Congressional Record, Volume 146 Issue 102 (Wednesday, September 6, 2000)

[Congressional Record Volume 146, Number 102 (Wednesday, September 6, 2000)]
[Senate]
[Pages S8048-S8066]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

TO AUTHORIZE EXTENSION OF NONDISCRIMINATORY TREATMENT TO THE PEOPLE'S
REPUBLIC OF CHINA--MOTION TO PROCEED--Continued

Mr. GRAMS. Mr. President, I rise in strong support of H.R. 4444,
which grants permanent normal trade relations--PNTR--to China. We
should have passed this in early June, and I deeply regret the delay
and hope we can expedite the House bill without amendments.
I believe this is a no brainer. China negotiated a WTO accession
agreement with the United States--an agreement in which China has
committed to improve market access for most U.S. products and services
to China. In exchange, the one thing we are required to grant them is
PNTR--the same treatment all WTO members afford each other.
The U.S.-China WTO agreement is a good one. China has made
commitments in nearly every sector of our economy--agriculture, goods
and services. Strong enforcement measures were included which allow us
to not only continue use of our strong trade remedy laws, but China has
agreed to allow us to use a tougher safeguard standard than our current
``201'' law and continued use of tougher antidumping laws. This will
help us enforce the agreement and generally allow us to use very tough
trade remedy laws to address dumping and import surges.
U.S. competitiveness will also be protected since China has dropped
its requirement that U.S. companies transfer technology in order to
export or invest in China. Exports to China will no longer require
Chinese components or performance requirements. China will allow
competition through imports for the first time. U.S. exporters can sell
directly rather than using a government distribution system. It has
made commitments on intellectual property enforcement as well.
For the first time, China will be subject to the multilateral trade
disciplines of the WTO. Any WTO member can enter into the dispute
settlement process with China if China does not live up to any of its
bilateral commitments. We can still use our trade remedy laws against
China if necessary, and the Administration has tripled resources to
monitor and enforce the U.S.-China WTO accession agreement.

Some may say this week that we can continue our annual Jackson-Vanik
review of China and still receive the benefits of the U.S.-China
agreement--or they will say the 1979 U.S.-China Bilateral Agreement
will provide the same benefits as the 1999 agreement. They will claim
we need the annual review to achieve progress on human rights, nuclear
proliferation and other areas of differences we have with China.
However, virtually none of the concessions achieved in the 1999
agreement are covered in the 1979 agreement. And we will not receive
the benefits under the 1999 agreement if we do not grant China PNTR.
The annual review is not responsible for the progress we have made in
China--so it is time to end it.
Let's examine what PNTR will mean to U.S. farmers and workers. A
Goldman Sachs estimate indicates U.S. exports to China will increase by
$14 billion per year by 2005. In 1998, U.S. exports to China exceeded
$14 billion, which supported over 200,000 high-wage American jobs.
Therefore, exports will more than quadruple by 2005--and the potential
is enormous as China continues to grow in the future. USDA projects
China will account for over one-third of the growth in U.S. ag exports
in the next ten years. It will spend over $750 billion for new
infrastructure projects.
Since the benefits for Minnesota my home state are particularly
important to me, I want to use that as a reference, but I think it
represents other States and their opportunities as well. Minnesota's
exports to China in 1998

[[Page S8049]]

tripled the 1996 volume. China is now Minnesota's 12th largest export
destination, up from 22nd in 1993. We are now exporting 25 product
groups compared to 21 in 1993. There are many farmers and workers who
will benefit from the projected growth in agriculture and
infrastructure project sales in China.

Overall, America's farmers will prosper with an end to corn export
subsidies, increased corn and wheat quotas, reduced tariffs from an
average of 31 percent to 14 percent with greater decreases on soybeans,
beef, pork, poultry, cheese, and ice cream. For example, my home State
of Minnesota is the third largest soybean producer in the courtry, and
China is the largest growth market for soybean products. Minnesota is
the fourth largest feed corn producer, and the tariff-rate quota for
corn will expand by 2004. China consumes more pork than any other
country and will lower its pork tariffs and accept USDA certification.
This is a huge boon for Minnesota pork producers. Cheese tariffs will
be reduced from 50 percent to 12 percent, which will benefit Minnesota
dairy farmers. Potato product tariffs will also be cut in half
benefiting Minnesota's potato farmers and processors. Vegetable
producers will see their tariffs drop up to 60 percent by 2004. And
fertilizer and all ag products can now be distributed without going
through a Chinese middleman.
Tariff reductions will help other Minnesota workers export more in
the areas of ag equipment, forest products, medical equipment,
scientific, and measuring instruments, computers, pumps, machinery of
all kinds and environmental technology equipment. PNTR will open
markets for our banking, insurance, telecommunications and software
services. In fact, the Coalition of Service Industries states:

It will enable U.S. service industries to begin to operate
in one of the world's most important--and until now, most
restricted--markets in the world.

Minnesota's largest exports to China now are industrial machinery,
computers, and food products. And exports from small- and medium-sized
businesses will expand. Right now Minnesota exports 55 percent of its
total exports to China from small and medium businesses. Crystal Fresh,
American Medical Systems, Inc., Image Sensing Systems, Inc., Minnesota
Wire & Cable, ADC Telecommunications, Brustuen International, and Auto
Tech International are among Minnesota's smaller companies with success
stories to tell. Their China markets are expanding, and the 1999
agreement will only increase their potential. Of course we have long-
time exporters such as Honeywell, 3M, Cargill, Pillsbury, Land O'Lakes,
and many others who will be able to expand their exports to China as
well.

You have heard that the 1999 agreement will not produce overnight
results, but I believe it will produce some short-term positive
results. And the best benefit will be the longer term prospects. It is
important to continue building commercial relationships for the future
in order to reap those longer-term benefits. If we are not there early
on, we may miss out on important future gains. As China develops and
more of its citizens improve their earning power, they will demand more
food products, goods and services. PNTR will allow U.S. firms the
opportunity to compete for their business.
I would now like to address some of the concerns of our labor union
friends who believe PNTR will result in huge job losses in the U.S.
That is curious to me since the U.S.-China WTO accession agreement is
one sided. Union leaders cite an Economic Policy Institute--EPI--study
alleging at least 872,091 jobs will be lost between 1999 and 2010, but
the EPI study assumes every Chinese import displaces domestic
production. However, a CATO analysis shows most of our imports from
China substitute for imports from other countries or are inputs used in
the U.S. to produce final U.S. products. If a rising trade deficit
causes job losses, why are our unemployment rates the lowest they have
been in 30 years?

The Institute for International Economics also indicates that most of
the growth of the U.S.-China trade imbalance is due to China taking
market share from other East Asian economies rather than from U.S.
producers.
The bilateral agreement includes greater protections against unfair
imports than we currently have and it will eliminate many Chinese
practices that have helped it stimulate its own exports as well as
forcing many U.S. companies to invest in China. Any ``giant sucking
sound'' we may have seen in the past will be reversed under the U.S.-
China WTO agreement. China will be forced to abandon many of its
policies which did force or encourage U.S. companies to invest there.
The agreement will grow U.S. jobs by allowing us to export more of our
products from the U.S. rather than selling through U.S. investments in
China.
Union leaders also speculate that U.S. companies want to shift
production to China to take advantage of labor rates ``as low as 13
cents an hour.'' The average production worker wage at U.S. companies
in China is $4 an hour and $9.25 for higher skilled workers. The World
Bank indicates average Chinese wages grew by 343 percent between 1987
and 1997, mainly due to China's engagement with other countries. I
believe approving PNTR and allowing more trade with China would
continue the trend toward higher wages for Chinese workers.
A group of 12 academicians recently commented on China's low wages
and stated that PNTR would help improve China's labor standards. They
discussed China's poverty as the main reason for low wages and often
poor working conditions. They concluded child labor often is necessary
to help families survive. They believe China's entry into the WTO will
help it enforce and improve its own laws, and that opposing PNTR
undermines China's efforts to improve its labor rights. They concluded
by stating:

Whoever may benefit from a sanctions approach to trade with
China, it will certainly not be Chinese workers or their
children.

You will also hear claims that the U.S. is being flooded with
products made by Chinese forced labor. Both our trade laws and the WTO
prohibit forced-labor imports, and the U.S. Customs Service vigorously
enforces our law.
Union leaders also talk about PNTR as a reward to China, yet it is
hard to see how the bilateral agreements negotiated by China to enter
the WTO are a reward. Many, many concessions were made, and those
commitments are binding and will be vigorously enforced bilaterally and
through the WTO.
I hope union members, who will benefit from the U.S.-China WTO
agreement, will listen to their elder statesman Leonard Woodcock, who
stated recently:

I have been startled by organized labor's vociferous
negative reaction to this agreement . . . in this instance, I
think our labor leaders have got it wrong. . . . American
labor has a tremendous interest in China's trading on fair
terms with the U.S. The agreement we signed with China this
past November marks the largest single step ever taken toward
achieving that goal.

In my State of Minnesota, Governor Jesse Ventura, in his March
testimony before the Ways and Means Committee, also sent union leaders
a message. The Governor said:

They (unions) better modernize themselves and realize that
opening up China to our trade is going to create more jobs
here. . . .

I have spoken to union members and others who are also concerned
about labor and environmental practices in China. While China, as a
developing country, has a way to go on these issues, they certainly
have made some progress as well. And I am proud that American companies
investing in China have created better jobs, higher wages and better
working conditions and have begun to serve as a model for their Chinese
counterparts. Many U.S. companies have ``best practices'' of
environmental, health, and safety standards which provide good job
opportunities for many Chinese citizens. Housing, meals, insurance, and
medical care are often included in their employment.

Here is what a Chinese employee of one American company in Shanghai
stated:

I, a common girl, with no power and no money, could hardly
imagine all these things could be done several years ago . .
. don't let the friendship become cool (U.S.-China). Many of
the Chinese people are longing for knowledge, techniques and
culture from western countries, especially U.S.

An employee of another American firm in China stated:

. . . when our local company merged two years ago, my
salary was increased five or six times . . .

[[Page S8050]]

Another worker said:

After I joined the company, my family's life and living
standard improved, I have some deposit in the bank and bought
a new apartment which is big enough for my family.

You will hear a lot during this debate about how we are pandering to
U.S. companies who want to trade with China, ignoring all of our
concerns with China. However, as noted previously, there are many
examples of how American companies are helping Chinese citizens improve
their lives, and as China privatizes more of its state-owned
industries, the new owners will look to our companies as an example of
how to succeed. I strongly believe American companies care about their
employees and that they do not invest abroad to exploit local workers
and ruin the environment. I believe American companies help bring about
positive changes in China and other nations, and the exposure to
Western ideals and values they bring to China includes a better work
experience for those they hire. In fact, American companies are taking
their responsibility seriously by setting up programs in their Chinese
subsidiaries addressing issues from fair labor practices and
environmental standards to community involvement.
For those concerned about human rights, I again ask why they believe
human rights would be aided by isolating ourselves from China.
Maintaining relationships with the Chinese people through trade and
other contact I believe is the best way to help the Chinese people help
themselves. They are the ones who will promote changes from within that
will improve their lives. Even Martin Lee, the Chairman of the
Democratic Party of Hong Kong, who has long fought for human rights in
China, recently stated:

The participation of China in the WTO would not only have
economic and political benefits, but would also serve to
bolster those in China who understand that the country must
embrace the rule of law.

The Dalai Lama, also long critical of China's human rights practices,
especially in Tibet, states:

Joining the World Trade Organization, I think, is one way
(for China) to change in the right direction . . . I think it
is a positive development.

Some believe granting PNTR will help promote hardliners in China's
leadership. However, a Washington Post story earlier this year noted
that China analysts have found hardliners, including PLA officials,
worrying that WTO membership will privatize more of China's economy and
import more western ideas about management and civil society which they
see as a threat to those who want to ensure the longevity of the one-
party Communist state.
The U.S. should be part of this, through the granting of PNTR. While
China will become a member of the WTO with or without us, I would
certainly prefer the U.S. have a part in using our improved trade
relationship as a way to make progress on our differences with China.
Many human rights activists support China PNTR. Former political
prisoner Fu Shenqi says:

I unquestionably support the (view that NTR and the human
rights question be separated because) the annual argument
over NTR renewal exerts no genuine pressure on the Chinese
communists and performs absolutely no role in compelling them
to improve the human rights situation . . .

The China Democracy Party, founded two years ago, issued a statement
including:

. . . We declare hereby to support the Unconditional PNTR
to China by the U.S. government.

Zhou Yang, Executive director of the China Democracy and Freedom
Alliance, states:

Granting PNTR to China is a positive force in promoting
China's recognition of world human rights and in improving
the human rights situation of the Chinese people.

Noted Chinese human rights activist Bao Tong was more direct, saying:
``Pass permanent normal trade relations with China . . .'' and adding,
``But in the U.S., the `Seattle coalition . . . have combined their
lobbying firepower to oppose the move (PNTR). From here in China, their
intellectual counterparts are looking on in dismay . . . it doesn't
make sense to use trade as a lever. It just doesn't work.'' There are
many others with similar advice.
Included in the definition of human rights is religious persecution.
While religious leaders remain concerned about the recent report from
the U.S. International Religious Freedom Commission, which points out
China has a long way to go toward religious freedom, they point to
progress as well. A letter signed by 13 religious organizations
concluded:

Change will not occur overnight in China. Nor can it be
imposed from outside. Rather, change will occur gradually,
and it will be inspired and shaped by the aspirations,
culture and history of the Chinese people. We on the outside
can help advance religious freedom and human rights best
through policies of normal trade, exchange and engagement for
the mutual benefit of peoples of faith, scholars, workers and
businesses. Enacting permanent normal trade relations with
China is the next, most important legislative step that
Congress can take to help in this process.

As you know, the House has attached a Commission on China to PNTR,
which would monitor human rights progress with an annual report. It
would set a U.S. objective to work to create a WTO mechanism to measure
compliance, and requires an annual USTR report on the PRC's compliance
with the 1999 agreement and also authorizes additional staff to monitor
China's compliance. It also includes sense-of-the-Congress language
that China and Taiwan should enter the WTO at the same time.
The bottom line is PNTR is easy. China had to do all the heavy
lifting. We gave up noting in these negotiations, and PNTR doesn't
force us to give up anything. I urge my colleagues to oppose all
amendments offered in an attempt to either slow down or kill PNTR.
While the amendments point out problem areas we have with China, these
matters should be, and are, addressed separately in high-level contact
between our two countries. I address them as well in contact I have
with Chinese officials.

Particularly, I urge you to oppose the Thompson-Torricelli amendment.
While I will have a much longer statement once that amendment is
offered, I will only say now that this amendment in any form will drive
a wedge through our efforts to improve our relationship with China. It
will foster a relationship of mistrust that will not help us improve
China's proliferation record or its record on any other differences.
The amendment is counterproductive. The amendment will not accomplish
its goal of reducing proliferation, and it will create hostility
between our countries. As Henry Kissinger stated:

If hostility to China were to become a permanent aspect of
our foreign policy, we would find no allies. Nationalism
would accelerate throughout the region. Just as American
prestige grew with the opening to China, most Asian nations
would blame America for generating an unwanted cold war with
Beijing.

