[Congressional Record Volume 146, Number 8 (Thursday, February 3, 2000)]
[Senate]
[Pages S341-S344]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           THE TRADE DEFICIT

  Mr. DORGAN. I will talk for a moment about the issue of the trade 
deficit that faces this country. I would like to do so, understanding 
that this country is full of good economic news. And there is a lot of 
reason for all of us to be optimistic about the future. The good 
economic news that was described last week--in fact, a week ago this 
evening--by President Clinton in the State of the Union Address tells 
us that unemployment is way down and more people are working than 
virtually ever before in this country; home ownership is up at record 
levels; inflation is down, down, way down; income is up; the stock 
market is up. There are so many evidences of good news in our country. 
Crime rates are also down. There is evidence all around us that things 
are better in America. All of us feel good about that. We live at a 
wonderful time in a wonderful country. It is quite a remarkable 
opportunity all of us have.

  But we must be vigilant about some storm clouds on the horizon. One 
of those storm clouds for this country's economy is the burgeoning 
trade deficit, the imbalance between what we buy from other countries 
and what we sell to other countries and the resulting deficit that 
comes from selling less and buying more.
  The trade deficit in this country is virtually exploding. We have a 
trade deficit that is higher than any trade deficit ever experienced 
anywhere on this Earth at any time. Does it matter? Is anybody talking 
about it? Was it mentioned in the State of the Union Address last week? 
No. Everyone wants to ignore the fact that we are rolling around pretty 
well, even though the trade deficit is increasing dramatically, and it 
somehow doesn't matter. We have wrestled this ``500-pound gorilla'' 
called the Federal budget deficit, with great pains, over many years. 
Finally, the scourge called the budget deficit, which was growing like 
a tumor--growing forever--is now gone.
  But the budget deficit, while gone, is being replaced by a trade 
deficit that is growing at an alarming rate. I want to describe part of 
that today. Everyone talks about the past 107 months of economic 
expansion. I want to talk about that, but I also want to talk about the 
trade deficit that could put an end to that economic expansion if we 
don't do something to resolve this burgeoning deficit.
  I will put up a chart that describes what we face for a trade 
deficit. This chart goes back to 1991. It shows the amount of goods and 
services we export and the amount we import. The red, of course, 
represents the imbalance, the trade deficit. In January, the Commerce 
Department announced that the trade deficit had widened to $26.5 
billion in November alone, a new monthly record. But a new monthly 
record was set in 8 of the last 11 months. Our goods and services trade 
deficit--that is, all goods and services--in 1999 will be $266 billion. 
That will exceed the previous year's $164 billion by 62 percent. 
Understand that the goods and services trade deficit will have 
ratcheted up by 62 percent in 1 year alone.
  We imported $92 billion worth of goods and exported $59.5 billion in 
goods in November. Now, if current trends continue, the growth in our 
international debt will simply not be sustainable. The foreign debt in 
this country is projected to be $1.7 trillion in 1999. That is not debt 
we owe to ourselves as the Federal budget deficit was; that is debt 
owed to foreigners who have a claim to assets in this country--$1.7 
trillion. Almost all economists will tell us that is not sustainable 
and we must do something to address it.
  When we become more dependent on receiving and retaining foreign 
capital to finance this imbalance, the day will come when foreigners 
lose faith in this economy and begin to pull out of our financial 
markets. When that happens, the value of the dollar will fall, interest 
rates will rise, corporate profits and stock prices will decline, and 
then we will have a slowdown in this economy.
  Senators Byrd and Stevens and I authored legislation, which is now 
law, creating a trade deficit review commission. That commission is now 
impaneled and underway, looking into the nature, causes, consequences, 
and remedies of this trade deficit. They will report their findings in 
August. In the meantime, this trade deficit escalates. This is the 
deficit in goods alone--what is called the merchandise trade deficit. 
This shows what happens to your manufacturing base. This is the most 
alarming deficit of all--$343

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billion--and you can see what has happened to this trade deficit since 
1991. It is a dramatic escalation--$343 billion in a single year.

