[Congressional Record Volume 146, Number 142 (Wednesday, November 1, 2000)]
[Senate]
[Pages S11457-S11459]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              TRADE ISSUES

  Mr. MOYNIHAN. Mr. President, the majority leader has, on several 
occasions, noted that this Congress, particularly this session of this 
Congress, has been singular in the number of major trade measures that 
have been enacted.
  With the cooperation of the minority leader, with the full support of 
the chairman of the Finance Committee, Senator Roth--who was here just 
a moment ago but whose schedule required that he leave as soon as the 
unanimous consent measure was adopted--we have agreed to major trade 
legislation with sub-Saharan Africa --that entire part of the 
continent; to expand the Caribbean Basin Initiative, which is hugely 
important in the aftermath of the North American Free Trade Agreement--
which suddenly put island nations and nations on the isthmus below 
Mexico at a disadvantage, which no one intended and which we have now 
been able to redress in some considerable measure. The permanent normal 
trade relations with China was one of the most important pieces of 
legislation we have dealt with in a half century in the Congress. And 
we passed the Tariff Suspension and Trade Act of 2000, granting, among 
other things, permanent normal trade relations to Georgia, just last 
week.
  Now as the closing days are at hand, or may be at hand--in any event, 
it is the first of November--we have taken this action by unanimous 
consent to adopt an amended version of the FSC Repeal and 
Extraterritorial Income Exclusion Act of 2000. That is a long title for 
a simple proposition. The World Trade Organization ruled that a measure 
in our Tax Code which has been in place for many years now, the Foreign 
Sales Corporation, which gave a tax benefit for income earned 
overseas--it was to encourage overseas sales--was contrary to the World 
Trade Organization rules.
  I think we do not disagree; when we look at the rules, look at the 
law, the ruling was correct. But we had to then change our laws in 
order to give equivalent treatment to American corporations working 
overseas so that they would remain competitive in those markets, but 
would not be in violation of the WTO rules. If we were not to do that, 
sir, and do it today, we would be subject to $4 billion a year in 
tariff retaliation from the European Union. It had the potential of a 
ruinous trade war. We have seen the animosity that arises over bananas. 
How the United States ever got into the business of exporting bananas, 
I do not know. I think I understand some of the politics involved, but 
that was unfortunate. But look at how quickly reactions occurred in 
Europe. Just wait, if $4 billion in retaliatory tariffs were to close 
off American access to European markets selectively--the more sensitive 
items chosen, the greatest damage doable--if that were the disposition 
of the ministers in Brussels, and it might well be.
  Well, it is not going to happen. We have done this properly. It is no 
coincidence that the Finance Committee, under the chairmanship of my 
revered friend from Delaware, Senator Roth, adopted this measure--it is 
a House measure, of course--on the same day we passed out the bill to 
grant China permanent normal trade relations. These are trade matters 
of great importance.
  We did it. The House and Senate subsequently agreed to a slightly 
different version, which we have adopted today. It will have to go back 
to the House. There will be no problem. The House conferees have 
already agreed, in the comprehensive tax bill and the Balanced Budget 
Refinement bill, to the exchanges.
  So it is a good day and a good morning's work. Not every morning do 
we avoid a trade war. This morning we did. We did not have an hour to 
lose. The deadline was November 1. We often do things at the last 
minute around here. But we often do things well also.
  I see my friend from Texas is on the floor. I know he would agree 
that avoiding a trade war over the Foreign Sales Corporation is a very 
good thing indeed. We have done it this morning with not a moment to 
lose. My friend from Texas will recall the deadline of November 1. And 
it is now November 1. We have done well.
  I thank Senator Durbin and others who had amendments they wanted to 
offer--Senator Wellstone, Senator Bryan. They had every right to do so, 
and they could have done so. They chose not in the larger interest of 
the United States. I think we should express our particular gratitude 
to them for their forbearance.
  I have said my piece. I thank all on behalf of Senator Roth and the 
Finance Committee, which acted unanimously in this regard. We have 
dodged a big bullet. We did it usefully and quickly in the spirit of 
cooperation about trade matters, which will mark this Congress. Perhaps 
we might even get that fact reported in the press somewhere. If not, we 
can maybe start a web site of our own. It would be worth it.
  Mr. President, I thank you for your courtesy. I see the assistant 
majority leader on the floor, and I yield the floor.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I ask unanimous consent to address the 
Senate for 2 minutes.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. NICKLES. Mr. President, I thank my colleague from New York for 
his leadership, as well as Senator Roth.
  This is an area where we have worked in a bipartisan way with the 
administration. It is important on international trade work. It is 
important that we avoid countertariffs that could possibly be enacted. 
I think it is good