This amendment will force us on the path of a cold war most of us
never want to see again. Also, there have been so many drafts of this
amendment, I am not sure any of us will really know what we are voting
on. An amendment as controversial as this one deserves to go through
the usual congressional committee process, and not be offered in a
highly politicized matter on the Senate floor.
There has been progress with China and proliferation, human rights
and other issues. Let's work with China toward further progress--and
use the laws we already have, if necessary, to address lack of
progress. Above all, let's not use trade as a weapon. Let's pass PNTR
to provide our workers and farmers the benefits of the U.S.-China WTO
agreement. This should be one of the easiest trade votes we will ever
take. Let's vote on H.R. 4444 without amendment now--this week--not 2
weeks from now.
Mr. President, I yield the floor.
The PRESIDING OFFICER (Mr. Burns). The Senator from Arkansas.
Mrs. LINCOLN. Mr. President, I, too, am here to speak on the issue of
permanent normal trade relations with China.
In order to be successful in today's global economy, every industry
must market its products overseas. And in order for the United States
to continue the unprecedented economic growth we have seen during the
last few years, we must adopt policies that open international markets
for farmers, small businesses, manufacturers and service industries.
On November 15 of last year, our Government successfully negotiated
an

[[Page S8051]]

historic trade agreement with the People's Republic of China that will
bring China into the World Trade Organization. The potential impact of
this arrangement cannot be overstated. China is home to one-fifth of
the world's population and is growing by 7 percent each year. Access to
China's enormous population will help sustain American economic growth.
But before the United States and Arkansas can reap the full benefits
of this agreement, Congress must vote to grant China Permanent Normal
Trade Relations status. The WTO requires that its members extend normal
trade relations to all other members.
There is a lot at stake depending on whether or not the United States
grants PNTR to China. Since February, I have been urging the Senate
leadership to bring this issue up for a vote as soon as possible. I had
hoped that we would approve this legislation prior to the August
recess, but nevertheless, I am anxious to finish work on this bill as
soon as possible and get it on the President's desk for signature.
There are so many things at stake. We must not lose this opportunity.
China will join the WTO regardless of the congressional decision on
PNTR, so a decision to deny this new status to China will only give
China license to keep its markets closed to U.S. services and
agriculture, and to keep its high tariffs in place on U.S. goods and
services while opening it up to all other WTO members.
All sectors of our economy, especially agriculture, will benefit from
increased trade with China. Likewise, all sectors of our economy will
suffer if we don't trade with China. Chinese accession into the WTO
could mean $2 billion more a year in national agricultural exports to
China by the year 2005.
On U.S. priority agricultural products, tariffs will drop from an
average of 31 percent to 14 percent. China will also expand access for
bulk agricultural products, permit private trade in these products, and
eliminate export subsidies. In my home State of Arkansas, rice,
poultry, soybean and cotton producers will stand to reap enormous
benefits from opening markets with China, including lower tariffs and
increased trade. For instance, under its WTO accession agreement, China
will cut tariffs on rice to 1 percent. Also, China is already the
second leading market for U.S. poultry exports. If Congress approves
PNTR status, it will cut tariffs in half from 20 percent to 10 percent
by the year 2004 for frozen poultry cuts.
In addition to the agricultural changes, China's tariffs on American
industrial goods will fall from an average of about 25 percent to less
than 10 percent within 5 years. Industries including
telecommunications, banking, insurance, reinsurance, and pensions will
all gain expanded market access. In information technology, tariffs on
products such as computers, semiconductors and all Internet-related
equipment will decrease from an average of 13 percent to zero by the
year 2005.
In exchange, the U.S. gives up nothing; our trade policies remain the
same. The economic reasons make so much sense and are themselves a very
powerful reason for passage of PNTR.
But the opportunity we have as a nation to make an impact on the
humanity of China only exists if we are engaged with the country and
its people. We cannot build a relationship that is effective if we turn
our backs on China and isolate them.
Is China a perfect country? No.
I too share the concerns about human rights abuses in China and
believe that a greater international presence in the country, fostered
by free trade, will help to improve the lives of Chinese workers and
citizens. WTO membership will strengthen the forces of reform inside
China by exposing the Chinese to better paying jobs, and higher labor
and environmental standards.
Finally, permanent normal trade relations with China will force the
Chinese to play by the rules in the international marketplace.
Only under this agreement with their accession into the WTO will we
have the proper recourse to be able to question their practices.
The WTO's dispute settlement system will force China to explain its
actions if other member countries question them. In addition, the WTO's
trade policy review mechanism will allow all other members to review a
country's entire trade system. This type of scrutiny of China is
virtually unprecedented in history.
If we do not approve PNTR status for China, the missed opportunities
will be tremendous, not to mention the devastation it could have on our
strong economy today. Our producers and industries will not be in a
position to openly access the 1.3 billion people who live in China. The
United States will not have the ability to challenge China's trade
practices or demand better human rights practices. In short, the United
States stands to gain enormously if we grant PNTR status to China, and
we stand to lose enormously if we do not.
Certainly once China does enter the WTO, there will still be many
challenges ahead for all of us, but congressional approval of PNTR for
China is a critical first step. It means so much to this Nation and to
my home State of Arkansas. We must take this first step in passage of a
good, clean PNTR bill in the Senate. Having China in the WTO is a good
deal for Arkansas and a good deal for this Nation.
I encourage my colleagues to approve the House-passed bill granting
permanent normal trading relations with China--soon, not later--and
that we send it to the President to be confirmed so we can continue
building a relationship which will benefit both countries.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. FEINGOLD. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FEINGOLD. I rise today, Mr. President, to express my opposition
to granting permanent normal trade relations to the People's Republic
of China.
The recent history of U.S.-China relations has been a study in self-
delusion. The administration and this Congress do not lack for evidence
or information about the nature of the Chinese government. But I am
afraid the siren song of vast Chinese markets has deafened too many
ears to the news of oppression and abuse inside China. Too often, the
U.S. has chosen to ignore the realities before us and, as in this trade
debate, has engaged in political and intellectual contortions to
compartmentalize and seal off a host of important issues so that the
promise of vast profits can stand alone and unencumbered.
But I urge my colleagues to remember today--the mythological sirens'
song served to lure sailors onto the rocks that crushed their ships.
And refusing to look at the whole picture of U.S.-China relations in
the single-minded pursuit of trade is, I submit, both foolish and
dangerous. I fear that this country will find its policy in shambles
unless we force ourselves to see the facts before us.
The fact is that China continues to be one of the most oppressive
states in the world.
The State Department acknowledges that the human rights situation in
China has deteriorated over the past year--a year in which the U.S. has
extended normal trade relations with China, casting doubt on the claims
that trade will lead to greater openness and therefore greater civil
and political rights in China.
The list of abuses committed by the Chinese government is so lengthy,
so encompassing, as to be numbing. Thousands of political prisoners
remain in prison--many sentenced after unfair trials or no trial at
all. Torture is regularly used to extract ``confessions'' from
detainees. Authorities continue to use the brutal laogai system of
``reeducation through labor'' to detain dissidents and others deemed
dangerous to this paranoid state. Religious freedom does not exist in
China; from global faiths like Catholicism to more obscure sects, the
leadership in Beijing has sought to force its will and its agenda on
spirituality. Nowhere is this more egregious than in Tibet, where
thousands of monks and nuns still are arbitrarily detained, where
something termed ``patriotic education'' is forced on Tibetans at their
monasteries, where individuals have been arrested and sentenced to
imprisonment for activities such as displaying the banned

[[Page S8052]]

Tibetan flag, where an entire culture is at risk. And forced abortion
and forced sterilization are realities in the PRC.
The Chinese government has waged a campaign to destroy all sources of
dissent. Leading members of the China Democracy Party have been
sentenced to lengthy prison terms for ``conspiring to subvert state
power.'' Activists in Xinjiang have been the target of a campaign of
arrests, substandard trials, and executions. Leaders of laborers and
peasants daring to call for worker's rights are detained. Expression,
in virtually all of its forms, is restricted. The government of China
has zealously launched into a campaign to monitor and control content
on the internet. According to Human Rights Watch, ``last fall, local
newspapers and magazines were put under Communist Party control. And
the State Press and Publications Administration banned foreign
investment in wholesale book publication and distribution, and limited
the right to distribute textbooks, political documents, and the writing
of China's leaders to a handful of enterprises.''
My colleagues, this is the state that seems so promising to the
supporters of PNTR. This is the China with which we are urged to
engage. This is to be our full partner.

That very abbreviated list of abuses sounds awfully bad, doesn't it?
But the Administration's material on PNTR sounds so good. It is full of
promises and optimism. How, I wonder, do they imagine getting from here
to there--to that promised land in which our relationship with China is
all about good news and profits?
I would suggest that the influence of money in politics goes a long
way toward explaining the peculiar nature of this debate and U.S.
policy toward China more broadly.
The push for PNTR legislation is one of the most expensive lobbying
campaigns in history. Business interests are pitted against labor
unions, as they make PAC and soft money contributions, and wage huge
lobbying campaigns on television and in the halls of Congress. So
before we go any further with this legislation, I would like to Call
the Bankroll on the PNTR issue, to give my colleagues and the public an
idea of the spending spree that has gone on to lobby us on this bill.
Labor unions have donated heavily to the parties as they have fought
against Permanent Normal Trade Relations with China. The Center for
Responsive Politics estimates labor's overall soft money, PAC and
individual contributions at roughly $31 million so far in this election
cycle in a May 24th report. In particular, the AFL-CIO and its
affiliates, which have campaigned hard against PNTR, have given $60,000
in soft money through the first 15 months of this election cycle.
And then there's the other side of the debate. On the side of PNTR we
find corporate America, which, according to a New York Times report,
engaged in its ``costliest legislative campaign ever'' to win this
fight--including an $8 million advertising campaign. The ``costliest
legislative campaign ever'' by corporate America--now that's saying
something.
As we know, corporations typically spend the most in the political
money game, and often win as a result. And it looks like PNTR will be
no exception, Mr. President.
For example, take the Business Roundtable, a well-known business
coalition eager to get this bill passed. The Center for Responsive
Politics' May 24th report put the collective contributions of Business
Roundtable members at $58 million in soft money, PAC money and
individual contributions so far in the election cycle. And that is in
addition to the Roundtable's $10 million dollar advertising campaign to
push PNTR, according to the Center.
Business Roundtable members are corporations like Boeing, Philip
Morris, UPS and Citigroup. These are heavy hitters who regularly write
checks to the political parties for $50,000, $100,000, even a quarter
million dollars. These companies have to ante up to stay in the game,
Mr. President--PNTR is a high stakes game, and the ante is bigger than
ever.
I will quickly run down the soft money contributions of these
companies, Mr. President. These are huge numbers, and they are just
through the first 15 months of this election cycle: Boeing has given
more than $465,000 in soft money through the first 15 months of the
election cycle, including 10 contributions of $25,000 or more.
UPS, its subsidiaries and executives have given more than $960,000 in
soft money through March 31st of the current cycle. That includes two
contributions of a quarter million dollars.
Citigroup, its subsidiaries and executives gave more than one million
dollars in soft money through the first 15 months of this election
cycle, including six contributions of $50,000 or more.

And of course who could forget Philip Morris, Mr. President? Long
known as the granddaddy of political donors, Philip Morris and its
subsidiaries have given more than $1.2 million in soft money through
March 31st of the election cycle, including more than eight donations
of $100,000 or more.
Since I've mentioned Philip Morris' contributions here, let me take a
moment to discuss the impact of contributions of large multinational
corporations with many legislative interests. Some might argue that is
unfair to mention Philip Morris in this calling of the bankroll because
its main interest is tobacco legislation.
That is exactly the beauty of soft money contributions from the point
of view of the corporate donor. They buy access for the company that
makes them. They aren't payment for a particular piece of legislation.
No, they are more powerful than that because they are so large, and so
sought after by the parties. They further the interests of that company
on all pieces of legislation. There can be no doubt that Philip Morris
has an interest in PNTR.
China is a huge untapped market for cigarettes. So Philip Morris's
soft money contributions open the doors for its lobbyists on this
issue, just as they open the doors for its anti-tobacco control
arguments.
Everyone knows that PNTR is the very top legislative priority for the
business community in this country. There is absolutely no dispute
about that. The lobbying effort has been extraordinary. And Philip
Morris's legislative and lobbying muscle, supported by their huge
campaign contributions, have been put at the service of that priority,
as well as of its own particular interest in tobacco legislation.
Mr. President, corporations such as Philip Morris, and the other
members of the Business Roundtable pay to play--they get visibility in
the debate, and they get their voices heard loud and clear. The shape
of the PNTR debate so far is exactly what we should expect from a
campaign finance system that is rigged to value money above all else.
So it is clear that some people do stand to gain from PNTR and
China's accession to the World Trade Organization. But I think that
camp has vastly overstated its case. These forces, which have paid to
pipe the siren song into the halls of the Senate for months now, claim,
for example, that America's farmers will benefit greatly from PNTR for
China. They wave impressive graphs, they promise access to vast
markets. But I for one, as a Senator from a very important agriculture
state, am not convinced that those claims are more than just empty
promises. China's Vice Minister of Trade has already noted publicly
that market-opening promises for U.S. wheat exporters are only a
theoretical opportunity--not an actual one. The fact is that China's
promises to import more agricultural products conflict with internal
Chinese political and cultural dynamics--dynamics that are affected by
longstanding fears about dependence on foreign food and by employment-
creation imperatives. China has produced a glut of agricultural goods
for years. Beijing now has massive stockpiles and a three-to-one ratio
of exports to imports. Chinese prices will likely continue to be lower
than American ones for years. I am not convinced that there is a big
pay-off in store for American agriculture.
Ask Wisconsin's ginseng growers about the Chinese commitment to rule-
governed trade. They will tell you that the Chinese have continued to
mislabel their ginseng as ``Wisconsin-grown ginseng.'' As a result of
this misleading practice, the price paid to actual American ginseng
farmers has steadily declined. Recent press reports even suggest that
the Chinese are now smuggling ginseng containing dangerously high
levels of harmful pesticides and chemicals into U.S.--again
inaccurately labeled as Wisconsin ginseng.

[[Page S8053]]

I concede, Mr. President, that profits are within the reach of some.
And I recognize that the business community is responsible to its
shareholders. Seeking profitable opportunities is their very purpose,
and there is nothing wrong with that. But this Senate is responsible to
all of the citizens of the United States, to the core values of this
country, and to future generations of Americans. And the United States
of America does not stand only for profit. Even if I were convinced
that Permanent Normal Trade relations with China and Beijing's
accession to the WTO would bring significant new economic opportunities
to a large number of Americans--and I am not convinced of this fact--I
still believe it is my responsibility to weigh that factor against
others--including the fact that the Chinese government's human rights
record is unquestionably appalling. I still believe that certain
economic gains are not worth their moral price. I still believe that
the prosperity we all seek for our great country should never be a
prosperity that also brings shame.

