[Congressional Record Volume 148, Number 55 (Monday, May 6, 2002)]
[Senate]
[Pages S3891-S3895]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


            ANDEAN TRADE PREFERENCE EXPANSION ACT--Continued

  Mr. THOMAS. Mr. President, I wish to speak a few minutes about trade 
and the several bills on trade that have been pending for some time.
  Trade promotion authority is the central element of what we are 
seeking to do. Trade is one of the most important issues with which we 
have to deal. Transactions are made around the world in the billions of 
dollars every day, and we need the authority to negotiate trade 
agreements that fit us into world trade and, at the same time, are 
favorable to the United States, which is a basic issue.
  The Senator from Nevada was saying a moment ago that we ought to be 
doing something about unemployment. I suggest doing something with 
trade promotion authority. This is one of the basic issues with which 
we have to deal in augmenting employment and stimulating employment.
  Agriculture is very big in my part of the country and 40 percent 
depends on foreign markets because we produce more than we consume in 
this country. I wish to comment a moment on where we are and what I 
hope can happen.
  The Andean Trade Preference Act has been amended to include three 
bills. It deals only with Bolivia, Colombia, Ecuador, and Peru, and it 
has expired. It needs to be reauthorized so we can deal with those four 
nations in terms of imports and exports. It was originally passed in 
1991 to provide an economic benefit to help those countries such as 
Colombia with which we have such concern about their internal 
conflicts, drug activities, illegal drug production and trafficking, 
and a number of issues that are of great importance to us.
  Time is running out to reauthorize the Andean Trade Preference 
Expansion Act. I hope we can reauthorize it. It is the underlying bill. 
But I have to tell my colleagues, in my view at least and I think in 
most everyone's view, trade promotion authority is really the basis of 
our concern. I am a member of the Finance Committee, and trade issues 
are handled in the Finance Committee. We handled these three issues not 
as one but as separate issues. I suggest that is what we ought to be 
doing: dealing with each bill separately.
  We found ourselves, however, in a position where those who are 
skeptical of trade promotion authority are insisting on much more in 
the trade adjustment bill as leverage for their support for trade 
promotion authority. On the other side, people who want trade promotion 
authority are saying: We will not do that unless you give us a little 
less on trade adjustment. So we find ourselves in a conflict.
  Trade promotion authority is generally known as fast track, which was 
passed by the committee in December by a 19-to-3 vote, a very strong 
vote. The discussions about all the aspects of the bill were held in 
committee, as they should be.
  Basically, trade promotion authority falls into two categories: One, 
the President's authority to proclaim changes in tariffs resulting from 
negotiations of reciprocal trade agreements; two, procedures for 
implementing provisions of such agreements which provide for changes in 
the U.S. law, basically known as fast track.
  Trade promotion authority is a process for the President or his 
representatives to negotiate, guided by rules that are in law. They 
bring those agreements back to the Senate when they are completed for 
an up-or-down vote. It is really the only reasonable approach we can 
take to accomplish negotiations. Obviously, 535 Members of Congress 
cannot do the negotiating for the country. The bill does provide a 
framework, an outline of how this can be done. Its purposes are:

  Obtaining more open and equitable market access; reducing or 
eliminating trade barriers and other trade-distorting practices; 
strengthening the system of trading disciplines and procedures, 
including dispute settlement; promoting full employment in the United 
States.
  It is true that every industry is not always treated the same. Some 
are very successful; others find it more difficult. That is, I guess, 
the reality we have in trade of any kind. That is part of it.
  This bill requires Presidential consultation with the Congress 
before, during, and after a trade negotiation. Without that, why, we 
will not have any agreements, and we have, indeed, fallen behind. This 
has been out of the system since 1994. Other countries have negotiated 
their agreements among themselves, particularly in South America, and 
we have not. We have negotiated relatively few.
  To the extent we can agree that trade is necessary, trade is good for 
us overall, then we have to have a system for negotiating and not sit 
back while the rest of the world negotiates agreements and expect that 
we are going to benefit from that situation.
  As I indicated, it does provide for Senators to be more involved. It 
provides legitimate opportunities for the Congress and others to 
express their concerns, which is proper.
  It provides for ongoing consultation and debate during the process of 
agreements.
  It creates an oversight group of Congress that is broad based and 
bipartisan.
  It sets up this system that gives input by the Congress and yet 
allows the President to make agreements and then bring them back to the 
Congress for acceptance or rejection.
  So we hear they are going to give him all the authority and have 
nothing to do with it. That is not the case. We still do have something 
to do with it. We do still have final approval as to what is done. So 
we need to be doing some of those things.
  A lot of the U.S. products, for instance, in agriculture still have 
very high tariffs in other places. Our good friends from Japan have 
very high tariffs on beef, for example, which comes partly from my 
State. So we need to be involved and protect our interests as well as 
be fair with others and participate in this whole business of trade. So 
it is important.
  As I mentioned, in agriculture, one out of every three acres planted 
is basically for export because we produce more. Under the farm bill 
that is pending, we will be producing even more if we do not run into a 
conflict with trade because of the farm bill itself. We will be talking 
about that starting tomorrow.
  In 2001, American farmers exported $55 billion in agricultural 
products. That supports a great number of jobs. I know people have 
different views about it. The fact is it is there and we need to 
participate. We can argue about how we do it and what the outcome is, 
but it is pretty apparent we need to participate actively in deciding 
how these things are going to be done. The European Union, for example, 
has 15 free trade agreements in which we are not involved. Mexico has 
signed 28 trade agreements; the United States has signed 3. So we are 
kind of being left behind in terms of what we are seeking to do.
  One of the problems which we are going to have to deal with--it has 
already been discussed a great deal, and I think it is being discussed 
now in terms of hoping to come up with some agreement--is the trade 
adjustment authority, which is a legitimate concern about being able to 
deal with people who might be put out of work and to have some kind of 
a program that would be helpful to them. There was a program in place, 
but it has expired. But we basically need financial and training 
assistance for workers displaced by import competition or for firms 
that face a significant adjustment. Those things were done in 
conjunction with NAFTA, and they increase the number of weeks 
adversely-affected employees could receive assistance.
  Now the question is: Are those made to be entitlements? Are those to 
be made welfare programs that are everlasting? How do we define who is 
available, who should be receiving those benefits? I think those are 
things we have to be concerned with when talking about upstream and 
downstream employees, people who are feeding into this industry who are 
affected. Where do we stop? How far do we go? How far do we go on the 
retail side? Without some definition, it could be a huge sort of 
welfare program, when it is designed to be an assistance program that 
helps people be trained and available to move back into the workplace. 
That is what it is for, and that should be our goal. I hope it will be 
the goal.
  We have had some unusual things happen since the bill has left the 
committee. It left the committee in one form, and now it has been 
amended