  It would be useful to look at how our bilateral agreements have 
contributed to our bilateral goods deficit.
  Between 1998-99, our merchandise trade deficit with Canada went from 
$14 billion to $28 billion. Mexico--incidentally, I might mention that, 
before Congress passed NAFTA--without my vote; I didn't vote for it--we 
had a trade surplus with Mexico and a relatively small deficit with 
Canada. NAFTA turned that into a large deficit with Canada and a very 
large deficit with Mexico.
  The European Union: You can see what happened in the last year with 
respect to trade deficits with the European Union. They have increased 
dramatically.
  China and Japan: What happened there is almost unforgivable in terms 
of an economic relationship. China had, in 1999, a merchandise trade 
deficit of over $60 billion with the United States, up from about $53 
billion in the previous year. Japan's is $67 billion. These aren't 
getting better, they are getting worse.
  What does all that mean for this country? We just negotiated a trade 
agreement with China. One of the major issues of great controversy in 
this Chamber in the coming months will be whether China should be 
granted permanent normal trade relations, the same as we grant other 
countries. We will debate that sometime soon.
  That will be the source of great controversy for a number of reasons. 
Some in this Chamber will believe the Chinese have not made progress on 
human rights. Others will perhaps believe the Chinese are not abiding 
by fair labor standards that we would consider important in this 
country. Still others will believe China hasn't complied with previous 
trade agreements. So there will be a substantial amount of debate about 
this issue.
  I have been interested in the bilateral trade agreement negotiated 
with China because we have a very large trade deficit with China. I 
wonder, when our negotiators negotiated, did they negotiate with some 
idea that we will bring that into balance? Can we send more goods into 
China? Can we sell more to China? Or will we simply continue to be a 
sponge for China and watch their goods come here while they still 
retain a relatively closed market to many of our goods?
  Once when I was in China, I met with the President of that country. I 
talked to the President of China about trade issues. I said: You must 
buy more pork from the United States. You must buy more wheat from the 
United States. You must buy more from the United States. You ship us 
your trousers, your shirts, your shoes, your trinkets. Boats come from 
China loaded with all of the things you produce. Our consumers are 
happy to buy them. But we are not so lucky when American producers are 
trying to sell goods into the Chinese economy. We are told: No, you 
can't sell wheat in these circumstances in China; no, we won't purchase 
your pork; or, no, we won't purchase this or that. In fact, the things 
we do have, you want to make copies and violate the intellectual 
property rights of our producers. And we are not going to enforce that. 
We are going to look the other way when your plants press out the CDs 
with copyrighted music made by American artists.
  My point is this: I think China is a very big, strong, interesting 
country that is going to be a significant part of our lives in the 
future. I am not sure what kind of influence they will have on our 
future, but it will be significant. I want China to play a constructive 
role in our future. I want us to play a constructive role in their 
future. So I want us to have engagement and opportunity. I want us to 
have trade relationships that are fair. I want China to move in a more 
significant way to improve their record on human rights and to move in 
a way that provides more opportunity for their workers to have a fair 
say in their economy. But having said all of that, I don't have great 
confidence that the trade agreements we have with countries such as 
China are intent on ending these kinds of trade circumstances that are 
unfair to our country.