But de-linking trade from human rights and prohibiting an annual
debate on this issue suggests that I do not have the right to weigh
these factors, that I cannot consider the totality of U.S.-Chinese
bilateral relations when matters of trade arise. Apparently, we are all
simply supposed to follow the music.
I argue that to compartmentalize our national values is to cordon off
our national identity, to subordinate what we stand for so completely
that it no longer affects how we behave. That is dangerous. I think it
is an abdication of the responsibility I accepted when I took this
office.
So apart from the question--and it is a good question, a question not
answered nearly so easily as the Administration would like--of whether
or not a significant number of Americans will reap economic benefits
from PNTR for China--and apart from legitimate questions grounded in
the historical record about whether or not China will stick to its
trade-related commitments--apart from these issues, we are debating
whether or not to draw a sharp, impenetrable division between one of
our interests--economic gain--and what we believe and who we are. That
is the question that has been evaded in the mountains of pro-PNTR
literature and the countless pro-PNTR briefings that have become a
fixture on Capitol Hill in recent months. I cannot support such a
division. I will not abdicate my responsibilities in the hopes of
avoiding tough choices and decisions. I cannot support this bill.
I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. HOLLINGS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Smith of New Hampshire). Without
objection, it is so ordered.
Mr. HOLLINGS. Mr. President, in making opening comments relative to
permanent normal trade relations with China, I feel compelled to sort
of qualify as a witness in that we have over the years in these
particular debates about international trade made very little progress,
whether with Democratic administrations or Republican administrations.
My rising in opposition and my amendments will be to the thrust of
not having permanent and not having normal trade relations with anybody
because our normal trade relations are a $350 billion to $400 billion
trade deficit which is destroying the middle class in our society,
weakening our democracy, and diminishing our influence in world
affairs. With all of the pep talk about the wonderful economy, we are
actually, on this particular score, in tremendous decline.
I say ``as a witness'' in a sense because I can remember when
southern Governors started computing. People up in New Hampshire and
other places say that they are from down south and that they are blind
protectionists; they do not understand the importance of manufacturing
and international trade and exports. So I hearken back to the day when
I represented the northern textile industry from New Hampshire as well
as the southern textile industry. I appeared before the old
International Tariff Commission. Who ran me around the room? None other
than Tom Dewey. This was back in 1960. The subject was textiles--that
10 percent of the American consumption of textiles in clothing was
represented in imports, and if this continued at the pace that it was
going, before long we would be out of business.
By the way, they told me at that particular hearing: Governor, what
do you expect? For those emerging Third World countries in the Pacific
rim and everywhere else, what do you expect them to make? Let them make
the shoes and the clothing, and we will make the computers and the
airplanes.
Fast forward 40 years: They are making the shoes. They are making the
clothing. They are making the airplanes and they are making the
computers. They are making all of it. Actually, we have high tech. I
want to get into that in a minute. High tech--they think that is saving
us. We have a deficit in the balance of trade with the People's
Republic of China in high technology.
This Congress doesn't have any idea where we are on this particular
score. Everybody is outside talking about the new economy. True it is,
we are all proud of that new economy, particularly on this side of the
aisle. They were afraid to say they raised the Social Security tax in
1993 when Clinton came into office. But I wasn't afraid. I brought it
in line with all other pension plans. We are afraid to say we raised
gasoline taxes. But we did. We cut spending $250 billion. The taxes
that were supposed to be $250 billion are now up to $370 billion. Then
we cut some taxes very minimally. We reduced the size of government by
some 377,000 Federal employees.
They have the new economy. But the new economy has a private side and
a public side. The private side is doing extremely well. High
employment, low unemployment, low interest rates, booming economy,
booming stock market, strong bank system--but the public side is almost
a disaster. I say that advisedly. The reason I say it is so that, for
one thing, they are talking surplus, surplus. Everywhere, someone cries
``surplus.''
The public debt to the penny according to the U.S. Treasury
Department shows that, as of September 1, the debt is $5.676 trillion.
At the beginning of the fiscal year of September 30, 1999, it was
$5.656 trillion.
I ask unanimous consent to have this printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

THE PUBLIC DEBT TO THE PENNY
------------------------------------------------------------------------
Amount
------------------------------------------------------------------------
9/01/2000..................................... $5,676,516,679,692.56
Prior months:
8/31/2000................................... 5,677,822,307,077.83
7/31/2000................................... 5,658,807,449,906.68
6/30/2000................................... 5,685,938,087,296.66
5/31/2000................................... 5,647,169,888,532.25
4/28/2000................................... 5,685,108,228,594.76
3/31/2000................................... 5,773,391,634,682.91
2/29/2000................................... 5,735,333,348,132.58
1/31/2000................................... 5,711,285,168,951.46
12/31/1999.................................. 5,776,091,314,225.33
11/30/1999.................................. 5,693,600,157,029.08
10/29/1999.................................. 5,679,726,662,904.06
Prior fiscal years:
9/30/1999................................... 5,656,270,901,615.43
9/30/1998................................... 5,526,193,008,897.62
9/30/1997................................... 5,413,146,011,397.34
9/30/1996................................... 5,224,810,939,135.73
9/29/1995................................... 4,973,982,900,709.39
9/30/1994................................... 4,692,749,910,013.32
9/30/1993................................... 4,411,488,883,139.38
9/30/1992................................... 4,064,620,655,521.66
9/30/1991................................... 3,665,303,351,697.03
9/28/1990................................... 3,233,313,451,777.25
9/29/1989................................... 2,857,430,960,187.32
9/30/1988................................... 2,602,337,712,041.16
9/30/1987................................... 2,350,276,890,953.00
------------------------------------------------------------------------
Source: Bureau of the Public Debt.

Mr. HOLLINGS. Mr. President, that shows that the debt has increased
$20 billion--no surplus. They don't want to say where they get the
surplus from. I can tell you where they get the surplus from. We had an
increased measure of taxation over the years. When we had the 1983
Social Security settlement, we wanted it to increase to build up a
trust fund to take care of the baby boomers in the next generation--
which is now. In 1992, the Social Security surplus was $50 billion; now
the Social Security surplus is $150 billion.
Over the last 8 years--because of what we did back in 1983--we have
an additional $100 billion surplus, if you please, for the Social
Security trust fund. We voted it here--section 13-301 of the Budget
Act--that you shall not use Social Security surpluses in your budgets.
Section 12 of the Greenspan commission said it should be set aside. It
took us from 1983 until 1990 in order

[[Page S8054]]

to get that done, but we finally got it done. Ninety-eight Senators
voted for it. Almost all the Members of the House voted for it. It was
signed into law on November 5, 1990, by President George Bush.
But all of them are running around saying we are going to save Social
Security while they are spending it with all kinds of monkeyshine
plans--invest a little, invest a lot, do this, or do that to save
Social Security. They set up the straw man in violation of the law--the
policy of the Greenspan commission and talking about surpluses when
there is not any surplus. The debt is increasing. If there is a
surplus, why has the debt increased $20 billion? With all the wonderful
income tax from which we had revenues on April 15, with all the good
corporate tax revenues in June, we are still increasing the debt some
$20 billion.
All of them say tax cut, tax cut, but if you cut the estate taxes,
you have increased the debt. All tax cuts are increasing the debt. They
are all saying pay down the debt, pay down the debt. It is Alice in
Wonderland. It is double talk. They are not talking sense with relation
to what is actually going on.
Everybody says we are paying down the debt. But they are for all of
these taxes. Whether it is middle class, or targeted, or estate, or
gasoline, or capital gains, or marriage penalty, any of those tax cuts
under present circumstances obviously amount to an increase in debt.
They talk about surplus that doesn't exist, and they talk about paying
down the debt as they regularly increase it. They don't mention waste.
As a result of this charade, interest costs have gone up to $366
billion for this fiscal year. I remember when we balanced the budget in
1968 and 1969 under President Lyndon Johnson. The interest cost on the
national debt was less than $1 trillion; the interest cost was only $16
billion. That was the cost of all the wars from the Revolution, to the
Civil War, the Spanish-American War, World War I, World War II, Korea,
Vietnam. We had a debt of less than $1 trillion and they had interest
costs of only $16 billion. Now we are up to $5.7 trillion, with $1
billion a day being spent. Wait until the whopping payment is made in
September.
I ask unanimous consent to have printed in the Record the interest
expense as of this minute.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Interest Expense on the Public Debt Outstanding

The monthly Interest Expense represents the interest
expense on the Public Debt Outstanding as of each month end.
The interest expense on the Public Debt includes interest for
Treasury notes and bonds; foreign and domestic series
certificates of indebtedness, notes and bonds; Savings Bonds;
as well as Government Account Series (GAS), State and Local
Government series (SLGs), and other special purpose
securities. Amortized discount or premium on bills, notes and
bonds is also included in interest expense.
The fiscal year Interest Expense represents the total
interest expense on the Public Debt Outstanding for a given
fiscal year. This includes the months of October through
September.

INTEREST EXPENSE--FISCAL YEAR 2000
------------------------------------------------------------------------
Amount
------------------------------------------------------------------------
July.............................................. $19,332,594,012.00
June.............................................. 75,884,057,388.85
May............................................... 26,802,350,934.54
April............................................. 19,878,902,328.72
March............................................. 20,889,017,596.95
February.......................................... 20,778,646,308.19
January........................................... 19,689,955,250.71
December.......................................... 73,267,794,917.58
November.......................................... 25,690,033,589.51
October........................................... 19,373,192,333.69
---------------------
Fiscal Year Total............................. 321,586,544,660.74
------------------------------------------------------------------------

AVAILABLE HISTORICAL DATA--FISCAL YEAR END
------------------------------------------------------------------------
Amount
------------------------------------------------------------------------
1999............................................. $353,511,471,722.87
1998............................................. 363,823,722,920.26
1997............................................. 355,795,834,214.66
1996............................................. 343,955,076,695.15
1995............................................. 332,413,555,030.62
1994............................................. 296,277,764,246.26
1993............................................. 292,502,219,484.25
1992............................................. 292,361,073,070.74
1991............................................. 286,021,921,181.04
1990............................................. 264,852,544,615.90
1989............................................. 240,863,231,535.71
1988............................................. 214,145,028,847.73
------------------------------------------------------------------------

Mr. HOLLINGS. It is $321 billion without the August and September
payments. When we get those particular payments, it will go up, up, and
away. And that is under low interest rate circumstances.
We have the worst waste of all. I served on the Grace Commission
under President Reagan. We were going to cut out waste, fraud, and
abuse. Now we have caused the greatest waste of all.
After President Clinton early this year made the State of the Union
Address, the comment was made by the distinguished majority leader that
it was costing $1 billion a minute. The President talked for 90
minutes; that is $90 billion. Governor Bush wants to give a $90 billion
tax cut. We could give President Clinton $90 billion in spending. We
could give Governor Bush $90 billion in tax cuts and still have $170
billion left for all the increases to the Department of Health, for
class size reduction and school construction and any and every kind of
research at NIH that we wanted.
The point is, we are spending the money and we are not getting
anything for it and we don't talk about it on the campaign trail. What
do they avoid talking about? The $350 to $400 billion--and it will
probably be nearly $400 billion--deficit in the balance of trade. The
economists say that costs us at least 1 percent on our GNP. Instead of
4.1, we would have 5.1, and more jobs.
This is ignoring the failure of the United States to compete in
international trade. I emphasize that for a reason, for those who say
we are blind protectionists, that we don't understand the global
economy, the global competition and do not want to compete and want to
start a trade war. No. 1, we have been in a trade war and we have been
losing. They don't understand that. No. 2, on globalization, I don't
want to sound like the Vice President, but I helped invent it 40 years
ago. I went as a young Governor to Europe. I have that Deutsche Telekom
bill that they talked about in the paper the other day. The truth is, I
called on the Germans in Frankfurt. Today we have 116 German industries
in the little State of South Carolina. I will never forget calling on
Michelin in downtown Paris in June of 1960 with 11,600 Michelin
employees. We have Hoffman-LaRoche from Switzerland. And Honda broke
ground a few years ago. I was amazed to hear that Honda produced and
exported more vehicles than General Motors.
I have been in public service 50 years. I have been debating this
issue in all five textile bills that passed here. Four of them passed
the House also and were vetoed by Presidents over the years. When we
come to trade and globalization, I think it behooves me not to talk
about permanent, not to talk about normal, but use this opportunity to
sober up the Congress and the leadership of the United States, making
them realize that we are in a real competition, but not for profit.
That is, the American multinational. They could care less. They don't
have a country. Boeing came out the other day and said in the United
States, we are not a U.S. company but an international company.
Caterpillar has been holding in Illinois. But they were international.
They think it is fine. The Chamber of Commerce has forgotten about Main
Street America and gone with the multinationals. NAM and the Business
Roundtable--we are in the hands of the Philistines. We are losing our
manufacturing base because we don't understand that the global
competition is not for profit but for jobs and market share.
Let me talk a minute about jobs. At the fall of the wall, 4 billion
workers came from behind the Iron Curtain, ready to work for anything,
anywhere, at any time. In the last 10 years, with computerization and
satellites, you can transfer your technology on a computer chip, you
can transfer your financing by satellite. You can produce anything
anywhere that you please. That is the global competition and
international trade.
While our American producers for the so-called profit want to
manufacture, say, in the People's Republic of China, for 10 percent of
the labor costs than it is paying in the United States, we have been
losing, losing, losing. In manufacturing, they say 30 percent of volume
is in the cost of labor. Or you can save 20 percent of your volume by
moving the manufacturer of your product offshore or down to Mexico.
Simply put, you can maintain your executive and your sales force here
but put your manufacturing elsewhere. If you have $500 million in
sales, at 20 percent, before taxes, you can save $100 million. Or you
can continue to work your own people and go broke because your
competition

[[Page S8055]]

is headed that way. That is the job policy of the U.S. Congress today.
It is to accelerate the exodus and the export of jobs.

I will never forget when they told us that NAFTA was going to create
200,000 jobs. I just looked at the figure from the Bureau of Labor
Statistics. It is more than just that 38,700 figure, but in textiles
alone we have lost 38,700 jobs since NAFTA; in North Carolina, 90,000.
I will never forget when they came down to Charlotte and said they
wanted to talk about the digital divide. They are the ones dividing it.
You think if you lost a job you are going out and buying a $2,000 or
$3,000 computer? ``It's the economy, stupid.'' That is where we are.
You just can't understand we are here, when they think it is a
productivity thing on jobs: Productivity, productivity, productivity--
We have global competition.
The U.S. industrial worker was the most productive industrial worker
in the world, all during the 60s, all during the 1970s, all during the
1980s, all during the 1990s, and is today still the most productive
industrial worker. They are not the highest paid. They pay much more in
Germany and a bunch of other countries--and I will have a word to say
about that, where the rich are getting richer and the poor are getting
poorer and the middle class is disappearing. But the point is, we are
losing our manufacturing strength and capability. We are losing our
economy.
America's security and strength is like a three-legged stool. You
have the one leg which is the values of a nation, and that is
unquestioned. We commit for freedom in Somalia and down in Haiti,
Bosnia, Kosovo. There are nine peacekeeping missions currently and we
are adding four more around the world. People admire the United States
of America and its high principles and values.
The second leg is one of the military, and that is unquestioned.
But the third leg is a fraud--intentionally so. You see, after World
War II we had the only industry, so with the Marshall Plan, that really
started globalization. We not only sent the money, we sent the
technology and the expertise--and capitalism has defeated communism. In
the People's Republic of China, which is the present subject, they are
tending more every day towards capitalism. That is a wonderful thing.
The question is, Can we afford to give away the store? We have
sacrificed and sacrificed so that now Boeing of Seattle, WA is moving
production of airplanes--the most prominent of export industries--out
of the country. Why do you think the machinists at Boeing led the
strike not to break up in Seattle last December? That was a crowd that
came out of Oregon, if I remember correctly, the Ruckus Society, or
something like that. But the AFL-CIO march, at that WTO meeting in
Seattle in December was led by the Boeing machinists. Why? Because 70
percent of the Boeing 777--McDonnell 90-10 is made overseas. In order
to sell the Boeing plane in the People's Republic of China, according
to Bill Greider, 50 percent of the Boeing 777 is made in downtown
Shanghai.
So we are losing the best, the best of the jobs. We know about jobs.
We know about globalization. We are looking at this constant drain, so
to speak, over the 50-year period. At the end of World War II we had 41
percent of our workforce in manufacturing. Last month, we lost another
69,000 manufacturing jobs. Go to the Department of Commerce--ask them.
So we have gone from 41 percent down to 12 percent. Akio Morita, the
former head of Sony said: Wait a minute, that world power that loses
its manufacturing capacity ceases to be a world power. That is why we
stand opposed to permanent normal trade relations with China.
I know full well--I live in the real world--we are going to have
trade with China. I am not opposed to trade with China. I am opposed to
permanent, normal. When I say ``permanent,'' that is exactly what these
CEOs of the Fortune 500 companies want. Because they know if they go
over and invest in China and it has been permanent, they can come back
appealing, ``Don't change anything,'' and they can get a foothold there
and they can really make a wonderful profit. But, of course, that puts
us more and more in jeopardy because we cannot shout ``productivity''
to the most productive industrial worker while at the same time
saddling him with all the penalties.