[[Page S3892]]

into quite a different form. So we go back to kind of where we were on 
the energy bill, where the committee did not have an opportunity to 
talk about it. So all those details, rather than being discussed in 
committee, which is the process normally used, have to come to the 
floor to be discussed because they have not been available to be 
discussed with recommendations coming from the bipartisanship of the 
committee.
  It is my understanding we are going to go to the farm bill tomorrow 
and Wednesday and conclude after 12 hours of debate on the report from 
the conference committee, and then we will be returning, after that, 
apparently to the trade promotion bills. I am hopeful we can deal with 
them in a direct manner, that we can deal with them with an attitude as 
to how important it is to the United States and what is our best 
process for getting the best arrangement for Americans to participate 
in trade, because we are going to be participating in it one way or 
another; there is no question about that.
  The question is: What kind of a process can we put in place that 
gives us the best opportunity to equally participate, to our benefit 
hopefully, in world trade? I look forward to the debate.
  I yield the floor.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HOLLINGS. Madam President, I ask unanimous consent the order for 
the quorum call be dispensed with.
  The PRESIDING OFFICER (Mrs. Lincoln). Without objection, it is so 
ordered.
  Mr. HOLLINGS. Madam President, we have had very little opportunity to 
really discuss trade. This bill was called up on a weekend, without 
debate. By Monday evening it was already moved for consent, so there 
was no debate whatsoever given to actually calling up the fast-track 
measure for consideration, to discuss it.
  We need a thorough discussion of exactly what is occurring in the 
globalization in world trade. I am sorry I do not have a greater 
audience, but I will speak for the purposes of at least getting it in 
the Record. Tomorrow we will be on the farm bill. There is a general 
slowdown with respect to the Dorgan amendment. We have only had one 
amendment up.
  I have a very important amendment relative to trade adjustment 
assistance. What we are providing, as I understand it, in the Daschle 
amendment as a substitute for the fast-track measure itself, is trade 
adjustment assistance for the legacy cause, for those in steel who had 
retirement, and when the plants closed, of course, they went broke and 
could not provide for that retirement.
  I am a strong supporter of that situation, so long as we can consider 
the post-NAFTA textile employees--we call them associates now, down 
south. Those associates who lost their jobs over the 8-year period 
since NAFTA was enacted, have not been able to find new ones. I will 
have a very important amendment.
  I have 53,900 who have made claims for unemployment. One of the 
distinguished leaders on the floor earlier today said he could not 
believe that figure. That figure comes from the Bureau of Labor 
Statistics, for those associates who have made claims for unemployment, 
having lost their jobs. I think it is just as important, or more 
important, since they have not been able to find any work, that they be 
taken care of, that they have available the measure called COBRA, so 
they can get their health care while they are looking. We are in 
desperate circumstances.
  Everyone knows of the wonderful success we have, and I share in it, 
with respect to the German industries. When I was governor of South 
Carolina, I visited Germany in 1960, to try to attract corporations to 
open plants in my state. In the 42 years since, I thought 117 companies 
had opened plants. But last week when I said that, the German 
Ambassador heard me and has updated the figure for me. It is now 125 
German industries. So we are rejoicing in the success of German 
investment in South Carolina, particularly everyone coming here for the 
BMW plant.
  But the unemployment rate for the BMW plant in Spartanburg, where it 
is located, was 3.2-percent last year. It is now 6.1-percent. The 
overall unemployment of the State itself is 6 percent.
  We are having a very difficult time replacing those jobs. At least we 
ought to be able to get trade adjustment assistance for those 
unemployed associates.
  I place with specific emphasis an article in the May 13 issue of 
Business Week, entitled ``Where The Recovery Won't Reach.''
  Madam President, I think it is important that I cover this now while 
others are not seeking recognition.