  Two weeks ago, for example, after a bilateral trade negotiation with 
China was announced as a great success, the Chinese WTO negotiator, 
Vice Minister Long Yungtu, went to Kweichow in south China to talk 
about it. He was quoted in the South Asia Post as saying: You know, the 
agreement we have with the United States, this notion of buying a 
certain number of millions of tons of wheat doesn't mean we are going 
to buy any wheat in the United States. That is just theory. That is all 
theoretical. The notion that we will now accept meat from several 
thousand meat-packing plants in the United States doesn't mean we 
intend to have any U.S. meat come into our country. That is all just 
theoretical.
  When I read what Minister Long, the man who negotiated the Chinese 
side of the agreement, said, I wrote to him and asked about that. I 
understand people get misquoted from time to time. I also asked 
Charlene Barshefsky, our trade ambassador, to find out what this means. 
So far I have not heard a word from the Chinese negotiator. I have not 
heard a word from the U.S. trade ambassador. I hope to hear from both.
  I would like to see some progress in these areas. I want us to have a 
good trading relationship with China, Japan, Europe, Canada, and 
Mexico. But a good trading relationship to me is not defined as a 
circumstance where they plug our market with all of the goods from 
their country and then keep their market closed to many of our 
producers of commodities and goods. That doesn't make any sense to me.
  This country can't allow that to happen any longer. We must insist on 
a reciprocal opportunity in foreign markets. A trade relationship with 
another country must be mutually beneficial to us and to them. We have 
far too often negotiated trade agreements that are one-way streets with 
foreign goods coming into the U.S. economy, but not a similar 
opportunity for U.S.-produced goods, including agricultural commodities 
and manufactured goods, to go into other economies. That is one of the 
reasons we have this massive trade deficit that is growing at an 
alarming rate.
  I was going to speak about our situation with Canada and durum. I 
will reserve that for another time. I know we are nearing the end of 
the day. Some have other things they want to do. I am going to close 
with a point about trade enforcement.
  It is one thing to have trade agreements that are bad agreements. We 
have had plenty of those. Our trade negotiators have not done well for 
this country, in my judgment. But it is another thing to have trade 
agreements that are reasonably decent but are unenforceable. That is 
also, I think, what happens even with those agreements that were decent 
agreements in the first place.
  In the Department of Commerce where we monitor trade agreements, the 
number of people whose job it is to work on enforcement issues with 
respect to China and our trade agreements with China is 10. We have 
nearly a $65 billion merchandise trade deficit with China. We have all 
kinds of problems getting into the Chinese marketplace with American 
goods, and we have 10 people whose job it is to work on the issue--10.
  Or Japan--we have had a trade deficit with Japan of $45 billion to 
$60 billion forever. Do you know how many people work on that issue? 
Sixteen.
  Canada and Mexico together--we turned a surplus with Mexico into a 
big deficit, and we doubled the deficit with Canada. That is all the 
result of this wonderful trade agreement called NAFTA for which we had 
people stand up and brag on the floor of the Senate saying that you 
have to pass this because if you do we will have more American jobs. It 
will be better for everybody.
  I didn't vote for NAFTA. But the Congress passed it. Guess what. All 
of those economists are now unwilling to show their face around here 
because they predicted several hundred thousand new American jobs. In 
fact, we lost several hundred thousand opportunities, and a trade 
surplus with Mexico turned into a huge deficit. And a trade deficit 
with Canada doubled because this country didn't negotiate a reasonable 
trade agreement with Canada and Mexico. This country lost. Do you know 
how many people are working on this issue at the Department of 
Commerce? Ten for two countries, and a combined trade deficit of over 
$50 billion. We have 10 people working on it.

[[Page S343]]