What are the penalties? What are the costs of productivity? We, the
Congress of the United States, say: Before you open up the XYZ
manufacturing company you have to have a minimum wage, Social Security,
Medicare, Medicaid, clean air, clean water, safe working place, safe
machinery, plant closing notice, parental leave. We might add on
prescription drugs. Everybody is for prescription drugs. That is the
cost of doing business.
You can go down to Mexico for none of that, 58 cents, $1 an hour. You
can go, for 10 percent of the cost, to China. We run around here like
we understand something when we are totally off base, operating in the
dark, on one of the most important issues confronting the United
States. They think: Technology, high tech, high tech. Let's talk about
jobs. High tech jobs? Do you know that a third of Microsoft's workers
are part time? At one time they were all full time and lower-level
workers sued and said: We are going to get some of these stock options
and other benefits. And they won the case in court. So Gates and
Microsoft turned around and gave them a 364-day contract. They are part
time; 40 percent of the employees in Silicon Valley are part time. They
don't give them any jobs. Gates has 22,000 up there in Redmond, WA and
Boeing has 100,000. But what jobs they do have don't produce anything
to export.
We had a deficit balance of trade in advanced technology products
with the People's Republic of China of $3.5 billion in 1999. This year
it will be almost $5 billion. So don't give me anything about high
tech--the high tech is going to save us. That is not going to save us
at all. Advances in technology has spurred productivity. We all
acknowledge that. The Japanese, after all, are the ones that taught us
that with their advances in robotics in the early 80's. The BMW plant
in Spartanburg, SC has been able to incorporate cutting edge technology
and machinery. That is why over half the employees came off the farms
within 50 miles and the other little textile industries and have been
able to produce very efficiently. The quality of the Spartanburg plant
exceeds the quality of Munich BMW. As a result, BMW is doubling the
size of its operations at the Spartanburg plant.
Open your eyes. The most productive automobile plant in the world,
according to J.D. Power, is not in Detroit, it is down in Mexico--the
Ford plant. We know about productivity and we know about jobs. While we
lost 69,000 manufacturing jobs this August, we took on some 127,000
service jobs. We are going just the way of England.
At the end of the war, they told the Brits: Don't worry; instead of a
nation of brawn, this will be a nation of brains; and instead of
producing products, we will provide services. Instead of creating
wealth, we will handle it and be a financial seller. And England has
gone to hell in an economic hand basket. Even Land Rover is leaving
there now, and there is some question with the BMW plant there.
I am not anti-British. I love the Brits. But London has become a
downtown amusement park. I like to go there like everybody else. What I
am talking about here is economic strength. The British Army is not as
big as our Marine Corps. We are running around here puffing and blowing
about the world's superpower. You cannot use and you would not use the
hydrogen bomb. They couldn't care less now about the 6th Fleet or our
military superiority.
So what counts? Money. Money talks in international affairs. I will
never forget when in the U.N. there was a resolution to examine China
with respect to human rights and they were preparing to set up the
hearings. This was 1993.
The last time I checked 5 years later, 1998, they did not have the
hearings. Why? Because the Chinese are the best diplomats. The Chinese
are the best negotiators. They are the best business people. They have
the best commercial minds. They went all around Africa, down into
Australia and everywhere else. They never called for the hearings. Why?
Because everybody wants to get into that rich market of $1.3 trillion.
At the moment, we have the richest market in the world, and we refuse

[[Page S8056]]

to use it and whine: Be fair, fair trade, level the playing field.
Come on. Trade is not Boy Scouts. There is no morality to trade--be
fair. I know what they are talking about. I know the word ``trade''
itself. ``Free trade'' is an oxymoron, but they hope there will be no
barriers, no tariffs, no limitations.
As we shout for free trade, the same thing we shout for is world
peace. I do not believe we are going to get either one in my lifetime.
Maybe in Strom's. The fact of the matter is, the father of this country
said the best way to preserve the peace is to prepare for war. The best
way to get free trade is to compete, raise the barriers and then remove
them. The Chinese do that. They use their market.
Some come to the floor and talk at length with respect to how the
agreement is so good and it will not do this and it will not do that. I
will touch on one thing this afternoon because I am limited in my time.
My colleagues will remember, they said there would not be any more
forced technology transfers. That is what Qualcomm thought when it
invested in China. Ambassador Barshefsky, the Special Trade
Representative, said:

The rules put an absolute end to forced technology
transfers.

This was November of last year after they had the agreement. I have
an article from the Wall Street Journal with regard to ``Qualcomm
learns from its mistake in China'':

U.S. mobile phone maker listens to Beijing's call for local
production.

This is dated June 7 of this year. The Ambassador is telling us the
agreement does one thing, but the reality is quite another. Qualcomm,
trusting it would not have to transfer, has to have local production
before it can sell. So it is with all of these other industries.
I am not anti-Chinese. I am anti this policy. I have been against
this particular policy for years on end. We had a GAO report--about
which I could go on at length--that the agreement is indecisive and
complex. When we negotiate, we find out again and again it is normal
trade relations; namely, you have to give before you can take. You have
to give the Chinese the technology, and move production to China. I do
not fault China. The Chinese are doing only what we did to build this
great United States of America.

In the earliest days, we had just won our freedom, and the Brits
corresponded with the fledgling Colonies and said: Now that you have
won your freedom, why don't you trade with us what you produce best,
and we will trade back with you what we produce best--the doctrine of
comparative advantage these economists will tell you about.
Alexander Hamilton had the wisdom, outlined in the Report on
Manufactures. There is one copy left at the Library of Congress. That
little booklet in a line told the Brits to bug off: We are not going to
remain your colony. As a result, the second bill that ever passed
Congress--the first being the Seal of the United States--was a
protectionist measure passed on July 4, 1789, a tariff bill of 50
percent on 60 different articles. From there we began to build our own
economic strength, our own industrial capacity, carried on by President
Lincoln. When plans were being made to build the transcontinental
railroad, some said buy the steel from London. Lincoln said: Oh, no, we
are going to build our own steel plants, and then when we get through,
we will not only have the railroad, we will have a steel capacity.
Again, that crowd that comes around here whining about free trade,
getting all the protection you can possibly imagine--the farmers--are
solid for this. They are going to learn a lesson--be careful what you
wish for. Maybe I will get on to that in a minute.
It was Franklin Delano Roosevelt who instituted marketing quotas,
protective import quotas, price supports--protectionism that built up.
Yes, I am for the farmer and we are the greatest agriculture producer
in the world. But do not tell me about free trade. There have not been
any price supports for my textiles and my 38,700 textile workers who
have lost their jobs since NAFTA. Incidentally, I remind people just
exactly what happened. Yes, they are having to turn to service jobs if
they can.
I remember Onieta Industries in Andrews, SC. They made T-shirts.
Everybody can understand it. They closed the plant in the early part of
last year. There were approximately 480 employees with an average age
of 47. Do it Washington's way; do it the way Congress lectures:
Education, education--we have to reeducate. They sound like a bunch of
Mao Tse-tungs. So we reeducate, and tomorrow we have 487 expert
computer operators. Are you going to hire the 47-year-old or the 21-
year-old?
Those 47-year-olds are out of a job. The average employer is not
going to take on the pension costs and health costs for the 47-year-old
when they have relatively none to consider for the 20-year-old. So they
are sidelined. And that is the anxiety explored recently in Business
Week: ``The Backlash Behind the Anxiety of Globalization.''
President Clinton, himself--this is from the Los Angeles Times in May
of this year. I quote:

So Clinton asked rhetorically, why are we having this
debate on PNTR? Because people are anxiety ridden about the
forces of globalization.

I just finished reading David Kennedy's ``Freedom from Fear,'' the
legacy of Franklin Delano Roosevelt. The legacy of William Jefferson
Clinton is fear and fear itself. Global anxiety. Why? Because that 47-
year-old who worked at a plant for 25 years was saving his money,
making his home payments, his car payments and had a little boat down
on the Black River--now he is high and dry. At best, he is trying to
get a job at McDonald's or at the laundry or somewhere else in the
service economy that doesn't pay.
Talking about those jobs, I think we ought to really emphasize the
fact that we are separating, if you please, the society. In Fortune
magazine, dated September 4 there is the article entitled, ``Are the
Rich Cleaning Up?'' It is by Cait Murphy:

Blue-collar workers make less than they did a generation
ago while the earnings of professionals have soared.

Mr. President, I ask unanimous consent to have this article printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From Fortune, Sept. 4, 2000]

Are the Rich Cleaning Up?

(By Cait Murphy)

The average price of a Manhattan apartment south of Harlem
has hit more than $850,000--at a time when two-fifths of New
York City's residents make $20,000 or less a year. In Silicon
Valley teachers struggle with the rent while dot-com-rich
parents wonder how to cope with ``affluenza''--the perils of
new and great wealth. (Hint: Just don't buy that helicopter.)
In leafy suburbs nurses and cops commute from 50 miles away:
They cannot afford to live near their work.
This dichotomy--between new wealth and the not-so-wealthy--
has lately become something of an academic and political
obsession. Economists and social scientists have turned the
study of income inequality into a thriving cottage industry.
And while the rich-poor gap has not cropped up explicitly in
the presidential campaign, it is the stubtext for a number of
front-burner issues like tax cuts, educational reform, and
the ``digital divide.'' When a politician uses the word
``fairness'' in an economic debate, that's often shorthand
for ``inequality.''
Why the concern about inequality? Basically, because
there's more of it. From 1977 on, the cash earnings of the
poorest fifth of the U.S. population fell about 9%, estimates
the Center on Budget and Policy Priorities; middle-class
earnings rose 8%; and upper-income earnings, 43%. The exact
numbers are hotly contested, but it is clear that the
distance between the top and the bottom tiers of the income
distribution has grown strikingly since the 1970s. By some
measures, Americans' earnings are more unequal today than at
any time in the past 60 years; at best, even after the past
several years, when income has grown throughout the income
distribution, the gap has plateaued at or near record levels.
Of course, no serious person would argue that everyone
should get the same-sized piece of the economic pie. That
would be unfair to those who work hard, as opposed to those
who watch reruns of Gilligan's Island all day. And if
spectators want to pay more to watch a baseball game than,
say, a badminton match, there is no reason both sets of
athletes must be paid alike. At the same time, no serious
person would deny that inequality can hit such levels
(think medieval societies) that it comprises both an
ethical problem and a threat to social peace (the peasants
revolt). Finally, there is little disagreement about
whether inequality has increased. It has. But there is
also massive mud-wrestling about how much it has grown,
why, and what it all means.
FORTUNE will spare you the arcane details--for now, anyway.
But the fundamental argument about inequality is simple. The

[[Page S8057]]