       Unlike bouncebacks of the past, many jobs recently lost at 
     American factories may be gone for good.
       The recession of 2001 may have been exceptionally mild for 
     the economy as a whole but it devastated U.S. manufacturing. 
     The number of manufacturing jobs fell from 18.5 million in 
     the middle of 2000 to 16.9 million today--a decline almost as 
     steep as during the harsh downturn of 1981-82.

  Let me divert for a moment to say that years ago Sony's Akio Morita 
told me that a country that loses manufacturing capacity will cease to 
be a world power.
  A generation ago, we had 26 percent of the workforce in 
manufacturing. Today, it is less than 12 percent. We are hardly 
producing anything.
  When the debate resumes, I will have the figures with respect to what 
we are not able to produce. The majority of what we consume in the 
United States in manufacturing, of course, is important.
  Back to the article itself:

       In the past, manufacturing employment typically rebounded 
     after a recession ended. After the 1981-82 downturn, 
     manufacturing got back about two-thirds of the jobs it had 
     lost. In the 1990s, growth in U.S. high-tech manufacturing 
     helped offset losses in industries such as steel and apparel. 
     By 1998, manufacturing employment had risen to only 11% below 
     its all-time high.
       This time, however, the bounceback may not be so strong and 
     the bulk of the manufacturing job losses may be permanent. 
     The sharp decline in U.S. corporate profits, combined with 
     the burden of a strong dollar, is forcing companies to take a 
     fresh look at how they can cut costs. And in an increasingly 
     global economy, they're deciding it's cheaper to use foreign 
     factories than domestic ones.
       The result: As U.S. demand rebounds, imports are rising far 
     faster than domestic production. First-quarter imports of 
     goods rose at a 10% annual rate, adjusted for inflation. 
     South Korean factories are ramping up production, while 
     electronics makers in Taiwan are restarting idle machines to 
     turn out chips, phones, and flat-panel displays. Meanwhile, 
     manufacturing output in the U.S. rose at a mere 3% annual 
     rate in the first quarter. What's worse, factory employment 
     shrank at a 6% annual rate, with no sign of a bottom.
       The failure to generate manufacturing jobs at home may 
     already be muting the recovery.

  Let me divert again to emphasize that it is not just the bankers in 
Japan. I am telling you--manufacturing, research, and high-tech both 
from the United States and Japan are all going to China.
  We are going out of business here. We are hollering ``free trade, 
free trade'' as if we are doing something to help the country.
  Incidentally, the assistant majority leader, the Senator from Nevada, 
just pointed out that there could be a closedown by our Republican 
colleagues later this week on the proceedings here in the Senate for 
their desire to confirm some 11 judges. Here they are talking about an 
emergency to close down proceedings and to close down the Senate for 
judges. We are looking for jobs, not judges.
  Let me go back to the article.

       The worsening of the trade deficit subtracted 1.2 
     percentage points from economic growth in the first quarter, 
     the Commerce Dept. says.
       And the economic drag appears likely to continue, as 
     manufacturers aggressively cut jobs even as demand picks up. 
     The employment index of the Institute for Supply Management 
     survey for April was 46.7, signaling further contraction of 
     the factory workforce. In recent days, DuPont announced plans 
     to cut about 1,400 U.S. textile manufacturing jobs, while 
     Kraft Foods Inc. said it would close a Chicago plant that 
     makes Shake 'N Bake coating mix. Maytag Corp. has transferred 
     four assembly operations to a maquiladora in Reynosa, Mexico, 
     and plans to transfer 12 others by August. In April, San 
     Francisco's Levi Strauss & Co., which once boasted of its 
     American-made clothing, said it would close six U.S. 
     factories and lay off 3,300 workers. That will leave it with 
     just two U.S. factories. Most of its clothing comes from 
     contractors in Latin America and Asia.
       Intense competition makes low-cost regions hard to resist. 
     In electronics manufacturing, for instance, the labor cost 
     for assembling printed-circuit boards--the guts of