[[Page S11458]]

news. I am glad we were able to get it passed. I am glad we could have 
some bipartisan cooperation. I think in many respects that is due to 
the leadership of the Senator from New York and the Senator from 
Delaware. I compliment both for their leadership, and I am pleased we 
are able to pass this legislation today.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I am actually going to take about 2 
minutes. I know Senator Durbin wants to speak.
  I say to Senator Moynihan from New York that it is an important bill. 
There were a number of us, however, who objected. I know how strongly 
Senator Moynihan feels about this legislation. I know that this is an 
important issue in our trade policy. I want him to know, given the 
tremendous respect I have for him--I think the tremendous respect that 
every Senator has for him--that for my own part my standing objection 
was focused not so much on the substance of this legislation. It was 
what some of us have been talking about over and over again, which is 
that the Senate cannot function as a great institution when Senators 
are not allowed to bring amendments to the floor.
  There are some aspects of this bill that bother me. One of them has 
to do with hundreds of millions of dollars of subsidy for the tobacco 
industry to peddle tobacco in poor countries and in developing 
countries, which I think has the consequence of killing children. We 
don't need to be subsidizing this. Senator Durbin is far more the 
expert. He can speak more about the substance of it.
  I wanted to offer an amendment. I wanted to join Senator Durbin with 
an amendment to knock this corporate welfare subsidy to tobacco 
companies out.
  I am also concerned about additional subsidies that go to the 
pharmaceutical industry, and, frankly, the doubling of the subsidy that 
goes to arms exports.
  The point is that it is hard to be a good Senator and it is hard for 
the Senate to be a good Senate when we don't have the opportunity to 
come to the floor with amendments and try to improve a piece of 
legislation. Senators can vote up or down. I know that Senator Moynihan 
is in favor of this process.
  I take exception with the majority leader over the way we are doing 
this. Now we are at the very end of the process, and we certainly don't 
want to see harsh consequences as a result of this not going through. 
That is why I won't object.
  I will listen to the counsel of the Senator from New York. I find his 
counsel usually to be wise counsel.
  I hope the Senate will operate differently and that there will be an 
opportunity for Senators to come to the floor with amendments and to be 
legislators to try to improve policy.
  I find it outrageous, unconscionable, and egregious that we still 
have corporate welfare for the tobacco industry to peddle its death 
products to other nations and ultimately end up killing young people 
and children. That to me is outrageous.
  I yield the floor. I yield my time to Senator Durbin.
  Mr. MOYNIHAN. Mr. President, I thank the Senator from Minnesota. He 
feels strongly. And he is right. But there are moments when we just 
have to get something done and go on to the next measure.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Texas is recognized.
  Mr. DURBIN. Mr. President, it is my understanding that Senator 
Wellstone yielded to me the remainder of his time.
  The PRESIDING OFFICER. He did, but the order was for the Senator from 
Texas to proceed.
  The Senator from Texas.
  Mr. GRAMM. Mr. President, if the Senator from Illinois is going to 
talk about the issue before us, I would like to grant him the courtesy 
of letting him go ahead and speak. I am going to thank the Senator from 
New York, as I always do. But I want to speak about another subject. If 
he wants to talk about this subject, let me yield to him, and if the 
Chair will come back to me when he finishes his 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Illinois.
  Mr. DURBIN. Mr. President, I thank my colleague from the State of 
Texas. We disagree on substance but we have a cordial relationship on 
the Senate floor. I thank him for his courtesy.
  I also congratulate Senator Moynihan for his leadership in the 
closing months of this session. Senator Moynihan, as he is facing 
retirement, has really been a leader on issues that will have a lasting 
impact on this world. It has been the hallmark of his congressional and 
public career. I note in personal conversations with him that he takes 
great pride in these accomplishments. I believe they will inure to the 
benefit of this country for generations to come. I thank him for his 
great service to the State of New York and to our Nation throughout his 
public life.
  This morning I had an opportunity to object and could have been one, 
I guess, to stop this effort to enact at the last minute this Foreign 
Sales Corporation provision. I did not. The decision not to object was 
made after a lot of deliberation and consideration.
  I would like to describe the reason why I was prepared to object and 
offer an amendment, and to assure my colleague that they have not heard 
the end of this debate.
  This Foreign Sales Corporation provision is a $4 billion annual 
subsidy to over 7,000 companies in America which export overseas. 
Between 15 and 30 percent of their income from sales overseas will not 
be subject to taxes in the United States.
  That is a windfall to these companies. It is a windfall which gives 
them an opportunity for more profits and, I argue as well, to create 
more jobs.
  In many instances, in my State this Foreign Sales Corporation 
provision means that some of the major exporters from Illinois and 
across the United States have a chance to thrive and grow.
  I am one who is a Democrat and proud of it and proud of my labor 
support. But I also believe very passionately that globalization and 
free trade are the future.
  If they in fact are the future, we should do everything legally 
possible to encourage export that creates good paying jobs in the 
United States. And for that reason, I don't stand in general objection 
to the Foreign Sales Corporation. I believe that what we are talking 
about in this provision can be good for our economy and our workers, 
and in that respect I can support it. But I do have an objection to one 
element of it. When you look at the over 7,000 corporations that are 
going to benefit from this tax subsidy, you will find on that list 
names of three corporations which I would like to call to your 
attention: Philip Morris, R.J. Reynolds, and Brown & Williamson.