pessimists contend that income distribution has grown so
lopsided that all society is worse off. Richard Freeman of
Harvard speculates that there is a link between inequality
and crime. He notes that high school dropouts fill the
nation's jails--and that these men have lost the most ground
economically. Edward Wolff of New York University contends
that if young men had a better shot at earning a stable
living they might be more willing to marry and stop having
children on a freelance basis. Robert Greenstein of the
Center on Budget and Policy Priorities argues that earnings
disparities are one of the reasons that almost one in five
children lives in poverty. America's lowest-paid workers make
less, as a percentage of the median wage (the point at which
50% are above and 50% below), than their counterparts in any
other country (38%, compared with 46% in Britain and Japan
and more than 50% in France and Germany). This means that
many low-skilled parents just cannot earn enough to escape
poverty. ``If there were somewhat less inequality,''
Greenstein concludes, ``more would have a better standard of
living.''
There is also considerable (but contentious) literature
that more-equal societies are healthier. And there is the
inchoate but deeply felt belief that inequality at current
levels is simply un-American. It gives the rich too loud a
voice. It makes it too hard for those at the bottom to rise
to prosperity. And it allows the wealthy to separate
themselves from society through private clubs, private
schools, and gated communities.
The optimists respond to that critique with a polite yawn.
Or perhaps a rude word along the lines of ``Rubbish!'' Sure,
inequality has grown, but so what? As long as people at the
bottom have not become absolutely worse off, goes this set of
arguments, it doesn't matter that the rich got richer faster.
And no, the poor are not worse off. Though men's earnings
seem to have fallen since 1973 (and maybe they haven't),
women's have clearly risen. That trend and smaller households
mean that family income and income per head have increased
all along the income distribution. Housing quality and access
to medical care have improved markedly for the poor since
1973.
Besides, people don't necessarily stay in the same
position. They move up and down the income ladder: Horatio
Alger was not just making stuff up. Today's income
distribution is the result of long-standing economic forces
and social trends. Nothing is broke, so don't fix it.
Those are the broad outlines of a debate in which the devil
is most definitely in the details. What follows is a primer
of the arguments, followed by a suggestion about how to get
out of this thicket.
What are people so concerned about? Students of inequality
use several tools in their trade. One is the Gini
coefficient; a 0 coefficient is perfect equality (everyone
has exactly the same share of the economic pie). A
coefficient of 1 is perfect inequality (Bill Gates gets it
all). In America the coefficient has risen from 0.323 in 1974
to 0.375 in 1997, according to the Luxembourg Income Study,
higher than in any other rich country. Britain's is 0.346,
Germany's 0.300, Canada's 0.286, and Sweden's 0.222.
Matters naturally are not quite that straightforward. Alan
Greenspan has pointed out that while the Gini coefficient is
comparatively high for income, when applied to consumption it
is about 25% lower. In other words, poorer people are
spending more like the rich; they are, for example, almost as
likely to own such things as dryers and microwave ovens. So
the economic distance between the top and the bottom may be
narrower than the income numbers suggest. And Europe's
greater equality may simply reflect the widely accepted
premise that while America has adapted to economic change by
allowing inequality to rise, Europe has adjusted by allowing
higher unemployment. Which is better?
Another favored analytical tool for measuring inequality is
to divide the population into fifths, or quintiles, and see
what share of the nation's earnings each fifth took home.
According to the Census Bureau, in 1998 the bottom 20% earned
only 3.6% of total income (4.2% in 1973), compared with more
than 49% for the top 20% (44% in 1973).
But wait a minute. The Heritage Foundation points out that
the Census defines quintiles in terms of households--and
households in the bottom quintile are much smaller than those
at the top. Therefore, while there are 64 million people in
the richest quintile, there are fewer than 40 million in the
poorest one. Adjust for population, and the share of the
bottom fifth grows. Also, many Americans have income that is
not in the form of wages or cash transfers--food stamps and
housing subsidies for the poor, realized capital gains for
the better-off. Adjust for that, and the distribution narrows
again, as it does after accounting for taxes. Should the
adjustment include Medicaid and Medicare? If so (and that is
debatable), the gap shrinks further still; put it all
together, and Heritage figures that the bottom quintile takes
in 9.4% of national income, and the top 39.6%.
There is, then, no consensus on how to measure inequality.
There is, however, broad agreement that it has indeed grown.
Since the early 1970s the cash incomes of the rich have
indeed risen faster than those of the poor, with the middle
class hanging in there; the higher up the income ladder, the
faster the growth. That may help explain why the poverty
rate, now 12.7%, has still not dipped to 1973 levels (11.1%).
Median household income (the point at which 50% are above
and 50% below) has grown grudgingly, rising about 9% in
real terms from 1973 to 1998 and passing its 1989 peak
only in 1998.
Men have had a particularly dismal time. The median income
of men is significantly lower than in 1973 ($27,394 then vs.
$25,212 in 1997, in 1997 dollars). Men under 45 are making
less now, in real terms, than they did in 1967, and blue-
collar workers have taken the biggest hit. Blacks and women,
however, have seen their earnings rise.
Why is inequality increasing? Income inequality is
increasing because wage inequality is. The U.S. economy has
evolved to reward highly educated people even more than in
the past--a trend that social scientists, in a flight of
whimsy, call ``skill-biased technological change.'' This
means that demand for labor has shifted toward the skilled
and away from the unskilled. Brains beat brawn--hands down.
That explains the rise in the college premium--the extra
income college graduates can expect to earn compared with
those who finish only high school. The premium rose much
faster in the U.S. than in Europe because the supply of
graduates in the U.S. did not rise as fast in the 1980s and
1990s as the demand for them; Europe came closer to matching
demand and supply. It sounds like a tautology, and perhaps it
is: Income shifted toward the more highly skilled because
employers would pay more for their services. But it really is
that simple.
Of course, that by itself doesn't explain the income gap.
Another significant factor has been family structure.
Weighing on the downscale side of income distribution has
been the burgeoning number of single-parent families,
particularly those headed by never-married mothers; overall,
single-parent families earn about half as much as two-parent
households. On the upscale side, there has been an increase
in families in which both spouses make lots of money. To put
it another way, there are almost 2\1/2\ times as many people
working in the richest fifth of households as in the poorest
fifth. Less than a third of the people in the bottom quintile
live in households headed by a married couple; the rest are
single (55%) or in single-parent families. In the top
quintile some 90% live in married-couple families.
Changes in family structure account for more than a third
of the increase in income inequality since 1979, figures Gary
Burtless of the Brookings Institution, making it a slightly
more important factor than the widening wage gap. Lynn Karoly
of the Rand Institute in California calculates that the wage
gap is a bigger deal, but no matter: No one disputes that
both factors are crucial.
Other suspects in the inequality lineup are the declining
minimum wage (lower in real terms than in 1973), declining
unionization among men (accounting for as much as 20% of the
gap, estimates Freeman), deregulation (protected industries
kept wages high), immigration (which can depress wages), and
trade (that giant sucking sound). Higher levels of
entrepreneurship may also be associated with higher
inequality.
All those things probably count, but to a minor degree
compared with the changes in earnings patterns and family
structure. Immigrants, for example, can drive down wages in
local labor markets, particularly among the low-skilled, but
that effect is muted across the country as a whole. When it
comes to trade, the effect is even more difficult to
identify. While some companies have certainly shipped jobs to
cheaper climes, most U.S. trade is with other rich countries,
and most low-paid jobs are domestic, such as cleaning or food
service. Remember, too, that to critique immigration and
trade strictly in terms of their impact on inequality is to
look through a cracked mirror: Doing so ignores the
contributions immigrants make to America and the
opportunities wrought by freer trade.
What is more important than any of these individual
factors, Karoly notes, is how all of them have reinforced one
another. At the same time, there have been few countervailing
forces. The U.S. could have tried to slow these trends, as
Europe has done, through high minimum wages or centralized
wage bargaining or protective trade barriers or high taxes.
It chose not to.
What can be done? The primary rule of economic policy
should be like that of medicine: First, do no harm. And the
problem with many of the knee-jerk policy responses to
inequality is that they cannot pass that test. Looking at the
list of culprits responsible for the run-up in inequality,
for instance, one could argue for less technological change,
less trade, more regulation, and less entrepreneurship. Would
America really be better off with such an economic blueprint?
To ask the question is to answer it.
Even the more plausible approaches carry side effects worth
thinking about. Take unions. Unions are an essential part of
a free society, and they do an excellent job of raising wages
for members. But they can also be associated with not-so-good
things, such as protecting their workers at the expense of
those trying to get into the labor market--an important
factor in the high level of European unemployment. In July,
Alan Greenspan contended that it was America's greater labor-
market flexibility that had allowed it to take advantage of
information technologies faster and more fully than Europe;
tech-led productivity has been the bedrock of America's
recent wage and productivity surge. In this context, the case
for actively encouraging more unionization begins to weaken.

[[Page S8058]]

What about raising the minimum wage? That's plausible too,
and the increased minimum wage probably played a role in
steadying inequality in the past few years. Moreover,
countries like France, which has a high minimum wage, have
seen inequality grow much less. America may be robust enough
to swallow the proposed minimum-wage increase to $6.15. But
there is clearly a point where a minimum wage can become
burdensome, killing job opportunities, as has happened in
Europe. And raising the minimum wage is an awkward way to
lessen inequality. Most minimum-wage workers do not live in
low-income households (think of suburban teens), and many
poor households have no workers at all. So most of the gain
from a higher minimum wage goes to families that are not
poor. Worse, the Organization for Economic Cooperation and
Development has documented a connection between the minimum
wage and youth unemployment: the higher the wage, the more
idle youngsters. That has to be a large part of the reason a
quarter of France's under-25-year-olds are out of work.
Is all this simply an argument for complacency? Not quite.
It is really an argument for looking at the issue from a
different perspective. Let's face it: Normal Americans do not
fret about rising Gini coefficients or quintile
displacements. They do however, worry if hard-working people,
even professionals, cannot find a home of their own that fits
their means. They don't want children suffering, even if
their parents made bad choices. They believe that opportunity
is available to all and that government should not hinder
people's ability to take care of themselves. Americans, in
short, are hapless at class warfare (perhaps because they are
so absorbed in racial and ethnic issues). If they were better
at it, they would be howling, say, at the proposed death of
the death tax, which applies to only a tiny share of estates.
Instead, most people want it killed. The attitude seems to
be, ``Hey, that might be my estate someday.''
Given such attitudes, a plausible list of goals for
government might go something like this: Enhance the
prospects of poor children, improve living conditions, reward
work, bolster family responsibility, keep taxes from
impoverishing people and ensure mobility.
And surprise, surprise: American social policy in the 1980s
and '90s has done almost precisely that. The Reagan
Administration can take credit for the 1986 tax reform, which
released many lower-income Americans from federal income-tax
liability. The earned-income-tax credit (EITC), also a
Reagan-era initiative, supplements the pay of low-wage
workers with children through a refundable tax credit of up
to 40% of earnings. The Bush and Clinton Administrations
expanded the EITC (the latter in the teeth of strong
Republican opposition). Both also expanded the provision of
support services for poor children outside the home--child
care, foster care, Head Start, and so on. Child-support
enforcement expanded under all three (with, it has to be
said, spotty results), and health insurance and child-care
subsidies for poor children expanded under Bush and Clinton.
The welfare reform of 1996 (in the teeth of strong Democratic
opposition) explicitly connected working to the receipt of
benefits. Overall, these policies make up a broadly
consistent approach that Americans are in tune with--and that
has delivered real improvements.
Perhaps, then, the way to remedy inequality is not so much
to try to lessen the Gini coefficient--through redistributive
taxation, for example--but to ameliorate the problems of
those snagged at the bottom. One such problem is clearly
housing. There is a gap between the growing numbers of low-
income renters (10.5 million in 1995) and the shrinking
numbers of low-cost rental units (6.1 million). A record 5.4
million households spend more than half of their income on
rent or live in substandard housing. The feds can and should
do more in this regard by boosting the number of housing
vouchers. (Congress eliminated new housing vouchers for four
years in the 1990s; the 2000 budget envisions expansion.)
But inequality begins at home. It is not coincidental that
two cities with massive affordability problems--New York and
San Francisco--may also have the most tortured housing
markets in the country. Byzantine regulations suppress new
construction and raise its cost. Insiders--those who have
scored a price-controlled apartment--benefit at the expense
of outsiders, who pay prices exaggerated by the artificially
induced constraint in supply. So while rent decontrol rarely
makes the egalitarian to-do list, it deserves to be on it.
And Silicon Valley and other wealthy communities should take
a hard look at regulations--two-acre zoning and the like--
that put up a keep out sign for the unrich.
Expanding the EITC further--by increasing the credit
(particularly to families with three or more children) and
extending it to childless full-time workers--would also help.
The EITC is first-rate social policy. Essentially it promises
parents that if they work, their income will exceed the
poverty line. In 1998, EITC supplements lifted almost five
million people out of poverty, and that money has proved an
important carrot to get former welfare recipients into the
job market. A further expansion would put more dollars in low
earners' pockets and reduce the ranks of the working poor,
without the scattershot effect of the minimum wage. It also
makes perfect equity sense in the context of the tax cuts
both parties are fiddling with. Don't believe the fluff: Tax
cuts would benefit the better-off most, for the very good
reason that they pay the lion's share of taxes. The top 1% of
earners, for example, pays almost a fifth of all individual
federal income taxes, according to the Congressional Budget
Office, and the top fifth almost 60%. The bottom two
quintiles contribute 8%. An expanded EITC, in combination
with tax cuts, would spread tax largesse all the way up and
down the income distribution. Along the same lines, states
that are considering cutting taxes would do well to cut sales
taxes, which hit the poor hardest, rather than income taxes.
Or they could start or expand their own versions of the EITC,
as more than a dozen states have already done.
Third, surely a country as rich and talented as America can
figure out some way to ensure reasonable, regular health care
at a level of access that, say, Ireland provided in the
1960s. There has been expansion of guaranteed medical
provision for poor children, but about 15% still slip between
the cracks. A system with fewer gaps could also promote
mobility; it is scary for low-income people in a job with
health coverage to try to improve their position by moving to
a new job without it.
Fourth, let's remember that not every problem comes with a
ready solution, from government or anywhere else. For
example, it would be an unambiguously good thing for America
as a whole if families formed more readily and stayed
together more reliably. This would also narrow wage
inequality and boost family income. It's just far from
obvious how to get there from here.
Social policy is not a field of dreams; miracles are rare.
Across the rich world, estimates Ignazio Visco of the OECD,
the long-term poor are some 2% to 4% of the population.
But at any given time, these families make up half of the
population living in poverty--everyone else moves up and
out. The major problem in such homes is not lack of money
but disorganization, illness, lack of social skills, and
general cluelessness. In her book What Money Can't Buy,
Susan Mayer of the University of Chicago argues that after
basic needs are met, additional income has little effect
on children's prospects. Using a form of regression
analysis that only a social scientist could love (or
indeed understand), Mayer estimates that doubling the
income of the poor would reduce high school dropout rates
by one percentage point, increase education by a few
months, have no effect on teen pregnancy, and possibly
worsen male idleness. ``Any realistic redistribution
strategy,'' she concludes, ``is likely to have a
relatively small impact on the overall incidence of social
problems.'' Enhancing living standards to provide dignity
and reasonable comfort is a social good in itself. But
humility is warranted in terms of the long-range benefits
of doing so.
In the long run, because so much of inequality is connected
with the higher returns on skills, it is crucial that
Americans learn the things they need to know in order to
succeed. Which brings us to education, the most important
component of the mobility that is the bedrock of the American
dream. Poor people in poor communities are educationally
short-changed, and the problems begin early. That Americans
of almost any intellectual level can find a college to accept
them does not excuse the lack of basic skills too many high
school graduates demonstrate. Money may be part of the
answer, but only part. Cash can be spent wisely or stupidly;
there is, at best, an ambiguous correlation between spending
and achievement. But evidence indicates that increased
attention to education in early childhood brings enduring and
positive results. It's clear that there has to be more
emphasis on accountability and outcomes--what children
actually learn--as opposed to how much is being spent. That's
beginning to happen. And it's hard to believe that
competition--vouchers, charter schools, and the like--would
not be a goad to improvement.
Finally, let's remember that nothing good is going to
happen if the economy goes into the tank. Tight labor markets
have done more to make welfare reform work than any aspect of
its design; productivity has driven up wages since 1993
faster than any transfer program could have done. Remedies to
inequality that hurt the economy as a whole will hurt the
poor first and worst.
Laura D'Andrea Tyson, former head of the Council of
Economic Advisors under President Clinton, offered a striking
way of looking at these issues at a Federal Reserve
conference in 1998. Imagine the income distribution, she
suggested, as an apartment building in which the penthouse is
more and more luxurious, and the basement, in which a number
of dwellers (and their children) are stuck year after year,
is rat infested. What to do? Well, some social critics,
offended by the presence of wealth amid such distress, would
like to pillage the penthouse. Tyson simply notes, ``We need
to do something about that rat-infested basement.'' Taking
care of the rats and making sure people can climb out of the
cellar: That seems about right.