  There was a story not too long ago that said that U.S. officials who 
are responsible for monitoring trade agreements sometimes couldn't even 
locate the text of the agreements. It is one thing to be incompetent. 
It is another thing to exercise benign neglect over things that are 
your responsibility. But it is quite another thing to be in charge of 
something and then just lose it.
  Do those of us who have concerns about this have legitimate concerns? 
Yes. We need to negotiate better trade agreements. We need to enforce 
trade agreements. And we need to make certain that the relationships we 
have with other countries are mutually beneficial to us and to them. 
That has not been the case, sadly.
  At the WTO conference in Seattle, which turned out to be such a 
fiasco with demonstrators in the streets, with some thugs in the 
streets who defaced buildings, broke windows, and that sort of thing, 
one thing happened that was quite remarkable. I want to say, however, 
there were very few people who I call thugs who used paint cans up and 
down the streets of Seattle. It was regrettable that they defaced 
buildings and destroyed property. But the bulk of the people in the 
streets of Seattle--literally tens of thousands of them--were perfectly 
peaceable. They demonstrated up and down the streets in ways that were 
perfectly peaceable. They were there to demonstrate for legitimate 
reasons. They demonstrated about a range of issues about which they 
cared deeply and passionately.
  There will never be, in my judgment, a place in the world where there 
are negotiations about trade in which there won't be people showing up 
to ask legitimate questions about labor standards and environmental 
standards because you can't fight in a country such as ours for 75 
years and have people die in the streets demonstrating for the right to 
form unions and then decide, well, we will just pole-vault over all of 
those things and go and produce our goods in Sri Lanka or some other 
country where you do not have to worry about labor unions because they 
don't allow workers to form unions. We won't pay a livable wage, we 
won't have safe workplaces, and we won't restrict people from dumping 
chemicals into the streams and into the air. We'll hire kids for 12 
cents an hour, work them 12 hours a day, and put them in unsafe plants. 
And, if you do not like it, tough luck.
  That is the attitude of some in the rest of the world, and the people 
who demonstrate in the street are saying that isn't fair because we 
fought 75 years in this country for a minimum wage, for safe labor 
standards, and for a whole range of issues that are very important to 
who we are and what we are, and we are not going to allow those to be 
traded away in trade agreements. They have a legitimate concern. There 
will always, in my judgment, be Americans in the streets unless they 
are part of the negotiations. That is why the WTO needs to be much more 
open and much more inclusive. Having secret negotiations and excluding 
people is not a way to resolve these issues.
  Globalization, galloping along, must be accompanied by rules that are 
fair and thoughtful dealing with these serious issues of labor 
standards, environmental standards, and other issues. They must be 
accompanied by thoughtful rules.
  In Seattle, I met with a group of Parliamentarians from Europe. I and 
a number of my Republican and Democrat colleagues went together to the 
WTO meetings in Seattle with great hope, and regrettably those meetings 
didn't produce much in terms of agreement. They produced a great deal 
of chaos in the streets, and among the negotiators nothing much 
happened. But during one memorable meeting for me with a group of 
Parliamentarians from Europe something happened that was quite 
remarkable. Michel Rocard, who was a former Prime Minister of France 
and is now a member of the European Parliament in Europe, leaned across 
the table to me and said something interesting. He said:

       We talk about the beef dispute, beef hormones, and the 
     dispute with Roquefort cheese, and all of these issues we 
     have with Europe. They are nettlesome, difficult issues with 
     Europe on the trade disputes.

  As we were talking about the differences between Europe and the 
United States, Mr. Rocard, who was the former Prime Minister of France, 
leaned forward to me and he said:

       I want you to understand something, Mr. Senator. We talk 
     about our differences, but I want you to understand something 
     about how I feel about your country. I was a 14-year-old boy 
     standing on the streets of Paris, France, when the U.S. Army 
     came in to kick the Nazis out of our country. A young black 
     American soldier handed me an apple as he walked past. It was 
     the first apple I had seen in several years. I will never 
     forget how a 14-year-old boy felt about this young American 
     soldier walking down the street in Paris, to liberate my 
     country, and this young soldier handing me, this young French 
     boy, an apple.