  To make it clear, we are saying that the companies that make tobacco 
products can now continue to sell them overseas with a subsidy from the 
Federal Treasury to the tune of over $100 million a year. We are saying 
to these purveyors of these deadly tobacco products that we, in fact, 
are going to help you in selling your product overseas.
  Allow me to put this in perspective. The tobacco companies I have 
named will have domestic profits in the U.S. of $7.2 billion, and we 
are giving them $100 million to subsidize the sale of tobacco products 
overseas. Some would stand up and say, well, Senator, why would you 
pick out the tobacco companies? If you are going to go after companies 
and the products they make, why wouldn't you go after a lot of other 
companies, too?
  Perhaps some arguments can be made along those lines. But let me tell 
you why I think we should deal with tobacco exports in a different 
manner than other products being exported. I will use for my evidence 
on this the statements of Philip Morris, self-published on their 
website as of 10 days ago. You see all these soft, little gauzy 
commercials about Philip Morris feeding poor people, helping the 
elderly, providing scholarships. My friends and those who are 
witnessing this debate, this is just eyewash. This is an effort by the 
tobacco companies to tell you they are warm and loving people.
  Well, these warm and loving people sell a product that kills 400,000 
Americans a year. The No. 1 preventable cause of death in America today 
continues to be tobacco. We have just enacted legislation giving a 
Federal tax

[[Page S11459]]

subsidy to these same tobacco companies to sell this deadly product 
overseas. Is there any doubt that it is deadly? Well, for decades, the 
tobacco companies said: You can't prove it; there is no science behind 
it. We can prove that tobacco may not be harmful.
  Well, they finally gave up on that sad and disgraceful claim. This is 
what their web site started publishing 10 days ago. This is Philip 
Morris. I will read it into the Record:

       Cigarette smoking and disease in smokers: We agree with the 
     overwhelming medical and scientific consensus that cigarette 
     smoke causes lung cancer, heart disease, emphysema, and other 
     serious diseases in smokers. Smokers are far more likely to 
     develop serious diseases like lung cancer than nonsmokers. 
     There is no safe cigarette. These are and have been the 
     messages of public health authorities world-wide. Smokers and 
     potential smokers should rely on these messages in making all 
     smoking-related decisions.