[[Page S3893]]

     electronics gear--is about $7 to $8 an hour in the U.S., vs. 
     about 50 cents an hour in China, estimates Jeffrey A. Bloch, 
     vice-president for electronics manufacturing services at 
     iSuppli Inc., a supply-chain consulting firm in El Segundo, 
     Calif.
       The cost differential wasn't so compelling during the tech 
     boom of the late 1990s when companies like Cisco Systems Inc. 
     and Lucent Technologies Inc. were willing to pay extra for 
     the convenience of having production in the U.S., close to 
     their engineers and customers. ``Flexibility was more 
     important to them than cost,'' says Bloch. With the tech boom 
     over, he says, ``those industries have now decided to go to 
     the lower-cost regions.''
       Moreover, so much of electronics manufacturing has moved to 
     Asia already that it's cheaper and easier to build gear there 
     than to ship all the little pieces across the Pacific for 
     assembly in the U.S., says Jim Sacherman, chief marketing 
     officer for Flextronics International Ltd., the Singapore-
     based contract manufacturer. Flextronics says it will soon 
     have 75% to 80% of its production in low-wage regions, vs. 
     half in 2000. Once gone, production rarely shifts back to 
     high-cost regions. Says Sacherman: ``It's pretty hard under 
     any market conditions to say, `For these reasons, I'm going 
     to pay more.' ''
       Adding to their attractiveness countries such as China, 
     Mexico, Malaysia, and South Korea are moving up the 
     manufacturing learning curve, boosting their productivity 
     faster than in the U.S. In the second half of the 1990s, U.S. 
     manufacturing productivity rose at a solid 4.6% rate--but 
     manufacturing productivity in South Korea, for example, 
     improved nearly 12% a year.
       While most manufacturing jobs are in production, the 
     category also includes engineers, researchers, managers, and 
     support staff of manufacturing companies. Some white-collar 
     Americans are even moving to where the jobs are. To lure 
     Westerners and U.S.-based Chinese to a new billion-dollar 
     chip fab in Shanghai, China's Semiconductor Manufacturing 
     International Corp. is building an elementary and middle 
     school for their children.
       It's not just in technology that jobs are shifting abroad. 
     In North and South Carolina, the heart of the South's once-
     huge textile and apparel industry, many companies that had 
     been struggling to survive have finally capitulated. Worse 
     for them than the recession was the dollar's strength, 
     which triggered a flood of cheap imports. In the past two 
     years, the dollar is up sharply against the currencies of 
     apparel exporters such as Indonesia and South Korea.
       Mainly because of the dollar's impact on import prices, 
     retail apparel prices have fallen 3% over the past year. 
     ``The strong dollar is just wiping manufacturing out,'' says 
     Cass Johnson, an associate vice-president at the American 
     Textile Manufacturers Institute.
       Makers of machinery and steel are also suffering from the 
     dollar's rise. The job losses aren't even across industries. 
     Pharmaceuticals employment has increased 5% from a year ago 
     despite the recession. Auto industry employment is benefiting 
     from the construction of assembly plants in the U.S. by the 
     likes of Toyota, Honda, and Mercedes. Netting out Big Three 
     plant closings, productivity gains, and expansions by 
     Japanese, Korean, and German auto makers, ``auto employment 
     will hold even'' through 2010, predicts Sean McAlinden, 
     economics director at the Center for Automotive Research in 
     Ann Arbor, Mich.
       For employers, closing U.S. factories makes all the sense 
     in the world. For employees, it can be a terrible shock. Take 
     General Electric Co., a leading advocate of globalizing 
     production. It uses Mexican factories to make everything from 
     medical diagnostic gear to appliances. ``They really don't 
     give any real consideration to the impact of their decisions 
     on workers,'' says Edward Fire, a vice-president of the 
     Communications Workers of America. GE says it has generous 
     retraining and separation programs and continues to have a 
     vibrant U.S. production base.
       The ability of U.S. manufacturing to generate jobs at home 
     was one of the more pleasant surprises of the 1990s. The 
     inability to keep them here may be one of the unpleasant 
     surprises of this decade.