  It occurred to me that we forget, I think, what this country means, 
what it has been to so many others in the world; what we have done and 
what we have yet to do in the world. I tell you that story only to say 
that while we have substantial trade disputes, our country has done a 
lot for a lot of people around the world. We liberated Europe. We beat 
back the forces of fascism. This country was perhaps the only country 
that was capable of doing that at that time.
  After the Second World War, for the first 25 years after that, we 
said to Europe not only did we kick the Nazis out of France and 
American soldiers moved across Europe and liberated the Europeans and 
defeated Hitler, not only that, but this country has decided to create 
a Marshall Plan to rebuild Europe. We rebuilt the economies of Europe.
  For 25 years, in addition to spending money for the Marshall Plan to 
rebuild Europe and rebuild the economies of Europe, we also said our 
trade policy will be our foreign policy. We made concessional trade 
agreements with everybody because it was not a problem for us. We were 
big enough and strong enough so that with one hand tied behind our 
backs, we could beat almost anybody in the world with international 
trade. So our trade policy was our foreign policy, and it was to help 
other countries get back on their feet.
  But things changed. After about a quarter of a century, from the 
Second World War on, at that point we began to see our allies gaining 
strength, having better economies, doing a better job. All of a sudden, 
we had some tough, shrewd economic competitors. And in the second 25 
years post-Second World War, our competition has changed. Our 
competition has been tougher in international trade. But in this 
country, much of our trade policy has remained foreign policy.
  Instead of our being hard-nosed competitors with a reasonable trade 
policy that cares about our producers and the economic health of our 
producers, our trade policy has remained largely focused on foreign 
policy. That needs to change. We cannot always say it does not matter 
what our deficits are with China or Japan. We cannot say it does not 
matter--of course it matters. This has economic consequences to us. Our 
trade policy with respect to Japan needs to be a hard-nosed trade 
strategy that says you have tough competitors. But we need to compete 
with fair rules, and the rules of trade between the United States and 
Japan are fundamentally unfair. They are fundamentally unfair. I will 
come some other time to talk about the specifics of that. That was all 
fine, post-Second World War for a quarter of a century, but it is not 
fine anymore, and it is going to begin to injure this country and sap 
economic strength from this country.
  No one wants a future of economic growth for this country more than I 
do. But the way to assure continued months of economic prosperity and 
continued years of prosperity will be to deal with problems that exist. 
One set of problems and storm clouds on this country's horizon is a 
huge, growing trade deficit that nobody seems to care about and nobody 
seems to want to talk about and no one seems willing to do anything 
about. I just hope one of these days enough of us in the Senate can say 
to our colleagues, can say to the administration, and can say to our 
trading partners and our allies, that things are going to have to 
change. We believe in the global economy. I believe in expanding trade 
opportunities. I do not believe in putting up walls, and I do not 
believe in restricting trade. But I believe very much this country 
needs to say to our trading partners that we insist and demand fair 
trade rules. We demand it.

  It was fine 40 years ago that we did not have them because we did not 
need

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them and we were helping other countries get back on their feet. That 
is not the case any longer. With Japan, we need some equilibrium and 
fairness. If you want to ship your products to this country, God bless 
you. They are welcome, and our consumers will be advantaged by having 
the ability to buy them. But we demand the same of your consumers. We 
demand the ability of your consumers to buy that which is produced in 
this country.
  When you go to a grocery store in Tokyo and pay $30 or $35 for a 
pound of T-bone steak, you do that because they do not have enough 
beef. They don't have enough beef. That is because we don't get enough 
American beef in, because it is limited. Why? Because we have a trade 
agreement that provides, as we speak, a 40-percent tariff on every 
single pound of American beef going into Japan. If we did that on 
anything Japan sends into this country, it would be considered an 
outrage. We would be held up to ridicule, saying how on Earth dare the 
United States do this? Yet for every single pound of U.S. beef going 
into Japan as I speak, today, there is a 40-percent tariff attached to 
it. It is not fair.
  My point is this country can compete. Its producers can compete 
anywhere in the world any time. But only if we negotiate trade 
agreements and enforce trade agreements that are fair to our country 
and our producers and that are mutually beneficial to us and to our 
trading partners.
  Mr. President, I yield the floor. I make a point of order a quorum is 
not present.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DORGAN. 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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