[Congressional Record Volume 146, Number 64 (Monday, May 22, 2000)]
[Senate]
[Pages S4220-S4223]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             TRADE DEFICIT

  Mr. DORGAN. Mr. President, what piqued my interest last Friday and 
this morning was the announcement of the trade deficit. It is 
interesting to me, the deafening silence that occurs in this Chamber 
and around this town especially regarding the monthly announcement of 
our trade deficit.
  I prepared a chart that shows our growing and alarming bilateral 
merchandise trade deficits. This is last year, 1999. As announced on 
Friday, our monthly merchandise trade deficit rose to $37 billion. We 
have a surplus in our services trade balance, so if services are 
included the net effect is a $30 billion merchandise and services 
deficit. In other words, we buy $1 billion a day more from other 
countries than we sell to other countries--$1 billion a day.
  What does that mean? It means that is the debt we have and the 
liability we incur.
  Does it matter? We had people doing handstands and having apoplectic 
seizures on the floor of the Senate for years and years about the 
fiscal policy deficit. They would come and talk about the Federal 
budget deficit, what a god-awful thing it was--and it was--$300 billion 
a year and rising out of sight.
  With respect to this merchandise and services deficit--$30 billion a 
month net, $37 billion with respect to merchandise or manufactured 
goods, over $1 billion a day--one cannot find anybody who pays any 
attention to it or cares much about it. Why? Because the institutional 
thinkers in this country, once again on Friday, were genuflecting, as 
they always do when this news comes out, about how the deficit is not 
such a bad deal. This trade deficit means America is growing faster 
than other countries. If we are growing faster than other countries, 
then naturally we will be buying more from abroad and perhaps selling 
less to them. We will therefore have this trade deficit.
  These are the same economists, the same ``thinkers,'' who told us in 
1994: Why do we have a trade deficit? Because we have a fiscal policy 
deficit. If we get rid of the budget deficit, we will get rid of the 
trade deficit.
  I can give names, but they are embarrassed when I read their quotes 
with their names. They are the same economists who said we have a trade 
deficit because we have a budget deficit. They said the trade deficit 
will be gone once the budget deficit is gone. No, that is not the 
reason at all. We do not have a trade deficit because we are growing 
faster than other countries. That is an absurd contention, just absurd.

  We have a trade deficit with China because our country is growing 
faster than China? No, China has an economy which is growing very 
rapidly. Our trade deficit with China, which is very close to $70 
billion a year, is because we are buying more from China than they are 
buying from us. Is that because they do not need things? No, it is 
because they are buying from other countries instead of us.
  Why do we allow that to happen? Because we are weak-kneed and do not 
have a backbone. Our country has never had the backbone to say to other 
countries: You must have a reciprocal trade relationship with us. If we 
are going to treat you in a certain way and we welcome you into our 
marketplace, then we must be welcome in your marketplace. We have never 
had the backbone to do that.
  On Friday, the merchandise trade deficit with Japan increased from 
$6.7 billion to $6.8 billion. That means, with Japan, we have a 
merchandise trade deficit approaching $80 billion. How many years do 
you have to have $50 billion, $60 billion, $70 billion, $80 billion 
trade deficits with the same country before someone will stand up and 
say: There is something wrong here. They keep selling us all of their 
goods, but they buy what they need from others.
  I represent, for example, ranchers. I know I mentioned this before. I 
represent farmers and ranchers and others. Every pound of American beef 
going into Japan today has a 38.5-percent tariff on it. This is a 
country that has a nearly $80 billion trade surplus with us, or we have 
a deficit with them. Send a T-bone steak from Dickinson, ND, to Tokyo, 
Japan, and there is going to be a 38.5-percent tariff on the T-bone 
steak. What is that about? Does one think we would be considered a 
massive failure in international trade as a country if we had 38.5-
percent tariffs on products imported into our country? Of course we 
would.
  Yet we have a trade relationship with Japan that allows them to have 
a 38.5-percent tariff on beef--this is after we reached an agreement 
with them, by the way. We had a big trade agreement for beef producers 
about 10 years ago.