Mr. HOLLINGS. You begin to understand--when we talk about jobs, when
we talk about pay, when we talk about our society, when we talk about
our economic strength, when we talk about the middle class--that the
strength of our democracy is disappearing.
So, yes, we are going to trade with China. But if you make it
permanent

[[Page S8059]]

and you make it normal and you want to compete with China, you are
going to be in one heck of a fix, is all I have to say.
Let me say a word about market share. Japan has been practicing this
for a long time. They have a society that sacrifices at the home market
in order to take on the international market, the market of the United
States. There is no question about it.
That Lexus that costs $34,000 in the United States costs $40,000 to
$44,000 in downtown Tokyo. That camera that sells for $300 here--a
Japanese camera--sells for $600 to $1,000 in downtown Tokyo. That
Handycam that sells for $640 in the United States--made in Japan--sells
for almost $2,000 in downtown Tokyo.
We do not have that kind of society. This is a spoiled society. We
are supposed to give you tax cuts even though we have hardly any taxes
to cut. And they can't be punitive, because look at the economy. By the
way, we are paying down the debt, but we do not tell them we are
increasing the debt at the same time.
I really have not had but one person ask me about the estate tax.
Nobody has asked me about the Social Security tax because we put it in
line with all other pension plans. Nobody has bothered about gasoline.
Overseas, they regularly sacrifice $4.20 for a gallon of gas. When we
get to $2 a gallon, we go ape and hold Federal investigations, TV
shows, and everything else.
So the competition in globalization is one of sacrifice. In China,
they call it communism; sacrifice, in Japan, in Korea, and even in
France and Germany. They have all kinds of rules and regulations. Try
to buy a year 2000 Toyota in France. They keep it at the Port of Le
Havre and inspect it a year or so, and you can buy the year 2000 model
on January 1, 2001.
They have all kinds of barriers and different tricks. We talk about
globalization and productivity as if we know something about it and
that all we have to do is reeducate and get more engineering graduates.
Come on.
I am talking about middle America, the blood and guts of this
society, the blood and guts of this democracy. That is what keeps us a
strong country. That Fortune magazine article that came out the day
before yesterday will tell you about that divide, will tell you that
the take-home pay of that industrial worker is less than what it was 20
years ago, adjusted for inflation. It is a devil of a trend, but they
are not talking about that or even mentioning trade. But when it comes
to market share, the Japanese set the pace.
What is going on in telecommunications?
I have a bill which is a reminder because the law is there. I am
going to testify tomorrow that it is nothing more than a reminder. No
communications bill is going to pass unless they put it as a rider on
one of these appropriations bills. Because they do not want to debate
these things.
All you have to do is look at Deutsche Telekom's SEC reports and know
they call themselves a monopoly and that the German government is in
control.
When you are a country in control, you can print money. We know that
better than anybody. We have been running deficits since 1968, 1969
under Lyndon Johnson; now the debt is $5.7 trillion. So we know about
governments printing money.
Deutsche Telekom had its stock at $100 earlier this year, in March.
Now it is down to $40. Do you think Ron Sommer, the CEO of Deutsche
Telekom, is worried? He could care less. He says: I have $100 billion.
He just had a bond issue of $14 billion. Everybody got into it. We
could not get a $14 billion bond issue going in this country. But a
government-controlled company can easily get it because that company
can't go broke. It is bound to win.
Sommer says: I have $100 billion. And I am ready to buy AT&T or MCI
or Sprint or VoiceStream or any telecom company I please. If his stock
was down in the regular market to $40, and he had $100 billion, there
would be a footrace between Boone Pickens and Carl Icahn. They would be
in there in a flash. There would have been a takeover long ago. You
see, they can come in with all kinds of capital and distort the
competitive market.
That is why we deregulated telecommunications from U.S. Government
control in 1996. We certainly did not do it to put it under German
Government control. That is why we have the World Trade Organization,
in order to get competition, not to set up government-controlled
companies to take over in the private market.
But why do they do that? Who does offer the highest price, they tell
me, per subscriber in one of these communications entities. Previously
the highest bid was $12,000 per subscriber. Deutsche Telekom comes in
with $21,000 to $22,000. Money is nothing to them. Why? Because they
want market share. They battle. And the whole fight in globalization is
for either jobs on the one hand, market share on the other hand, or
both.
That is the globalization. That is the trade. And we do not have a
trade policy.
They talk about free trade, and they get together. Unfortunately, our
Democratic leadership gets together with the Republican leadership on
this score.
They put out the white tent and they fixed the vote. The New York
Times wrote the article about it. The New York Times put in there that
they got the NAFTA vote by giving our friend, Jake Pickle, a culture
center; another Congressman two C-17s; another one a golf match. They
had 26 gimmies to fix the vote. So they fixed the vote here in the
Finance Committee and fixed the vote with the leadership, and they have
the unmitigated gall to come and say: No amendments, don't discuss it,
when can we vote, let's get this thing over with, free trade, free
trade, free trade.
I am going to join my friend, our leader from West Virginia, Senator
Byrd, and others, and hope we bring some sobriety to this crowd up here
in Washington. Let's start competing and let's start being productive.
Congress berates the U.S. industrial worker. You must become
productive. But we can't pass an increase in the minimum wage. We can't
pass a patients' bill of rights. We can't pass gun control. We can't
pass campaign finance. We can't do anything.
Remember, we are competing with ourselves. I think that is one of the
main points to be understood. I will never forget those industrialists
who traveled all the way to Europe and back with jet lag to implement
the Marshall Plan. Now with the profit the corporations make, they
don't mind the jet lag. They don't mind moving for a while to Japan and
Korea and other places. And as of 1973, the banks--Citicorp and Chase
Manhattan--made a majority of their revenues and profits outside of the
United States. They became more or less multinational. Then, of course,
the corporations themselves started traveling over there and they
organized in order to support this so-called free trade, which they
knew historically was a bummer. They organized the Trilateral
Commission and the Foreign Policy Association. If you run for
President, the first thing you do is get a gilded invitation to go up
and pledge on the altar of almighty free trade your loyalty and your
fealty to free trade. So you become sophisticated. You become
knowledgeable. Yet you don't know what you are talking about.
Then they give the contributions to the college campuses so that you
not only have the companies and the banks, but you have the campuses.
There was a Ms. Jacobson who put out a study back in the 1980s where
the majority of the contributions, I think, on the Harvard campus were
Japanese. So you get all the campuses. You get the consultants. You get
the Washington lawyers. We don't hear too much from our friend Pat
Choate. I wish he would run again. Pat Choate wrote ``The Agents of
Influence.''
The agents of affluence were our special Trade Representatives,
whether it was Eberly or Brock or Strauss, those representing us
immediately went to represent the other side. It would be like General
Powell going to represent Saddam Hussein and Iraq. But that is what has
been going on. To Mickey Kantor's credit, he has not done that. But I
have been here long enough to watch all of them. Carla Hills, who gets
all of these awards and everything else, represented the other side,
the competition.
Then you have the retailers. We used to debate a bill, Mr. President.
I would go down to Bloomingdale's, and I would get a lady's blouse made
in Taiwan and

[[Page S8060]]

one made in New Jersey because they are trying to fill up the order.
They were never the same price, and the American manufacturer wasn't
the lower price. I went to Herman's and got a catcher's mitt, one made
in Michigan, one made in Korea--the same thing, the one from Korea was
cheaper. So they make a bigger profit, the retailers. And the retailers
pay the newspapers through advertisements. That is the source of the
majority of newspapers' profits. The business manager of that newspaper
says you have to be for free trade because the retailers are their
clientele.
I just heard the distinguished Senator from Arkansas talk about free
trade. She was very much for this particular bill. Their biggest
industry? Wal-Mart, import industry. They are going to sell a few
chickens in Arkansas. Tyson hopes he can sell a few chickens. But they
are not producing anything else there. So we have to go over to the
retailers.

We have the banks, the corporations, the consultants, the societies,
the campuses, the lawyers, special trade representatives and, yes, the
lawyers. The Commerce Committee does not consider a bill that your
office does not fill up with this crowd. In fact, these folks are
confusing the Deutsche Telekom bill that my distinguished colleague
cosponsored with me, running around the whole month of August trying to
figure out how to get this vote and how to get that vote.
Section 310(a) says you cannot license a foreign government in
telecommunications. It has been that way since 1934. We argued and
debated it in the 1996 bill. We ultimately left it alone. In spite of
the White House and the FCC and all the other legal shenanigans they
have ongoing, the law is still there, but they are trying to confuse
that.
It is like Spain with the fifth column. We have the enemy within,
like Bobby Kennedy wrote about. I mean, I am not worried about China. I
would run it the same way they are running it. They have a $68 to $70
billion plus balance of trade. We have got $70 billion minus balance of
trade and it has been growing each year. It is going to continue to
grow.
This is not about jobs in the United States. It is about jobs in
China. The Wall Street Journal had a big headline that said investors
are racing now to invest in downtown Beijing, get a foothold there and
then get the protection of the WTO--because you know who the WTO is
going to rule in favor of. Fidel Castro can cancel your vote, Senator,
my vote, the U.S. vote. I mean, come on, the WTO setting our trade
policy?
I have introduced a bill in each of the last sessions of Congress and
I will introduce it again next year. I am trying to get the 28
Departments and the Agencies coordinated in a department of trade and
commerce so that we can have a coordinated assault on the needs of this
Nation. At the present time, it is all spread around, disparate. You
have the policy from the Trade Representative. No, it is the Commerce
Secretary. No, it is the Secretary of Defense. No, it is the White
House. No, it is some other ruling that the administrative body, the
FCC, has made. That is why we have these booming 60,000 lawyers at the
bar in the District of Columbia--not 6, 60,000. I believe 59,000 of
them are communications lawyers.
If we could just coordinate and get one trade policy for this country
and get competitive like the old Yankee trader; otherwise, we are
losing our jobs, our manufacturing. We are in economic decline. We are
losing our middle class. Unfortunately, we are losing the strength of
our democracy. I really believe that.
My friend, the Senator from New York, says this is a most important
vote. Well, I think it is just as important for the exact opposite
reason, that we kill it, not pass it, kill this thing, have regular
trade, not normal, because we have been losing. I want to start
competing. I certainly don't want a permanent trade agreement. Don't
have one Congress try to bind the other Congresses. ``Permanent'' was
put in there by the NAM Business Roundtable and the downtown lawyers.
They are trying to get predictability to that investment over there,
and they want to come back and tell ensuing Congresses: Look, you told
us it was permanent and so we have our money over there.
And so just like the Senator from Arkansas protects Wal-Mart, which
he should, maybe I would be here trying to protect a textile company
that wants to produce in downtown Beijing.
The PRESIDING OFFICER (Mr. Gregg). The time under cloture has
expired.
Mr. HOLLINGS. I thank the Chair and yield the floor.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant bill clerk proceeded to call the roll.
Mr. CRAIG. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CRAIG. Mr. President, I come to the floor of the Senate this
afternoon to discuss a motion to proceed on what many of us believe to
be a very important issue, and that is Permanent Normal Trade Relations
(PNTR) for China.
While this issue has been a long time in coming to the floor of the
Senate, its time has come. Our Nation, for a good number of years, has
pursued a relationship with mainland China to improve the trade and
commerce flows that are critical to this country. The agreement that we
are here to ultimately get to final debate and passage on, is an
agreement that allows an unprecedented access to the China market.
I support PNTR for China because it will seal the deal on the U.S.-
China Bilateral Agreement and finally allow U.S. business and farmers
the access to Chinese markets that the Chinese have to our market. In
other words, America has had a relatively open market to China while
China's market has been, for all intents and purposes, closed--except
by category and by definition. Passage of PNTR will help pave the way
for China's eventual membership in the World Trade Organization.
I think, as you would probably agree, all of these are critical in
our relationship to this very large country and the role that it will
inevitably play in our future world. This deal cuts the barriers to
trade that U.S. farmers and businesses have unfairly encountered for
decades. It serves Idaho because it slashes tariffs on exports critical
to Idaho's economy.
Let me give a couple of examples. On U.S. priority industry products,
tariffs will fall to 7.1 percent. Tariffs will fall on several products
that are critical to my State, including wood and paper, which are
critical to my State; chemicals, a growing industry in my State; and
capital and medical equipment. In information technology--now a very
important part of Idaho's economy--the tariff on products, such as
computers, semiconductors, and all Internet-related equipment will fall
from an average of 13 percent to zero by the year 2005.
On U.S. priority agricultural products, tariffs will be reduced from
an average of 35.1 percent to 14 percent by January of 2004, at the
latest. It will also expand market access for U.S. corn, cotton, wheat,
rice, barley, soybeans, meat, and other products.

I think we all know the current state of the agricultural economy,
and while we will set policy, to hopefully help production agriculture,
we have always known that knocking down trade barriers and expanding
the world marketplace for our producers in agricultural products
remains critical. We have long since passed the day when we are the
consumers of all that we produce. Now, well over 50 percent of
everything a farmer or rancher produces on his or her property has to
be sold in world markets to maintain current economies and to improve
the profitability of those individual operations.
China, without question, is struggling today to determine what it
will do in agriculture. Without question, it will want to feed itself
and to continue to do so. Any nation worth its own gravity wants to
provide food and fiber for its own citizens. But as that economy
improves--and it is improving--the ability of disposable income in the
hands of the mainland Chinese means that they will want to buy more of
a variety of products that our tremendous agricultural economy
produces. This is merely a step, and that is why I say dropping tariffs
from 31.5 percent to 14.5 percent by the year 2004 is significant. As
we work with them, those

[[Page S8061]]

tariffs could actually drop more rapidly in that area with additional
agreements. There is no question that future Administrations in this
country will continue to pressure the Chinese to move in the direction
of even lower tariffs, but that significant drop of over 15 percent
will rapidly enhance agricultural opportunities for sales to China.
The United States needs this deal. We are the strongest economy in
the world and, as a Senator, would I stand here and say we need this
deal? Yes, because we do. The U.S. trade deficit with China is large
and continuing to widen. The deficit surged from $6.2 billion in 1989
to nearly $57 billion in 1998. And it continues to rise.
That statement alone is proof that our economy has been a largely
open economy and theirs has been a relatively closed economy. This
agreement, however, rapidly moves them toward a much more open economy
and, therefore, spells in very simple language an opportunity for
American business and industry and America's working men and women to
expand the products they produce to sell into the Chinese markets.
In addition to reducing barriers to trade, it will also force China
to play by the rules.
There is, I guess, a bit of a saying that when you deal with the
Chinese on the mainland, you sign the contract, and then you begin to
negotiate. In this country, when you sign the contract, you have made
the agreement. The negotiation is complete. That is why bringing them
on line with PNTR and into WTO means that not only will they have to
ultimately play by the rules, but there will be a learning process for
them as well. In working with the dispute mechanisms of the WTO they
will obviously learn that as they move more aggressively into world
markets, there is a rule of law that we have all trading nations of the
world play by; that is, a rule of fair trade based on the standards
established and negotiated within the agreements.
Let me give you an example of the problems we face today.
Idaho is known for its beautiful orchards. Of course, the State of
Washington--our neighbor--is known for more orchards and that fine red
apple that many of us see on the shelves of the produce markets and
supermarkets of our country. Today, many of those orchards that produce
those marvelous apples in Idaho and Washington are being pulled out and
replaced by other crops. Why? Because the Chinese have flooded the
United States market with concentrated apple juice--that when you buy
apple juice in the marketplace, the apple juice could well be produced
from a Chinese concentrate shipped into our markets, then processed and
bottled and sold into the American market.
The only way we can control the Chinese flow of concentrated apple
juice into our market today would be to either openly threaten or close
down our markets--close down our borders to the Chinese. That makes
very little sense when you are working to expand markets because they
then would counter by closing down access to another portion of their
markets only to hurt another segment of our agriculture.
If they were in the WTO--if we accept this agreement--then they come
under entirely new standards so that they have to regulate the flow of
their concentrated apple juice into our markets, and without question,
substantially improve the overall economy of the fresh fruit industry
of this Nation and of the State of Idaho, and the State of Washington.
PNTR also means better opportunity for Idaho business-people and for
the Idaho workforce.
For several years now Idaho has exported to China on a growing basis.
We are 1.2 million strong in the State of Idaho. We are not a large
State--at least population-wise.
In 1993, my State exported just about $2 million worth of goods and
services to China. But by just 2 years ago, in 1998, that number had
grown to $25 million. That is a 1,000-percent increase in the flow of
goods and services leaving Idaho and going to mainland China, which
just shows you the tremendous expansiveness in the marketplace that
still remains relatively closed. This agreement rapidly opens that
market and allows us greater access.
This last year, in December of 1999, I had the opportunity to lead an
Idaho trade mission to China. I asked 13 different businesses and
industries to go along with me and my wife, Suzanne, and some of our
staff. Representatives from agricultural companies and building
material companies and the high-tech community went along with us. We
were all united, not only in our recognition of the importance of
China's entry into the WTO, but all of these companies that went along
went to look for opportunities to expand the marketplace of products
built in Idaho for expanding the economy of my State and expanding the
workforce and the job opportunities that exist in my State.
While we were there, we had the distinct privilege of meeting with
President Jiang Zemin. President Jiang gave us the courtesy of nearly
an hour of his time in a direct discussion with myself and the trade
delegation. During that time, he talked about China's future and he
expressed it this way. He said China is serious about a transition to a
more market-based economy, although the President made it very clear
that China was not going to fall for the Russian model. In other words,
they weren't going to throw out the old and assume that the new would
just naturally take its place.