  Having said that, we have just awarded to the companies that make 
this deadly product, and want to sell it overseas, a $100 million-a-
year tax subsidy. Do you know what that means? It means that the United 
States of America, which for over a century has been a leader in public 
health causes around the world, is now going to be a leader in 
purveying this deadly cigarette and tobacco product in Third World 
countries.
  Visit any country that you choose overseas and look at what you see. 
With the exception of countries such as Poland which, surprisingly, has 
enacted good legislation to stop tobacco advertising that appeals to 
children, in country after country, you find the most outrageous, 
disgraceful activity by American tobacco companies subsidized by 
American taxpayers selling their deadly product overseas.
  In the Philippines, a very Catholic country, they give away these 
calendars showing religious images with American tobacco products. 
These are the things which American tobacco companies will now be doing 
with the help of this tax subsidy from Federal taxpayers.
  Allow me to tell you what we face here. Since 1990, Philip Morris 
sales have grown by 80 percent overseas. Smoking currently causes more 
than 3\1/2\ million deaths each year throughout the world. Within 20 
years, the number is expected to rise to 10 million, with 70 percent of 
all deaths from smoking in developing countries. Listen to this 
statistic. This ought to tell you how important this issue is to the 
world. Tobacco will soon be the leading cause of disease and premature 
death worldwide, surpassing AIDS, malaria, and tuberculosis.
  Do you take any pride as an American citizen that it is our tobacco 
companies selling these products to children and to unsuspecting people 
around the world, which will soon be the public health scourge of our 
globe? Do you take any comfort or satisfaction in the decision we have 
just made within a few minutes to give a $100 million subsidy each year 
to these tobacco companies so they can peddle this deadly product to 
kids and unsuspecting people in countries around the world? Can you 
hold your head up high as an American, proud that we are now 
subsidizing this deadly product? Can you visit these countries and see 
the Marlboro Man and all of the logos we have seen disappearing in 
America re-emerging in these Third World countries as more and more 
people are lured into tobacco addiction? Can you be proud as an 
American of that fact?
  I am not. I am saddened by it. I am saddened that this leadership 
refused to allow this bill to even be considered on the floor for an 
amendment. But that has been the story of the Senate for month after 
month. We have been afraid to face the reality of debate, afraid to 
face the tough votes. And for some members from those States that 
produce tobacco or happen to be friendly to tobacco companies, it would 
have been a tough vote. But these Senators have been protected from 
even facing this issue. It is a tax subsidy to tobacco companies that 
will literally kill people around the world.
  This country, of which I am so proud to be part, and the State I 
represent--I am so proud to be their Senator here--will become known to 
people around the world as the source of death and disease. People now 
are worried about death from malaria and tuberculosis and AIDS. Sit 
tight because in a few years you will see other deadly diseases coming 
across your land--emphysema, lung cancer, heart disease--from America's 
tobacco products. Marlboros, Camels, all of these products will be 
overseas.
  After they put on these sweet little commercials about how much they 
just love these children and they love these elderly people--they put 
on these sweet little commercials and spend a lot of money to tell you 
how lovable Philip Morris is--go to the Philip Morris web site and see 
what this lovable company sells to make the profits to take Meals on 
Wheels to an elderly lady.
  They sell a product which they now readily concede causes death and 
disease. After 40 years of denial, they finally admitted it. We have 
decided that we want to subsidize their efforts. It is a sad day in the 
Senate. I can certainly support this tax effort for the many 
corporations that will use it responsibly to sell good products 
overseas, but to think that this Senate will be party to this decision, 
it is a sad day.
  It is no surprise. A few years ago when we wanted to hold the tobacco 
companies accountable for their solicitation of children, it was 
stopped by the Republican leadership in the Senate. When the Clinton-
Gore administration said these tobacco companies owe Federal taxpayers 
for what they have done to them over the years as they settled, and pay 
the States for what they had done to their citizens as well, the 
Republican leadership said, no, stop the lawsuit; don't sue the tobacco 
companies; leave them alone. These poor tobacco companies, leave them 
alone. They only have $7.2 billion annually in profits.
  Well, I believe the Clinton-Gore administration is right. I believe 
the American people deserve this lawsuit. They deserve the tobacco 
companies being held accountable and they deserve that these companies 
finally stop soliciting our children, addicting our children, 
aggressively stop selling their products to our children. I have been 
in Congress for 18 years. For the last 12 years, I guess I have fought 
on this issue more than any other. I can assure my friends in the 
Senate it is not the end of the debate. To those who want to give this 
gift to the tobacco companies, they can expect this fight to continue.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.

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