  Now, there it is. I had been pleading last week with respect to the 
outflow of manufacturing. I quoted the General Electric policy, which 
says they would not consider any supplier to GE unless the supplier 
moved its facilities into Mexico. Here is the best of the best in 
American industry, along with the U.S. Chamber of Commerce, the 
National Association of Manufacturers, the Conference Board, and the 
Business Roundtable, all arrayed to move and eliminate jobs from the 
United States of America. It is our duty, our responsibility, to 
maintain jobs, to maintain the economic strength and security of the 
United States.
  My friend, Robert Kennedy, who came to public acclaim for his book 
``The Enemy Within,'' sat at this desk, talking about labor. Today, I 
could write that same book--``The Enemy Within''--and it would be about 
management. That is our competition.
  We are like that fifth column in the civil war in Spain. We are 
having the particular trade policy of the United States made downtown 
on K Street. They bring it to the White House; get general approval for 
it; move to fix a vote on the House side; and barely get it--the White 
House got it by one vote, by promising to have a fundraiser. And 
President Bush went to the textile Piedmont to fulfill his commitment 
for that one vote. So they now have passed fast track.
  Over on this side, having gotten through, of course, the Finance 
Committee, they now have the 60 votes to go ahead and enact fast track 
without any provisions whatsoever. As a result, as you can see this 
afternoon, where we have it now up for debate, there is no one here to 
listen, for the simple reason: everybody knows the score. The vote is 
fixed. Why listen to the debate? Let's get it over with. We have a lot 
of work to do.
  That is not how we should fulfill our responsibility under article I, 
section 8 of the Constitution. It is not the President, not the Supreme 
Court, but the Congress that shall regulate foreign commerce.
  So much for manufacturing it is all high-tech, high-tech. I have had 
to listen to that nonsense for the last 10 years. Retraining, 
retraining. I have retraining coming out of my ears. I can retrain for 
any kind of job anywhere at any time.
  Then there is globalization. I don't want to sound like Al Gore, that 
I invented globalization, but a moment ago I said 40 years ago I went 
on trade missions to Europe, as well as to Latin America. Now we have 
125 German plants in South Carolina. We have Michelin there, with four 
facilities and its North American headquarters. We have Bowater's North 
American headquarters in Greenville, SC.
  Oh, yes, we have been working on trade. So don't start and act as if 
there is a sudden change and you old fogies have to understand 
globalization. And you have to understand and know about retraining 
and, more particularly, high-tech, high-tech.
  Bunk.
  Listen to this: the New York Times, dated April 21: ``Japan Braces 
for a `Designed in China' World.'' Let me repeat that: ``Japan Braces 
for a `Designed in China' World''--because that is the country that out 
manufactures us. Japan has about 126 million people. We have 280 
million people. We had a huge running start. Japan was decimated at the 
end of World War II. We had the only industry. Now, in a 55-year 
period, they are out manufacturing and out producing the United States 
of America.
  Here is what they are doing. This article was written by James Brooke 
from Tokyo for the New York Times.
  I quote:

       In recent decades, Japanese companies invested to make 
     China the ``factory to the world.'' In recent months, Japan's 
     blue-chip manufacturers announced investments to make China 
     the ``design laboratory to the world.''
       In a cascade of announcements this spring, blue-chip 
     Japanese manufacturing companies said they were planning 
     research and development units in China. Spurring the moves 
     are the low wages of Chinese engineers, a growing Chinese 
     market for computer chips and the hope that China's entry 
     into the World Trade Organization will bring protection for 
     patents.
       The crumbling of an informal wall that long kept assembly 
     in China and research here may spell the end of Japan's last 
     great competitive advantage over its low-wage neighbor. And 
     it is yet another step in China's rise, one that means both 
     new opportunities and wrenching change for Japan, which has 
     lately been coasting on wealth built up in earlier, high-
     growth decades.
       Today's young Japanese have grown up in affluence, taking 
     for granted high wages and their nation's status as the 
     world's second-largest economy. But older Japanese returning 
     from visiting Chinese factories and laboratories report that 
     the hard-working, self-sacrificing Chinese workers remind 
     them of the Japanese workers of the 1960's.
       As more and more Japanese manufacturing migrates to China, 
     the research and development activity is gradually following, 
     to be close to production.
       ``China is quickly becoming a country of low wage and high 
     tech,'' Yotaro Kobayashi, chairman of Fuji Xerox, warned 
     recently, echoing the spreading insecurities here. ``They are 
     going to prove to be extremely competitive with Japanese 
     companies.''
       China, with an economy only one-quarter the size of 
     Japan's, has a long way to go. But the thousands of computer 
     engineers graduating annually from Chinese universities are 
     enough to keep wages at one-third the level in Japan, a 
     country facing a shortage of

[[Page S3894]]