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At the end, one would have thought these folks just won the Olympics. 
They celebrated and had a day of feasting and rejoicing because this 
country had this great trade agreement with Japan. Yes, we have gotten 
more beef into Japan, but every pound of beef today that goes into 
Japan has a 38.5-percent tariff on it. That is outrageous.
  I will go through a couple of other countries to close the loop.
  Mexico. We have a trade agreement with Mexico called NAFTA, the North 
American Free Trade Agreement. I remember the two economists, Hufbauer 
and Schott. They said if we do this trade agreement with Mexico and 
Canada, this country will have 300,000 or so new jobs.
  At the time, we had a trade surplus with Mexico. That trade surplus 
with Mexico is now over a $20 billion trade deficit. Immediately after 
we passed NAFTA, signed a new trade agreement with Mexico, and reduced 
tariffs on United States goods going into Mexico, Mexico devalued its 
currency and washed out any gains. In fact, the devaluation was much 
higher in terms of its effect on the tariffs, so it more than washed 
out any gains. A trade surplus with Mexico was turned into a very large 
trade deficit. The trade deficit with Mexico in March was $1.9 
billion--for just a month.
  What about Canada? Canada had a modest trade surplus with us, or we 
had a modest trade deficit with Canada, and then we passed NAFTA, the 
North American Free Trade Agreement. The announcement Friday said the 
goods deficit with Canada is now $3.9 billion, almost $4 billion. Our 
annual deficit with Canada is somewhere in the neighborhood of $30 
billion to $40 billion.
  With respect to the European Union, Friday the announcement was that 
the merchandise trade deficit with the European Union rose from $3.5 
billion in February to $5.7 billion in March, the most recent month for 
which data has been reported.
  I will comment on our trade deficits with Japan and Mexico a little 
later.
  I taught economics briefly in college. I understand about economists. 
It is much less a discipline than it is some psychology pumped up with 
helium. It is just being able to say anything at any time about almost 
any subject.
  This is what the economists say.
  In today's Wall Street Journal, Mr. Wiegand says:

       This deficit will start to shrink as the Federal Reserve 
     continues to raise interest rates to slow the U.S. economy.

  Oh, yes, that is probably a pretty good solution: Drive the economy 
into the ditch. That will probably take care of it. I do not dispute 
them. If Alan Greenspan continues to choke the neck of the American 
economy and drives this economy into the ditch, yes, I suspect we will 
probably be buying less from abroad. It is probably not very good 
medicine to kill what ails us, in my judgment.
  The person who wrote this article in today's Wall Street Journal did 
not provide the name of the analyst. These are just anonymous analysts:

       Analysts say they remain sanguine because the underlying 
     fundamentals that fuel the deficit remain unchanged. 
     America's economy is stronger than the economies of trading 
     partners, and that's why we have these trade deficits.