What they recognized and what they are doing at this moment is a
progressive step-by-step approach for greater access in the
marketplace, greater flexibility in the marketplace, without collapsing
their economy, and without destroying the job base they currently have.
There is no question that China is eager to gain the economic benefit
and the political prestige of a WTO membership.
During that tour, we also went to an area and a province to the
coastal city of Xiamen. There you can see firsthand what happens when
an economy that was once guarded, protected, and limited by state-owned
companies and by political control is turned, relatively, loose to join
the world economy. Xiamen is one of six free-trade zones in China that
was created by Premier Deng Xiaoping a good number of years ago. Their
gross domestic product is phenomenal with average GDP of 20 percent,
and job creation of the kind that is tremendously significant in giving
the workforce of China the kind of upward mobility that all of us seek
for all peoples of the world.
While we were there, we toured a brand new Kodak plant that was built
on about 19 acres of ground. It was once a rice paddy for water buffalo
and cobra snake. In just 19 months, this rice paddy was transformed
into a very modern company that met all of the building codes,
standards, and safety requirements as if they were built in my
backyard, or in your backyard, or anywhere in this Nation. It was the
home of thousands of workers, working for a much higher wage given the
kind of power that a higher wage gives, and even given the opportunity
to buy and own their own apartment.
If we really want to see China change, we must help give their
workforce this kind of an economy, give them more money in their
pockets, a chance to own private property, and then we will watch, over
the years, a political change that will take place.
PNTR for China will improve the standard of living for many Chinese
who have endured very poor standards of living.
PNTR isn't just a good deal for the farmers of Idaho, or the business
men and women of Idaho. It is a good deal for the Chinese people who
have suffered poverty beyond compare, and who are now beginning to
experience through the marketplace, the opportunity of upward mobility,
and the opportunity of private property ownership that truly begins to
transform the political base and the landscape of a country.
Over the last year, as this issue developed and certainly over the
last 6 months as we have known and as the Nation has known that we
would ultimately debate the issue of permanent trade status for China
and debate their entry into the WTO, I have received a multitude of
letters from Idaho from all kinds of constituents who for one reason or
another see the issue of permanent trade status the same way I do.
While we agree that some of the human rights issues in China, and some
of the other kind of concerns that we have are important, we also agree
that our

[[Page S8062]]

Nation must be continually engaged with the Chinese to change the world
and to change their role in the world. Building a wall or turning our
backs on this huge population base is no way to gain those kinds of
ultimate changes or benefits.
These letters, and letters from my Governor, Dirk Kempthorne, I think
note, at least for the moment, that I share them with you. Let me give
you a couple of examples.
Here is one from David Sparrow, of Boise, ID.
He writes:

Dear Senator: As a constituent and a member of the
agricultural community, I continue to urge your strong
support of PNTR legislation with China.

He goes on to say:

PNTR for China is vital to the farmers and other
agricultural interests in our district. Your vote is
critical.

Another one is just a simple one-liner from a gentleman in America
Falls, when he said:

Support trade with China. Nothing to lose except a market
to other countries.

That is exactly right. If we don't compete effectively, then our
producers and our American workforce will be the loser as other
economies of the world continue to increasingly engage the Chinese
marketplace in their bid for consumer products and a role in the world
markets.
Doug Garrity from Blackfoot, ID, wrote this Senator:

Dear Senator: As your constituent, I urge you to vote in
favor of Permanent Normal Trade Relations with China.
Congress must approve PNTR this year in order to secure
unprecedented access to world markets for my company and
others across America.

He was talking about a company in American Falls, ID, that is an
agriculture-based company.
When the Idaho trade delegation and I met with President Jiang Zemin
it was very clear from what he was saying that they believed this time,
it was their turn to make the concessions. He openly talked about why
they had made these concessions, why they were lowering their trade
barriers, why they would phase them in over a period of time, and
openly discussed even freer markets than the kind that are proposed in
the current agreement Ambassador Charlene Barshefsky negotiated in late
October and early November. President Jiang Zemin recognizes that the
strength of his country in the future is not going to be based on the
strength of a government but the strength of an economy and the right
of his people to share in that economy, both individually and
collectively as a country. He spoke very openly about that.
It was an amazing experience to visit for well over an hour with a
man who had walked behind Mao in the great revolution. He did not
mention that once, but instead talked in terms of open and free markets
and talked about China's role in a world economy and our role and our
companies' roles and our national economy's influence over them and
their economy. It was a dialog I would not expect to have. Yet it is a
dialog that is now pursued nearly every day of the week in China by
U.S. companies who are openly and actively gaining a piece of that
market.
Another letter from Marlene Sanderlin of Lewiston, ID, which is a
forest products and agricultural town. It is the location of our
seaport where ocean-going barges come all the way up the Columbia and
Snake Rivers into the heart of Idaho to take out Montana and Idaho
grain, forest products, paper, and coal from Montana. All of that is
moving out to the Pacific rim and some of it ultimately going to China.
The vitality of that seaport, in the heart of Idaho, is in large part
connected to the vitality of our trade in the Pacific rim and China.
And China's economic growth, without question, is an opportunity for
that seaport and for every seaport in the United States and the men and
women who work in the maritime industries.

As your constituent, I urge you to support PNTR legislation
for China. This legislation benefits real people: Me, my
family, and my country. It guarantees economic growth for
America and promotes the growth of democracy in China.

She speaks from my experience and my limited exposure in China, and
the absolute truth when she says it addresses the growth of the
democracy or the democratic actions within China itself.
Potlatch Corporation happens to be a company that is a large paper
and fiber producer in Lewiston, ID. They write, asking that we support
this. Why? Because of the thousands of workers they have at Potlatch
and the products they can supply into the Pacific rim and into the
Chinese market.
I have a good many letters from Idaho. We have received thousands. I
know that nearly every Senator has received phenomenal communiques from
their State in support of this particular issue that is now before the
Senate itself. Establishing a permanent trade relationship with China
means establishing a permanent, but also growing and developing
relationship with the most populated country in the world. Without
question, it is a vast opportunity for the sale of our products, and
for an ongoing and working relationship with those Chinese people that
can do nothing but help improve the ongoing relationship.
We will have some important tests in the coming days as other votes
on other issues directly related to China come up. I will take a
serious look at some of them because we need to make very clear,
straightforward statements to our friends in China as to what we can
and will expect and what we don't expect as it relates to their role in
the world community and our role along with theirs.

If PNTR were voted down, the real losers would be the American
business person, the American farmer, and the American workforce. We
have a vibrant economy today, and our economy is vibrant because we can
sell in an ever-opening world market. It has not cost us jobs, it has
continually improved and built a stronger economic base and a greater
job opportunity for nearly every citizen in our country who seeks it.
While that economy is strong, in the agricultural communities of Idaho
and across the Nation, it is weak. It is weak because nearly 20 percent
of the world market is off limits or in some way restricted to direct
access for our production agriculture.
This is a quantum leap forward to not only gaining greater access but
improving the economy of hometown, smalltown America. Idaho, my State,
has a good many of them. PNTR is a critical link in providing that
business economy, jobs, and growth relationship with China and China's
future. Rejecting permanent normal trade relations would, in my
opinion, have a dramatic impact on the economy for all the opposite
reasons I have expressed that passage would have a positive impact.
Lastly, if we reject this, we largely freeze our relations with
China. We can't afford to do that as a country. We can't afford to do
that as a world leader. I, along with a lot of my colleagues, have been
very stressed in the last several months with some of the utterances
coming from China and some of what appear to be their activities here.
Shame on us if we ignore this and if we ignore all of those other
utterances. Full engagement is the only way we can deal with the
Chinese. Full engagement economically, full engagement in trade,
dealing with defense matters, openly stating our positions in
unequivocal ways as to how we will deal with our friends, neighbors,
and potential adversaries around the world.
It is that kind of leadership that is incumbent upon this country, it
is that kind of leadership that is asked for in the Senate now in the
passage of a permanent normalizing trade relationship with mainland
China. I hope as we move to this vote we can get there, pass it, pass
it as cleanly as possible, and get it to the President for his
signature.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mr. BYRD. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Craig). Without objection, it is so
ordered.
Mr. BYRD. Mr. President, the Senate is presently considering the
extension of permanent normal trade relations status, or PNTR, to the
People's Republic of China contingent upon China's accession to the
World Trade Organization, WTO. Earlier this year, it appeared that
China might seek to join the WTO this fall, but now, in the first blush
of autumn, that possibility has

[[Page S8063]]

receded. And so has the urgency for us to consider granting PNTR on a
permanent basis or on a temporary basis to China. Yet, here we are,
with but a scant handful of days left in this Congress and a large
number of must-pass appropriations bills awaiting our attention,
discussing the merits or demerits or lack of merits of forevermore
foregoing our annual ritual of reviewing and extending normal trade
relations to China.
It might be worthwhile for the Senate to so consume its time, if we
were taking this debate seriously. After all, it is quite a significant
vote, the outcome of which may have long-lasting effects on our
economy, on American jobs and on American workers. Proponents of
extending PNTR to China note with some alarm that, should China join
the WTO, the United States could be subject to sanctions by China
because we do not currently treat it exactly the same as we do other
trading partners, both in the WTO and outside the WTO. And that is
true. We do not treat China the same as, say, the United Kingdom or
Japan. We put conditions on our trade with China, human rights
conditions and labor conditions and nonproliferation conditions. We do
so out of concern for those issues with respect to China.
Our annual debate and vote to extend for another year normal trade
relations, with conditions or without conditions, allows us, here in
Congress, to comprehensively review our relationship with China. The
annual vote on NTR is important to China, more important, perhaps, than
any other single piece of legislation might be. The United States is a
huge market, an attractive market, and an important market for Chinese
goods. The competitive advantage of NTR tariff rates is consequential.
It is both a carrot and a stick to persuade China to alter its behavior
with regard to issues near and dear to Americans, such as religious
freedom, such as nonproliferation.
I would be happy to spend many hours on this debate, and discussing
this important trade and security relationship. I consider it an
important debate. But I am somewhat dismayed to read news accounts
about a cabal among Senators to stifle one of the most important rights
granted by the Constitution to the Senate. That is the right to offer
and have debate on and votes on amendments. In the House, the rule
guides debate and the number and content of amendments that might be
offered to a bill. That is perhaps necessary in a body with 435
Members. But the Constitution says: Each House may determine its own
rules. The framers made the Senate a place where minority views, and
small States, had an equal voice.
Thus, West Virginia, a State consisting of 24,000 square miles--as a
matter of fact, 24,231.4 square miles--is not a very large State when
placed beside, on a geographic map, the great State of New York, which
is so ably represented and which has been so ably represented by the
senior Senator from New York, Mr. Moynihan.
I oppose this legislation with due apologies to my friend. And he is
my friend--a man of great wit, of great stature, a man of natural
grace, a student, a scholar, a teacher--Pat Moynihan. I apologize to
him for having to vote against this bill, but I shall do it with gusto.
The framers established the Senate as a forum for unlimited debate
and unlimited amendment. Or did they? They certainly did so with
respect to unlimited amendments. But for several years, there was the
previous question here in the Senate by which debate could be limited.
But when Aaron Burr completed his tenure as Vice President of the
United States and made his farewell address to the Senate, in early
March of 1805, he recommended that the previous question be dropped
from the rules. It had only been used 10 times in the previous years
from the inception of the Republic. When the rules were revised in
1806, the previous question was dropped. It was then that unlimited
debate reigned pure and undefiled and unchallenged in the Senate of the
United States. So this is a precious birthright.
By the way, there were no limitations placed upon debate from that
time--1806 or 1805--until 1917, when the present rule XXII--not exactly
the present rule; it has been changed some since then--but a rule
providing for the invoking of cloture was adopted in the Senate in
1917.
But this group of Members--I do not know who they are, and I am not
sure that such a group exists, but I will take rumor for truth at this
point because it very well could occur to some Members to want a
``clean'' vote, up or down.
This group of Members, I read, want a ``clean'' vote, up or down, on
the House-passed bill. They, and a number of House Members, do not want
a conference. And they do not want a second vote in both Houses on a
conference report. So these Senators--well-intentioned, well-meaning--
are determined to defeat every amendment, I hear, to this bill,
regardless of merit. So having heard it, let me accept it as the truth
and proceed accordingly. I am embarrassed to read that. I hope that it
is not true, that Members of this body would relinquish a critical
Senate prerogative, especially over so important an issue. Perhaps they
would say: Well, it isn't exactly relinquishing a prerogative. Other
Senators may call up amendments, but we will vote them down. They shall
not pass.
If it is true, then we are just spinning our wheels here, are we not,
by trying to fulfill our Constitutional role of regulating foreign
commerce? We are just spinning deep ruts in the Senate floor by
attempting to offer amendments to improve this bill before we close off
our opportunity to annually review and affect our relationship with
China.
I have reviewed the House bill, somewhat cursorily, I admit. It is
not that the House-passed bill is a bad bill. It contains a number of
reporting requirements that attempt to assuage concerns about human
rights and labor rights in China. But without the goal of an annual
renewal of NTR status behind it, what force does a report have to
affect behavior in China? How can a report protect American workers
whose jobs are in jeopardy because of unfair actions in the trade field
by China? How can a report protect American missionaries in China or
Chinese citizens who wish to practice their religious beliefs? How does
a report turn back a shipment of missile technology? How does a report
turn back threatening words and actions directed at another nation like
Taiwan?
The goal of this administration, and of the past few
administrations--and I say this most advisedly; I have been in Congress
now 48 years--and every administration since I came to Washington,
Democratic and Republican, has been the same way, always singing the
same old tune, and is guided, it seems to me, by the State Department.
The goal of all of these administrations, including the present one,
has been to, bit by bit, eat away at the constitutional powers of this
body to regulate foreign commerce. This is the message behind limiting
mechanisms such as fast track. The argument is that our trading
partners do not like agreements to be amended so it is take it or leave
it for the Senate. But the Senate must make judgments based on our
national interest.
Trade is a matter of increasing national interest. No one would dream
of making the argument that we cannot vote for reservations or changes
in arms control treaties because it would upset our negotiating
partner. The Soviets promptly renegotiated the changes we made with
respect to the INF treaty, a very fundamental change on the question of
the very definition of the missiles that were the subject of the
treaty. So are we to conclude that we can amend arms control treaties
but not trade agreements, or even legislation dealing with trade
agreements?
Trade has now become a varsity sport in America, especially here in
Washington. It is very important to our well-being, important to
millions of workers, important to the quality of our environment,
important to the world's environment. It is important to large
industrial and service sectors, a matter of such importance that we
should at least pay careful attention to our constitutional
responsibilities. The final product will be more in the national
interest and Senators will have done their duty to their constituents
and to our Nation, as it was envisioned by our Founding Fathers, if we
debate this matter at length and if we offer amendments, debate them in
good faith, and have votes up or down on them and let the chips fall
where they may.
Is it not possible that we might improve this legislation by the vote
of a