     engineers. With the number of 18-year-olds decreasing, 
     colleges across Japan are closing because of a shortage of 
     students.
       Many of the biggest recent investments involve some of 
     Japan's biggest technology names. This month, the Matsushita 
     Electric Industrial Company opened a research and development 
     laboratory in Suzhou, China, for household appliances. By 
     2005, this lab and a Matsushita cellphone lab that open in 
     Beijing last year will employ 1,750 Chinese engineers.
       Last month, the Nomura Research Institute, a leading 
     Japanese systems integrator, began outsourcing software 
     projects to China in an effort that will employ 1,000 Chinese 
     software engineers by 2005. The Toshiba Corporation is 
     planning a tenfold increase in the number of engineers at its 
     new chip development center in Shanghai, to 1,000 by 2004.
       ``We intend to enlarge the R&D function in China,'' Yukio 
     Shohtoku, managing director of Matsushita Electric, said the 
     day after the lab opened. The complex, in Jiangsu province, 
     200 miles northwest of Shanghai, will concentrate on 
     developing air-conditioners, lights, refrigerators and 
     washing machines. His company, he added, does ``as much 
     software development outside Japan as possible'' because it 
     does not have enough engineers and the cost of engineering is 
     high in Japan.
       Japanese companies are not pioneers in China. By the end of 
     2000, 29 multinationals, including Lucent Technologies, 
     Microsoft, and I.B.M. of the United States, Alcatel of France 
     and Nokia of Finland, had opened research and development 
     units in China.
       Typical of Japan's investment frenzy this spring, Yomiuri, 
     a daily newspaper in Tokyo, recently ran a banner headline, 
     ``Toshiba Plan I.T. Plant in China,'' over an article that 
     cited company sources as saying the electronics concern 
     planned to spend hundreds of millions of dollars to build a 
     huge information technology production and research complex 
     outside Shanghai. A Toshiba spokesman, Hiroyuki Izuo, 
     immediately denied the report. But given the wealth of detail 
     and Japan's tradition of news leaks, many business analysts 
     here believe that Toshiba is preparing a major project.
       Japan Inc.'s new scramble to show individual 
     competitiveness looks a lot like Japan's old herd instinct. 
     Hitachi, Sony, Pioneer, Fujitsu and NEC are just some of the 
     other blue-chip companies that have announced plans recently 
     for research and development units in China.
       Two weeks after the Mitsubishi Electric Corporation opened 
     an elevator research unit in Shanghai in February, a major 
     rival, the Toshiba Elevator and Building Systems Corporation, 
     opened a research unit, also in Shanghai. And two weeks after 
     plans were announced for the Honda Motorcycle R&D China 
     Company in January, the Yamaha Motor Company announced that 
     it would open a research and development unit in or near 
     Shanghai in 2003.
       About 80 percent of the 11 million motorcycles made in 
     China last year were copycats of Japanese models, according 
     to the Japan Automobile Manufactures Association. With China 
     now in the World Trade Organization, Japanese manufactures 
     hope that it will crack down on sales of ``Yamehas'' and 
     ``Suzakis.''
       Much of the new Japanese push into China is in 
     semiconductor design and production, long an area of Japanese 
     strength. The heavy investment this year comes after the 
     worst year by far for global chip market, but a year in which 
     chip demand in China grew about 30 percent. It is expected to 
     grow another 30 percent there this year.
       Fueling this chip demand, China is now the world's largest 
     market for cellphones, and by 2006 is expected to surpass 
     Japan as the No. 2 market for PC's, after the United States. 
     In 30 years. China's population is expected to grow to 13 
     times that of Japan, from 10 times greater today.
       Chinese chip demand is expected to quadruple by 2010, to a 
     $48 billion market, Richard R. Chang, president of the 
     Semiconductor Manufacturing International Corporation, said 
     in a speech here. His company, 38 percent owned by Royal 
     Philips Electronics, the Dutch giant, is part of a series of 
     Chinese chip makers whose executives have visited here in 
     recent weeks to drum up investment.
       A surge is also expected in the number of high-tech 
     workers. At an information technology conference here last 
     month, Liu Jiren, chairman of the Neusoft Group, China's 
     largest software company, told Japanese investors that in 
     five years Chinese universities ``will produce 5 to 10 times 
     as many engineers as now.''
       Over all, Japan will be short 300,000 high-technology 
     workers within three years, a Japanese government study 
     warned recently. Despite this shortage, hundreds of Japanese 
     managers and engineers, many forced into early retirement, 
     now work in China, usually for lower pay.
       The flow of investment, both human and financial, is 
     changing the nature of China's export to Japan. Ever since 
     Japan and China established diplomatic ties in 1972, the two 
     largest Asian economies were seen as complementary.
       ``There is a clear division of labor between the two 
     countries, with China specializing in labor-intensive 
     products and processes, while Japan concentrates in high-tech 
     products,'' C.H. Kwan, a senior fellow at the Japanese 
     government's Research Institute of Economy Trade and 
     Industry, wrote in a report six months ago. ``China's exports 
     look like Japan's imports and vice versa.''
       In this relationship, China has sold goods like towels, 
     coal and spring onions to Japan, and Japan has sold laptops, 
     digital cameras and DVD players to China. Now China produces 
     and exports all these goods. The high-technology portion of 
     China's exports has more than tripled, to 18.5 percent last 
     year form 5 percent in 1985. But the goods produced by 
     Japanese companies have largely been designed in Japan.
       The Japanese have long prided themselves on quality 
     production, relegating Chinese-made goods to discount shops, 
     Now, Japanese manufacturers and consumers say they do not see 
     much qualitative difference between Made in Japan and made in 
     China.
       In a recent survey of 81 Japanese companies operating in 
     China, 62 percent of managers said they saw no difference in 
     the quality of products made in Japan from those made in 
     China. Fifteen percent said the Chinese products were of 
     better quality, according to the poll, which was commissioned 
     by The Nikkei Business Daily, Japan's leading business 
     newspaper, and Japan Management Association Consultants, a 
     private industry group.
       These tectonic shifts are rattling the increasingly 
     insecure Japanese. In the 1990's China's economy grew seven 
     times as fast as Japan's. Such statistics help populist 
     politicians fan the flames as they play on Japanese fears of 
     this emerging--and ambitious--economic giant next door.
       Last year, Japan reduced its foreign aid to China by 25 
     percent, to $1.2 billion, the biggest cut since aid started 
     in 1979. The cut was not big enough for Shintaro Ishihara, 
     Tokyo's populist governor, who warned voters last month 
     that Japan ``has been providing H-bomb-producing China 
     with hundreds of billions of yen every year from your tax 
     money.''
       According to the Kyodo News agency, Ichiro Ozawa, a 
     conservative opposition leader, warned recently that if China 
     `` gets too inflated, Japanese people will get hysterical.''
       ``It would be so easy for us to produce nuclear warheads,'' 
     he continue.
       But with Japan rivaling the United States as China's 
     biggest economic partner, such hostile talk has prompted a 
     series of ``China is not a threat'' statements.
       The growth of the Chinese economy will not be a threat for 
     Japan,'' Li Peng, chairman of China's Parliament, told 
     Japanese investors in Japan this month in one such sally. 
     ``The size of the Chinese economy is still small compared 
     with that of Japan.''
       Full economic cooperation with China will continue, Japan's 
     prime minister, Junichiro Koizumi, vowed this month in a 
     speech at an Asian economic conference in China.
       ``Some see the economic development of China as a threat,'' 
     Mr. Koizumi said. ``I do not. I believe that its dynamic 
     economic development presents challenges as well as 
     opportunities for Japan.
       I see the advancement of Japan-China economic relations not 
     as a hollowing out of Japanese industry but as an opportunity 
     to nurture new industries in Japan and to develop their 
     activities in the Chinese market,'' added the prime minister, 
     an advocate of free-market changes at home.
       In an exercise in raising morale, Mr. Koizumi recently 
     visited two Japanese high-technology companies in Tokyo and 
     said: ``I feel Japan's potential is high. Japanese people 
     should be more confident.''
       Many business people in Japan think that China's growth 
     will provide jobs for the Japanese in new ways. For example, 
     a consortium of companies in the Japan Railway group is 
     talking with China about selling technology and materials to 
     build a Japanese-style ``shinkansen'' bullet-train system in 
     China.