  That is absurd, just absurd. Why do we have a big trade deficit with 
Japan? It is because we lack a backbone. For 15 years, we have allowed 
Japan to throw their goods into our marketplace and keep their 
marketplace relatively closed to American goods. The same is true with 
China. The same is true with many other countries.
  This country needs to have the backbone to say to other countries: 
Here is a mirror. Look closely because what you see in that mirror is 
what you will get. You are welcome to come into our country with your 
goods and services. Our consumers welcome them, and we welcome them. 
But you should understand, the price for admission to the American 
marketplace is that your markets be open to our producers, to the 
products of our workers and our production plants. If it is not, then 
you are going to pay a price for that.
  About 30 to 40 percent of Chinese exports are sent to the United 
States. We are a ``cash cow'' for China's hard currency needs. There is 
no substitute on Earth for the American marketplace. China needs this 
marketplace. The closing of this marketplace would lead China to 
collapse immediately. Mr. President, 30 to 40 percent of their exports 
are to the U.S. economy.
  So we say to China: That's all right. You keep shipping all your 
products here. Ship us your shirts and your shoes and your trousers and 
your trinkets. You keep shipping all the merchandise you want to the 
United States, and that's fine if you want to prevent us from accessing 
your marketplace.
  We just negotiated a bilateral trade agreement with China. We had 
folks up all night over in Beijing and here. They were working back and 
forth and trading and doing the things you do when you negotiate a 
trade agreement. They finished a trade agreement. The vote we are going 
to have in the House this week, and subsequently, perhaps a week or two 
later in the Senate, is not about this trade agreement. We do not get 
the opportunity to vote on the bilateral trade agreement with China. 
The vote is going to be: Do we accord China permanent normal trade 
relations?
  I have voted for normal trade relations in the past. The only 
difference in this vote is: Shall it be permanent? But it is not a vote 
on the bilateral trade agreement with China. Frankly, I do not know how 
I am going to vote on permanent NTR. At this point, I am leaning, 
perhaps, to vote in favor of it, but only if it includes a commission 
to monitor trade compliance--because China has made other agreements 
with us and has not complied with them at all--and only if it provides 
some responsible monitoring of human rights in China.

  But having said all that, these votes are not about the bilateral 
trade agreement. We do not need PNTR to do what we should do with 
China. In Washington, DC, because there are so many interests here that 
are working on this PNTR issue, you can't turn on the television 
without seeing another ad by big interest groups that are saying: You 
must vote for China PNTR.
  Regrettably, they misstate it. They say: If we don't vote for PNTR, 
the Chinese marketplace will not be open. That is absurd. It does not 
make any sense at all.
  The vote on China PNTR isn't about whether the Chinese marketplace is 
open; it is a vote on whether normal trade relations with China will be 
made permanent--just that; and only that. It is not even a vote on the 
bilateral trade agreement we reached with China last year.
  Having said all that, as I said, I voted for normal trade relations 
previously. I think China is going to be a significant influence in our 
lives, and I prefer it be a good influence rather than a bad one. I 
happen to think that involvement is preferable to noninvolvement. But 
that does not excuse the relationship that exists between China and the 
United States in which our trade negotiators come so far short of 
reaching an agreement that is in our interest. I will give you an 
example.
  China has 1.2 billion people. On the issue of automobiles in the 
recently negotiated agreement with China, after a phase-in period, 
there will remain in China a 25-percent tariff on any automobiles the 
U.S. would send to China. Any automobiles that China would send to the 
U.S. would have a 2.5-percent tariff. So China will retain a tariff 
that is 10 times higher than the U.S. on vehicles moving back and 
forth. This is a country that has a nearly $70 billion surplus with us.
  I ask the question: Why? Why would a negotiator sit across the table 
and agree to a proposition that China can have a tariff that is 10 
times higher on automobiles than we can?
  The answer? The answer is: It is so much better than it was. The old 
tariff on automobiles was so much higher. We brought it down so far.
  I said: Why don't you sit down at the table, and hitch up your belt, 
and say, All right, let's begin negotiating reciprocal policies and the 
same tariff. Why can't our negotiators do that?
  Our trade negotiators would say: Oh, you can't do that because we are 
starting from different points.
  It is time we start from the same point. It is time we demand that 
our trade negotiators begin dealing with this trade deficit with 
respect to what is really causing it.
  These economists are wrong when they say the problem is that our 
country is growing too fast, other countries

[[Page S4222]]

are growing too slow, and therefore we have a big deficit. The reason 
we have a big deficit is that when China wants to buy airplanes China 
says: We are going to manufacture the airplanes in China. That is not 
the way you do business. If they are going to sell us all their 
commodities, then they have a responsibility to buy from us what we 
have to sell. If they need airplanes, they ought to buy airplanes built 
in the United States of America. If they need wheat, they ought to buy 
wheat from the United States. In other words, trade relationships ought 
to be reciprocal. But our trade negotiators never require that.
  Is this a criticism of the current administration? You bet--the past 
administration, and every administration for the last 20 years. None of 
them have had any backbone.
  I stand here and talk about this because the trade deficit report 
came out last Friday, and it said that the merchandise and services 
trade deficit was $30 billion in a month. That is roughly $340 billion 
a year more in manufactured goods that the United States bought than it 
sold.

