clothing, will be phased out. There will no 
longer be, for most Asian nations, a quota limitation on the number of 
items such as this golf shirt which can be imported into the United 
States. At that time, textile production in the Caribbean Basin will 
be placed in a distinct and growing disadvantage due to its higher cost 
of production. Disinvestment in the region is a real potential, 
reducing the incentive to use any material from U.S. textile mills or 
cotton grown in the United States. We face the prospect in the year 
2005, with the lifting of the quotas, that the already 5-percent 
production cost advantage of Asian countries will expand, as they are 
able to spread their production cost over an unlimited number of 
apparel items to be imported into the United States.

  The transportation and proximity advantages of the CBI country will 
not be able to sustain the raw economic advantage of the lower cost of 
production under current standards in Asia.
  That is why passing CBI enhancement legislation now, in 1999, is 
critical to U.S. textile and yarn industries as well as to U.S. cotton 
growers. There are 64,000 U.S. textile workers who are dependent on 
this partnership of textile produced in the United States and assembled 
in the Caribbean for their jobs. Overall, 400,000 U.S. jobs are 
dependent upon textile exports to the CBI region. Last year, $4.5 
billion worth of U.S. textile and apparel products were exported to the 
CBI region for assembly. Only by providing incentives for the 
development of stronger relationships with apparel manufacturers in our 
hemisphere will we have any chance of maintaining a market for U.S. 
cotton and textiles after the quotas are eliminated in 2005.
  We must see this 5-year period as a period of challenge, a period in 
which we must increase the production competitiveness of U.S. textiles 
and Caribbean apparel. If we squander these 5 years, we face the very 
real prospect that we will be having a debate over nothing because, 
with the lifting of the quotas, there will be a strong incentive for 
this industry and the cotton farmers and the textile workers who 
support it to move from the Caribbean to Asia.
  Developing strong relations with the countries in the Caribbean 
Basin, therefore, will not only promote political stability, will not 
only be in our humanitarian tradition, but will also be critical to the 
economic health of an important American industry.
  An independent economic analysis funded by the Inter-American 
Development Bank and prepared by Professor Raul Hinojosa-Ojeda of the 
UCLA School of Public Policy and Social Research and Professor Robert 
K. McCleery of the Monterey Institute for International Studies makes 
just this point. The numbers are clear.
  According to the American Apparel Manufacturers Association, without 
CBI enhancement, U.S. textile and agriculture will be adversely 
affected, and the U.S. economy will suffer. Currently, 50 percent of 
the apparel items consumed in the United States are manufactured with 
U.S. cotton. Industry estimates indicate that if we can increase the 
attractiveness of the Caribbean Basin as the place of assembly, that 
number will grow from 50 percent of U.S.-consumed apparel made with 
U.S. cotton to 70 percent. But if we fail to act, if we allow this 
partnership of U.S. textile and Caribbean assembly to wither, this 
number will drop to 30 percent. Without these enhancements, the U.S. 
cotton content will continue to decline, as apparel producers look to 
reduce costs and will move towards products made from cheaper labor and 
cheaper materials, primarily in Asia.
  The impact of the Agreement on Textiles and Clothing and year 2005 
changes on man-made fiber industries will be comparable to the cotton 
situation. Without CBI enhancements, the U.S. man-made fiber content of 
imported apparel will continue to significantly decline. Without CBI 
legislation and in the face of year 2005 quota reductions, producers of 
man-made fibers will be inclined to relocate their production 
facilities in order to take advantage of lower wages and production 
costs. If we begin to work to establish stronger relationships with the 
nations of the Caribbean Basin, we will be able to provide incentives 
to sustain these industries in our own hemisphere.
  Inherent in our CBI enhancement efforts are public and private 
investment incentives that will increase productivity and the quality 
of life within the region. We anticipate the textile industry will 
provide investment capital targeted for the construction and 
maintenance of schools, health and child care facilities, and 
technology enhancements to increase the productivity of both workers 
and existing manufacturing facilities. A well trained and healthy 
workforce will be more productive and efficient as Caribbean Basin 
producers compete for shares of the international textile market.
  We have an unprecedented opportunity to strengthen our economic and 
national security through the enhancement of our trade relationship 
with our neighbors in the region. We must act prior to 2005 to build a 
dynamic, formidable Western Hemisphere trade alliance that encourages 
U.S. industry to invest in the region and to make commitment to 
rebuilding the industrial infrastructure in the region.
  We are about to make a fundamental decision that will impact our 
closest neighbors, a decision that will impact a significant part of 
the economy of the United States. We can choose to create

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a climate where the United States and our neighbors can be competitive 
into the 21st century or we can repeat the same turmoil of the 1980s. 
The choice is clear, it is stark, and I think it is beyond reasonable 
debate: Will we engage or will we retreat?
  I urge you to extend this assistance to our neighbors to expand 
commerce and promote economic and political stability in the region. A 
primary beneficiary of that stability and expansion, a primary 
beneficiary of the new enhanced partnership between the United States 
and our neighbors in the Caribbean, will be the United States of 
America and its citizens.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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