  We are having a hard time getting Amtrak going, and here they are 
building bullet train systems in China. We cannot get a national 
passenger defense rail system in this country because we are worried 
about 11 judges. We are not getting with the program. Terrorism war? 
Trade war, Madam President. It has been going on. We have been losing 
our shirts. We have been losing the war, but that is what it is. It is 
a war without guns and without bombs and planes and tanks. But it is an 
economic struggle in competition. There is nothing free about this war; 
I can tell you that right now.

       But looking 25 years ahead, when China's economy is 
     expected to surpass Japan's, some Japanese say they will have 
     to adjust to playing a secondary role to their huge neighbor.
       ``Over the last 4,000 years of history, Japan has been a 
     peripheral country to China, with the exception of this one 
     last century,'' said Kenichi Ohmae, author of ``China 
     Impact,'' published in Japan this month. ``In the future, 
     Japan will be to China what Canada is to the United States, 
     what Austria is to Germany, what Ireland is to Britain.''
       Despite the move of higher and higher technology 
     manufacturing and research to China, for the near term at 
     least Japan will retain an edge in animation, video games and 
     the most advanced consumer electronics, Mr. Ohmae predicted. 
     The Nintendo Company, for instance, produces 70 percent of 
     its GameBoy Advance units in China and plans to start 
     producing GameCube video-game consoles there this summer. But 
     like most Japanese multinationals, Nintendo keeps most of its 
     research and design in Japan.

[[Page S3895]]

       Not content to write about China's high-technology boom, 
     Mr. Ohmae, former chairman in Japan of McKinsey & Company, 
     the consulting firm, is investing in back-room data 
     processing and telephone information call centers in Dalien, 
     China. Both operations take advantage of the linguistic links 
     of China and Japan and new fiber optic telephone and high-
     speed data connections. ``Half a million Japanese-speaking 
     Chinese live in northeastern China.'' Mr. Ohmae said, 
     referring to an area with long investment ties to Japan. 
     ``The costs are one-tenth that of Japan.
       ``There is no border,'' he added, spinning a future of ever 
     closer economic integration. ``Part of the business goes to 
     China. Part remains in Japan. I don't see a clear, industry-
     by-separation of China and Japan.''