  I know I will have people listening to this who will say: That guy is 
just a protectionist. They are wrong. I am not a protectionist in the 
definition of the word used pejoratively. One who seeks protection is 
somebody who wants to build a wall around the country and keep 
everybody out. That is not my view of it at all. We have a global 
economy. We have an expanding reach of opportunities around the world.
  But this country has to understand that times have changed. After the 
end of the Second World War, for the first 25 years, our trade policy 
was almost universally foreign policy. We would engage with another 
country with one hand tied behind our back, and say: Do you want some 
help? Here is a trade policy that is concessional to you because you're 
struggling, you're flat on your back, your economy is devastated 
because of the Second World War. We want to help you get back on your 
feet. Therefore, our trade policy was largely foreign policy. That was 
fine because we could beat anybody with one hand tied behind our back.
  But the second 25 years post-Second World War have been different. We 
have shrewd, tough, economic competitors. We have still tied the hands 
of America's producers and America's workers, and have provided 
concessional terms in trade negotiations to virtually every other 
country.
  That is the only basis that you could excuse a recurring trade 
deficit with Japan that is $50 and $60 and, now, $70 billion a year--
year after year after year after year. The only thing you can call that 
is neglect--yes, by Republican administrations and Democratic 
administrations. That is neglect.
  People who hear this will say: That guy just doesn't understand that 
you can't see over the horizon. He does not understand all this. The 
problem is, I think I do understand it.
  In the budget deficit debates, we used to have people come to the 
floor and say: Think of it in terms of your own family. If you're 
running up a deficit, you have to pay it sometime, don't you?
  Think of the trade deficit in terms of your own family unit. If the 
country is your family, and you are buying much more than you are 
selling and, therefore, incurring a deficit that continues to grow, is 
that a problem? Will it at some point come back and bite you? Will that 
be a problem for this country? Will it inhibit America's economic 
growth? Will the fact that the current accounts' deficit--measured by 
recurring trade deficits--allows foreigners to hold American dollars 
with which they can make decisions about whether to invest in this 
country, and how to invest in this country, be a problem for this 
country?
  I think it is. My only point is that last Friday should not pass 
without notice--a Friday in which we say the merchandise and services 
trade deficit is now $30 billion this month alone. That news occurs at 
the same time the Chairman of the Federal Reserve Board says our 
country is growing too rapidly and we need to slow it down with another 
one-half of 1 percent interest rate increase.
  Well, I am telling you, I think the combination of those two pieces 
of economic news ought to be very sobering to all Americans. Yet, as I 
said when I started, there is this deafening silence in the Chamber. 
Almost nobody will come and talk about the trade deficit because they 
will be branded by especially the corporate world as people who don't 
understand, who want to build a wall around this country, people who 
are protectionists. Yes, I want to protect America's economic 
interests. Of course, I do. I am an American and, of course, I want to 
do that.
  But I believe the protection of our interests involves understanding 
that the economy has changed. This is a global economy but we must have 
fair trade rules. If we decide as a country that nothing matters that 
we fought about for the last 100 years, and that the globalization of 
our economy somehow should pole-vault over all of those issues, then we 
will, in my judgment, have lost substantial ground. We had people die 
in the streets in this country. They were shot and clubbed to death 
because they fought for the basic principle of workers being able to 
organize. People died for that right in this country.
  Some companies will say: I know was a problem in America because you 
have all these collective bargaining issues. The way to get rid of that 
issue is we will take our manufacturing plant and close it. We will 
move to a country where workers can't organize, and we will not have 
those problems. People in this country fought so long for a minimum 
wage and a livable wage. A company might say: We can solve that issue. 
We don't have to deal with minimum wages. We will move this plant from 
the United States to Bangladesh, and we won't have to pay minimum 
wages. People fought a long time over the issue of child labor. They 
may say: Well, we can solve that. We will move our plant overseas and 
we will put 12-year-olds in the plant and we will pay them 12 cents an 
hour. We will work them 14 hours a day, and we won't have to meet plant 
safety standards. That is an easy way to pole-vault over those issues.
  How about dumping chemicals into the streams or into the air? A 
company can say: We can solve those issues. You know that plant where 
we are going to hire kids to work, and pay them 12 cents an hour, and 
work them 14 hours a day, and not worry about safety? We can also dump 
the raw chemicals into the water and into the air.
  Well, that raises the question, I am afraid: Should there be an 
admission price to the American marketplace? Should the admission price 
be at least that there are fair rules of trade? I have asked folks, and 
one honestly said to me he thought it was fine. If the marketplace 
decided that you can amass the capital and employ kids in unsafe 
conditions and pay them pennies, if you can produce a product the 
consumer wants, it is fine for that product to be in our marketplace. I 
respectfully disagree with that perspective. Globalization requires the 
attendance of rules, in my judgment, that relate to the kinds of issues 
we fought over for 100 years in this country.
  Others would say, well, you are trying to export American values. 
There you have it. That is exactly what is necessary in the global 
economy--exporting the values of saying that fair competition is not 
competition with 12-year-old kids being paid 12 cents an hour. Fair 
competition is not competition between a plant in Pittsburgh that has 
to meet air pollution standards and water pollution standards, 
competing with a plant owned by the same company somewhere that can 
dump all of their chemicals into the streams and into the air.
  Those are our range of issues with which we have to deal. All of 
those issues, incidentally, relate to a very significant and unhealthy 
growth in this country's trade deficit.