[[Page S8064]]

majority here in the Senate? Suppose one were to offer an amendment
vital to our security interest. It is not germane, but there is no rule
of germaneness in the Senate except under rule XVI with respect to
appropriations bills or when time agreements obtain or when cloture is
invoked. So why not? Why not offer subject matter that is important to
our national security interest?
If there is a group of Senators who have, by tacit understanding, by
a wink and a nod, or by words openly declared that they will oppose any
and every amendment regardless of its complexity or its complexion or
whether it is good or bad or in between--if there is such a group of
Senators, why not abstain from that and let us vote? Let us have a vote
up or down and have a vote based on the subject matter of the amendment
without any prior agreement, without any wink or nod, if there be such.
Let us see where the chips fall.
Are we to say that this particular bill is the acme of perfection and
we should not have any further amendments of any sort regardless of
merit? I don't think that would be the right way to commence.
Once granted, PNTR will be difficult, though not impossible, to
retract. Any attempt to withdraw PNTR status in the future, if it is
granted now, will cause an uproar, and not just in China. The
diplomatic crowd in the aptly named Foggy Bottom here in D.C. will
bleat that rejecting PNTR will upset delicate negotiations with the
Chinese. The big business crowd will complain about lost opportunities
to sell or invest in China. The Administration at the time will prate
erroneously about Congress interfering with their sovereign right to
conduct foreign affairs. And even in Congress, bills might be
introduced, only to die an unremarked death in some committee or on
some calendar. I have been here a long time. I have seen a lot of bills
die and I know a thing or two about how to kill them. So I know that
undoing a thing is much harder to do than doing it in the first place.
It will be much harder to undo PNTR than it will be to grant it.
So why are we apparently so gung-ho to have this sham debate and vote
now, this year, this week or next? There is no great urgency. The bill
will not even take effect until China's accession to the WTO is voted
upon. Why do it now, just weeks after a damning report has been issued
about China's role in the proliferation of missiles and missile
technology? Why do it now--why not next week sometime or next month or
next year sometime--mere weeks after Chinese authorities conducted
another raid on a so-called Christian sect that resulted in three
Taiwan-born American citizens and approximately 100 Chinese citizens
being arrested for meeting in worship? Why do it now, just months after
Chinese officials have made still more threatening gestures toward
Taiwan?
Why do it now, before the final negotiations on the bilateral U.S.-
Chinese trade agreement, particularly the trade subsidy portions, have
been ironed out?
Perhaps someone was listening to that advertisement I have heard on
the TV so many times: Do it now, do it here. Well, we don't do it now.
China's record on trade agreements is not stellar. Since 1992, six
trade agreements have been made--and broken--by China. In the last two
years, we have seen the effects of dumping on the U.S. steel industry,
as well as on the apple industry. So why are we rushing this vote? Why
now? Why are we rushing this in such haste that we will not even
seriously consider amendments that might improve the legislation? It is
hardly perfect, sprung like Minerva, fully formed, from the forehead of
Jove, or like Aphrodite from the ocean foam.
In that vein, I have several amendments prepared which I believe
could improve this agreement. One concerns prospective U.S. investments
in the Chinese energy sector. This amendment, if adopted, supports the
market for clean energy technology in China's admittedly booming
economy. I believe this amendment would pass the Senate. I think it
would command a decided majority in the Senate, if left to its own
merits. Sales of such clean technology helps U.S. firms, of course, but
also provide a mechanism for the Chinese to improve their air and water
quality, a necessary step if China is ever to step up to what should be
leadership role for her among the world's developing nations with
regard to climate change.
Now I am all for dealing with global warming. I am for the Kyoto
Protocols, if China will get on board. So why not have an amendment to
that effect. Let's have a vote here in the Senate.
After all, by the year 2015 at the latest, China is expected--let's
see, I will be serving in my tenth term; that will be my tenth term.
After all, by 2015 at the latest, China is expected to surpass the
United States as the world's leading emitter of greenhouse gases. For
her own sake, as well as for the future of all of us, China needs to
step up to the plate and tackle her role in addressing the global issue
of climate change. The United States would also benefit from this
effort, as increased volume of clean technology sales helps to reduce
prices and make the best technology more affordable to retrofit on
existing U.S. facilities.
My other amendments are perhaps somewhat more specific in nature. In
light of China's less-than-sterling record of abiding by previous trade
agreements, these amendments are focused on increasing the transparency
of Chinese Government subsidies made to China's many state-owned
enterprises, and on improving existing U.S. procedures for acting on
dumping complaints. China has made vague promises about not dumping and
about not providing unfair subsidies to her enterprises. Yet China has
also staked a verbal claim to the status of developing nations, which
would exempt her from any sanctions with regard to subsidies made to
Chinese industries. My amendments would require reports on China's
state-owned enterprises--what's wrong with that?--and the advantages
they enjoy, which would better enable us to determine if China's
actions are fair.
Another of my amendments would add certainty to the sometimes
excessively lengthy process used to determine if such subsidies have
adversely affected U.S. companies and U.S. workers. These amendments
will help us better to protect American manufacturers, American jobs,
American workers, and American families from unfair trade practices.

American trade negotiators have crowed that, in the U.S.-China
Bilateral Trade Agreement, the United States has given up nothing,
while the Chinese have made substantial concessions and have offered to
significantly lower tariff rates on certain goods. But I argue that the
United States is giving up something substantial, though not directly
through the U.S.-China Bilateral Trade Agreement. We are making our
part of the bargain now. We are giving up our annual review and
extension of normal trade relations with China in favor of a permanent
normal trade relations status. And we are doing it now, before China
has to make a single concession as a result of the bilateral agreement,
which, like PNTR, is contingent upon China's accession to the WTO. But
I suspect that the Chinese may also be gambling on the fact that having
once made the plunge in granting PNTR to China, the United States will
give it to them even if they never make it to the WTO, or even if the
details of the bilateral change are ignored. That is the way we are,
and the Chinese know it as well as I do.
We have an obligation to our constituents and to the citizens of our
great Nation to look out for their best interests. The Constitution
gives us a role. Yes, it does. This is the Constitution that I hold in
my hand for all to see through that electronic eye. This is the
Constitution. Article I, section 8 gives Congress the power to regulate
interstate and foreign commerce. So why don't we utilize that power?
Why don't we utilize it? The Constitution gives us a role in regulating
foreign commerce. I am not sure that we perform that obligation very
well. We grant--I don't--fast-track authority to the Executive to
negotiate massive trade deals and leave ourselves without the ability
to amend. We take away the Senate's right under the Constitution to
amend. We grant fast-track authority to the Executive to negotiate
massive trade deals and leave ourselves without the ability to amend
them, as we did with NAFTA and GATT, both of which I voted against--
proudly, I voted against both.
My State certainly did not benefit from those actions. West Virginia
lost

[[Page S8065]]

jobs and lost a lot of the diversity in its manufacturing base. China
is an enormous potential market, perhaps, but she is also an enormous
labor pool competing for jobs and competing at a price advantage. Our
economy is strong, but we cannot all sit at computer keyboards and be
information age technology wizards. As a Nation, we also need to
actually make things and grow things. Production and farming are
important. But I would not invest in planting a new apple orchard right
now, with Chinese apples and apple juice flooding the U.S. market. I
would think twice about establishing a new assembly plant or some
factory right now that faces competition from lower-paid workers in
China, who do not have the same labor protections that workers in the
United States enjoy and deserve. The future is uncertain and cloudy.
Who will get the prize? Chinese or American workers? Will China be
rewarded despite a history of broken trade agreements, weapons
proliferation, religious repression, poor labor protection, and
aggressive foreign policy statements? Will China be rewarded before the
final trade issues concerning subsidies have been inked in? Or will
American workers enjoy a respite? Will American concerns for security,
human rights, and fair trade hold sway for a little while longer? I say
to my colleagues, let it wait. Let it wait. This debate, this vote, can
wait until we have the leisure and the will to do it right. If we
persist in this misguided charade of a debate with no intention of
considering any amendments on their merits, I will fulfill my
obligations. I will offer amendments--good amendments, useful
amendments, not dilatory amendments. I hope they will not be tabled
simply to avoid a vote up or down, to avoid going to conference.
At this time, I believe it would be extremely unwise to simply rubber
stamp the House bill and approve PNTR with China without amendments.
Granting PNTR to China with no amendments and no conditions signals
that the U.S. Congress has given up on putting worker rights and
environmental standards on the international trade agenda. Coupled with
the rhetoric of the President, the Vice President, and the U.S. Trade
Representative in support of PNTR, congressional acquiescence will
reduce American credibility on labor and environmental issues to
virtually nothing.
At this time, it is not known whether China will actually apply for
membership in the WTO. But one thing is clear; the Chinese Government
has not wavered in its absolute opposition to any consideration of
labor rights and social standards in the WTO. Despite claims that a
market economy is bringing democracy to China, the U.S. State
Department's 1999 human rights report on China concludes that the
Chinese Government's ``poor human rights record deteriorated markedly
throughout the year, as the government intensified efforts to suppress
dissent, particularly organized dissent.'' Documented human rights
violations include torture and mistreatment of prisoners, forced
detentions, denial of due process, and extra-judicial killings. Violent
repression of all efforts to organize independent union activity
continues.

Given such a record, it would seem unbelievable to many that the
United States Congress would grant a green light to PNTR with China,
without so much as even a nod toward conditions or amendments.
Are we to turn a blind eye to every deeply held principle we have as
a people about justice, freedom, and right and wrong for the pie-in-the
sky promises of economic gain? I hope not. For that would be much, much
more than a sell-out. That would be a shame.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, I rise with deference and not a small
measure of awe at the continued erudition of my colleague from West
Virginia. The first decision I made when I came to the Senate was to
support him for majority leader, and I have not made one of equal
consequence since. None has given me greater pleasure.
I say on the question of amendments that it is a point of
significance. When the Finance Committee reported a measure on its own,
it was a two-page bill. It was not a complicated matter. It was just
agreed to. It will allow us to reap the benefits of an agreement that
was reached between two countries.
Now, I must say with absolute openness--and I hope always to be such.
Yes. It is the hope of the managers of the legislation that the Senator
from Delaware, the chairman of the Finance Committee, and the ranking
member, that we not amend the House bill. We have agreed to take up
H.R. 4444, because if we amend it with a semicolon, it will require us
to go back. The bill will go back. I do not have to tell the Senator.
It will have to go to conference and pass the House again, and then
come here and pass the Senate. Time has run out. This would have been a
wholly acceptable and sensible approach in May, but here we are in
September of an election year in the last weeks of the Senate.
So the Senator from West Virginia is right. He said he has read it in
the newspapers. I stand here to tell him that it is the case. I hope we
made no effort to conceal this. It is simply our judgment and the
administration's judgment.
I would like to say one last thing about fast track. The Senator
could not be more correct--that we have given up our right to amend the
trade agreements. But we did that in the aftermath of the disastrous
experience, which was the Smoot-Hawley Tariff Act of 1930. If you were
to make a list of five events that led to the Second World War, Smoot-
Hawley would be one. We raised our tariffs to the 60-percent level by
trading on the floor in the most normal political process that works
very well in most matters. But in trade it can be ruinous. We reached a
level of tariffs of 60 percent. We were in that early stage of a sharp
market crash. The economy was down. But it came back up. But with
Smoot-Hawley, indeed imports dropped by two-thirds. And exports dropped
by two-thirds. The British went off free trade into commonwealth
preferences. The Japanese went to the Greater East Asian Coprosperity
sphere.
In 1933, with unemployment rates of almost 33 percent, Germany
elected Hitler chancellor.
So under Cordell Hull, that great statesman from Tennessee, and
Secretary of State under President Roosevelt, we began reciprocal trade
agreements. We gave the President the authority to negotiate reciprocal
reductions in tariffs without coming back for the formal approval of
the Congress. This was the predecessor of, the precedent for, the fast
track procedures that were established in the Trade Act of 1974. In
effect, the Congress itself said we will deny ourselves this
temptation, if you like. We can always take it back.
Indeed, right now the President has no fast-track authority. It
expired in 1994. He could not get it in the atmosphere of the divided
parties.
It is that atmosphere, too, that leads us to believe that we should
not send this measure back to the House. It had been thought that the
permanent normal trade relations bill might pass by two or three votes.
It was more, but not overwhelming. As the Senator from West Virginia
knows, here in the Senate Chamber 86 votes were cast in July on the
motion to proceed.
I want to be open about this matter, if I can, and as I am. There is
nothing more to say than what I have said, save that I believe I have
more time--possibly 3 hours--apportioned to me in this debate. If the
beloved President pro tempore--and all of those things--would wish more
of my time to speak further, he would only have to ask.

Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, I thank the very distinguished senior
Senator from the State of Alexander Hamilton, New York. Alexander
Hamilton was the only one of the New York delegation who finally signed
the Constitution. He was one of the truly great statesmen in the early
life of this Republic. He helped guide the people of that delegation at
the Convention to a resolution concerning this great document, and one
who helped, along with John Jay and James Madison, to write those, if I
might use the word, ``immortal'' papers, the Federalist Papers. He
helped to win the approval of the State of New York for the
Constitution.
There is no one with whom I would rather, very honestly, discuss this
particular subject in the Senate than the

[[Page S8066]]

Senator from New York because I am so opposed to the view that he has
just expressed. I am so opposed to it. I could with much greater
passion say that if it were someone else.
I respect the Senator. I admire him. I know he was and is the great
teacher. I wish I had had the good fortune to sit in a class and listen
to Senator Moynihan speak as a Professor.
I am proud to say that I had much to do with Senator Moynihan's being
a member of the Finance Committee, as he also had to do with my
becoming majority leader.
But I am very, very much opposed to this approach. I am very, very
much opposed to and somewhat chagrined and disappointed, I say with due
apologies to my friend, at the philosophy which seems to govern the
Senate at the moment with respect to this legislation, with respect to
not adopting amendments.

The distinguished Senator has had no hesitancy whatever. He is not
doing something behind closed doors or under the table or under the
desk, but sitting it on front of the desk: This we are doing and this
is why we are doing it.
He honestly believes that is the best for his country. I admire that.
I respect the Senator for that forthrightness. He would not be
otherwise but forthright. I respect his reasons, therefor. However, I
cannot agree with him. I am totally, absolutely, unchangeably,
unalterably set in my viewpoint that this is not the right thing to do;
it is not in accordance with the Constitution of the United States; it
is not in accordance with the wishes, the intentions of the framers. So
be it. I am not going to argue that point. We will just disagree and be
as great friends as we have ever been. And the Senator will win when we
cast our final vote on this. His conscience will be clear and mine will
be clear.
My State has lost under these trade agreements--GATT. Our country has
lost under NAFTA. It is my understanding that we have lost 440,000
workers in this country as a result of NAFTA. Those are the statistics
my staff has been able to get from the administration.
As I say, I will not belabor the point further. I thank the
distinguished Senator for leadership that he has given the Senate. He
is a man who has always enjoyed the respect of his colleagues whether
he agrees or disagrees in a particular matter. He doesn't go out of
this Chamber and carry it with him. We all love him, and we will all
hate to see him go. But I will say to him, of his illustrious words
that have been spoken in the Senate so many times, I have very
carefully listened to them, and they will never dim from my memory.
The PRESIDING OFFICER. The Senator from New York's time has expired.
Mr. MOYNIHAN. I ask for an additional 1 minute to thank my
illustrious, incomparable colleague for his remarks.
I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. BYRD. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BYRD. Mr. President, inasmuch as no Senator seeks recognition,
and there is a little time remaining before the Senate goes back to the
appropriations bill dealing with energy and water, I ask unanimous
consent that I may speak for not to exceed 10 minutes without the time
being charged against time under the rule.
The PRESIDING OFFICER. Without objection, it is so ordered.

____________________