  Madam President, these are the things the Senate ought to be paying 
attention to. We need to pay our bills, rebuild the economy, cut out 
this Enron accounting of on-budget/off-budget, unified budget, and all 
the fancy words. Enron didn't start them. These politicians started it 
long before Ken Lay left Missouri to go down to Texas and start his 
charade.
  The truth is we in the U.S. Government have been playing with Enron 
accounting, and there is more coming up. We have a budget deficit. They 
don't call it a budget deficit. The Republicans have their budget; now 
let the President submit it. Let's call it up and see what they are 
going to do with it. But I will be suggesting--among other things--a 
freeze. Just take this year's budget for next year. We just passed the 
main defense bills--Labor, Health and Human Resources--just before 
Christmas. So here we are less than five months later. We would not 
hurt anybody with a freeze. Let's just take that hold-the-line 
approach, except in national defense and homeland security. We can put 
those aside.
  Let's debate the budget the President has submitted and consider what 
he asked for. He submitted his defense budget. Let's consider that and 
debate it and vote it. But let's not spend the whole darn time talking 
about how we are saving money. We can just take this year's for next 
year.
  Madam President, we would save almost $155 billion over five years. 
We would save $155 billion, rather than spend an extra $155 billion. 
Senator Thurmond and I are going to get by. But the Presiding Officer 
is going to have to pick up our bill. All the other young leaders we 
have in the U.S. Congress--we are just adding to the national debt. 
Another item to come up is the national debt. I don't mind if those who 
cut the revenues to increase the debt, rather than pay down the debt--
if they will give us a modicum of votes over there. They play a 
political game. I voted for the increase of the debt, but I want to see 
the debt come down. Don't act as if we don't know how it happened. We 
know exactly how it happened.
  It has the economy and the market's in Washington and New York just 
frozen in their tracks because of our leadership. The President, is 
playing T-ball, or running out to some Federal facility or some school 
patting the little children on the head, and then patting the 
pocketbooks at night with a fundraiser. We cannot get him in the Oval 
Office and find out what's going on. He wants a $4 trillion additional 
loss of revenue, which increases the debt some $4 trillion. So they 
will come up here and say, well, we have to increase the debt. It is an 
emergency situation. They start moving things around with Enron 
accounting. By June 28, they have to pay the interest costs to the 
Social Security trust fund--you see, they keep spending the Social 
Security money by issuing these bills, and they will have to pay it 
back and they won't have the money.
  So we will have to do something by June 28, and let's see the 
disposition of these tax cutters. We gave 8 years of the finest economy 
in the history of these United States of America under President 
Clinton by increasing taxes. Yes, we cut spending. We also increased 
the taxes.
  This Senator and others, without a single Republican vote, increased 
taxes on Social Security, and we voted to increase taxes on gasoline. 
We took the hard stand. Yes, we lost the Senate in 1994. It cost us 
politically, but we did it, and we stuck to our guns. Now they come 
with their leadership: Let's cut taxes; let's buy the vote; tell them 
the Government is too big; and it is the people's money, they know how 
to spend it better than we do. What kind of childish talk is that?
  America knows the city hall and the State houses back home are going 
to have to pay their bills. They have increased taxes in certain 
States, almost a dozen of them, and they are having to cut programs 
right across the board. They are not saying: Let's cut the revenues 
another $4 trillion. Come on.
  These are the issues we ought to be talking about, and let's get with 
it for a trade policy. We need a value-added tax to pay that bill and 
to equalize production and international trade. Every industrialized 
country in the world has a VAT save the United States of America. Now 
we need one. We can use it to pay for the war, but we have our 
leadership, our President, saying that we are not going to pay for the 
war. Since we have a war, we are going to run deficits, and, 
incidentally the war is never going to end.
  What kind of leadership is that? I never heard of such a thing. No 
wonder this country is in trouble. Everybody is amused. Politics is a 
spectator sport. The Government in Washington is just the weekend 
shows. As long as we do not get anything done--when in doubt do nothing 
and stay in doubt all the time, but keep spending, keep running up the 
debt and talking to everybody about how we are saving Social Security. 
We are not saving Social Security. We are spending it.
  We at least ought to pay for this war on terrorism. We paid for every 
war we have ever had. More than anything, we ought to start to engage 
in this trade war. It is not just manufacturing. Everything I read 
pertaining to Japan pertains to the United States of America. That is 
where our technology has gone. So do not say I have to understand 
globalization and free trade, free trade. The word ``trade'' means just 
that. It is not free. They continue to treat it as aid, and we are not 
in a position now to do that. We have to aid our hometown communities 
in America and rebuild our industrial strength and our economic might.
  That is what is on this Senator's mind. I wish there were others in 
the Chamber to debate the Andean Trade Preference Expansion Act because 
this bill is a hope to the solution of the drug problem. This is not 
trade. We do not get anything, but we hope if we can give them more 
textiles to produce, they will get out of producing cocaine and produce 
T-shirts and send them to us. That is the whole Andean trade bill.
  This is the biggest sham I have ever seen. Incidentally, I remembered 
one point I wanted to emphasize about productivity. The textile worker 
of the United States of America is the most productive textile worker 
in the world. In fact, let me embellish. The industrial worker of the 
United States is the most productive industrial worker in the entire 
world.
  Madam President, what is not producing is the U.S. Government, this 
Congress, this Senate. I am hopeful we can start discussing real issues 
and cut out all the political and parliamentary maneuvers so we can 
vote on the Dorgan amendment. I have plenty other amendments that 
pertain to the bill with respect to trade adjustment assistance for 
post-NAFTA workers, some 53,900 in my State. You cannot ask me to vote 
for some and not for all. We have to be fair with everyone. That is 
our hope, our duty, and our responsibility.

  I do appreciate the distinguished Chair indulging me this afternoon. 
I 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. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________