  Let me come back for a moment to the vote that will be very 
controversial on China's permanent normal trade relations. Last week--
and I know I digress here--I was thinking of coming to the floor and 
submitting in a bill that says the Federal Reserve Board cannot go into 
a room and lock the door in something called the ``Open Market 
Committee'' and continue to call it open. I was thinking of putting in 
a bill that requires them to call this a ``closed market committee.'' 
If they are going to lock the American people out, they should not call 
it an open committee. Just as I was thinking of

[[Page S4223]]

doing that--and I decided against it for the moment--we ought not to 
call it normal trade relations with China, or Japan, or, for that 
matter, Europe; we ought not to call normal trade relations a 
circumstance that give us a $50 billion, $60 billion, $70 billion, or 
$80 billion trade deficit. There is nothing normal about our trade 
relations with Japan. There is nothing normal about having a $50 
billion, $60 billion, or $70 billion trade deficit every single year. 
That is abnormal. Now, I could not get the votes, perhaps, to rename 
that ``abnormal trade relations,'' but it is not normal, and we ought 
not to consider it normal to have this sort of circumstance exist.
  In the last decade, it has gotten worse, not better. The mantra of 
so-called ``thinkers'' who are quoted--incidentally, they are the same 
people because when reporters write the stories, they call the same 
people, ``thinkers''. These same people have put the same quotes in the 
stories every month for 10 years. Even though the times have changed 
and the thinkers were demonstrated to not be accurate, they just change 
their story. That is why the story has changed now from their original 
saying that when we had a budget deficit you are therefore going to 
have a trade deficit. They say now that wasn't it; now it is because we 
are growing too fast. There must be some familial relationship here 
with the Chairman of the Fed because he also thinks we are growing too 
fast. It must be the same group of thinkers. There must be a genetic 
code that exists between these folks.
  Again, I digress. I came to the floor to simply say I don't want 
Friday's notice of this dramatic increase in the trade deficit to not 
be discussed at least at some length in the Senate. It is important 
that we discuss it and begin to provide remedies for it.
  Mr. President, how much time remains?
  The PRESIDING OFFICER. There are 2 minutes remaining.

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