[Congressional Record Volume 149, Number 33 (Monday, March 3, 2003)]
[Senate]
[Pages S3001-S3004]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                    U.S. International Trade Deficit

  Mr. President, I want to take the floor to talk about one very 
pressing matter, which all of us should be concerned with: that is, our 
country's record trade deficit in 2002.

[[Page S3002]]

  I spoke on Wednesday about it, and the very next day, the U.S. Trade 
Ambassador, Bob Zoellick, was on CNN's ``Moneyline'' with Lou Dobbs, to 
talk about the deficit.
  Mr. Dobbs, whom I really admire, asked Mr. Zoellick the following 
question:

       What would you say, [Mr.] Ambassador, is the most important 
     [issue for] a country that has a $430 billion trade deficit?

  Ambassador Zoellick's answer: Let's negotiate new trade agreements.
  He said:

       That's what we've been doing over the last couple years, 
     reversing some of the slowdown in the past. We just completed 
     two new trade agreements with Singapore and Chile. We're 
     trying to move ahead working with the global trade 
     negotiations, working with the Europeans and others.

  Then Lou Dobbs noted that manufacturing jobs are being exported 
abroad.
  Again quoting Mr. Dobbs, he said:

       Is there anything that can be done about that or is this a 
     historical trend that is going to continue for years to come?

  Ambassador Zoellick said:

       Jobs [have] gone down, but that's because productivity has 
     gone up. So where have those jobs gone? Well, you've got more 
     people in the service industry. You have cable television and 
     others.

  OK, so now I understand it, I guess. The Trade Ambassador said we are 
shipping manufacturing jobs overseas but we have cable television. 
Hooray for us.
  So Mr. Dobbs tried again, asking Ambassador Zoellick to identify the 
most important trade issue for the United States, and the Ambassador 
said:

       Well, the most important issue I frankly think is keeping 
     the United States in [a] leadership [role] in global trade. . 
     . .
       I just came back from China. I was in Latin America not 
     long ago. And what they look to is U.S. leadership in terms 
     of various negotiations, the global negotiations, the 
     hemispheric negotiations, and individual ones.

  That's the biggest trade issue for this country? We have the highest 
trade deficit in human history--and Mr. Zoellick thinks the answer is 
to negotiate even more trade deals?
  Maybe Mr. Zoellick thinks that the deficit is really not that big of 
a problem. He would not be alone in that belief.
  On February 24, the Wall Street Journal published an editorial 
entitled ``Hooray for the Trade Deficit!'' The Journal argued that the 
trade deficit was propping up the economies of Europe and Japan, and 
were a sign of our economic strength.
  I have no idea what water they have been drinking. But let me quote 
from the editorial:

       Pundits claim that ``financing'' the U.S. current account 
     deficit requires that foreigners purchase some $1.5 
     billion in U.S. assets a day, and warn darkly of the time 
     when that need cannot be met.

  And they say:

       But the current account deficit is by definition the 
     inverse of net capital inflow. So it can very easily be 
     argued that U.S. assets are in such demand, even with 
     Treasury yields at historic lows and after three down years 
     in the U.S. stock market, that Americans have to find $1.5 
     billion a day worth of foreign goods just to spend all the 
     money that's coming in.

  I do not understand that at all. Have they not taken the first basic 
course in economics? I just do not understand that. Total nonsense.
  We have been running record trade deficits through all kinds of 
economic conditions: through the economic boom of the 1990s, through 
the more recent recession, through a peacetime economy, through a 
wartime economy. The trade deficit keeps going one way: up, dangerously 
up.
  If the economies of Europe and Japan need our trade deficits to stay 
healthy, then they ought to get busy revamping their economies, because 
there is no way this situation is sustainable.
  Does anybody really believe our economy is so strong right now, as 
the Wall Street Journal suggests, that we have to find $1.5 billion a 
day worth of foreign goods just to spend all the money that is coming 
in? The fact is, we are mortgaging our children's future with these 
trade deficits. It is irresponsible, and it ought to stop. If the Wall 
Street Journal were truly a conservative newspaper, it would be leading 
the charge to demand that we do something to rectify this trade 
imbalance.
  I have been on the floor of the Senate critical of trade policies in 
the Clinton administration time after time after time, and I am 
critical of the trade policies of this administration. The fact is, you 
cannot tell the difference between Republican and Democratic 
administrations on trade policies. Year after year after year, we have 
Trade Ambassadors who talk about the advantage of doing another trade 
agreement; and every single time we do another trade agreement, our 
trade deficit ratchets up.
  This chart show the merchandise trade deficit we face: $470 billion 
in 2002, after exploding increases during the nineties.
  The Washington Post reported that this trade deficit put ``a 
significant damper on U.S. economic growth.'' In fact, the fact that 
the Post article talks about the deficit is very surprising, 
incidentally, because the Washington Post, of all newspapers, is the 
most ecstatic about this fast-track trade authority, global trade, and 
the trade deficits we have inherited. They excuse them away at every 
significant opportunity.
  Yet the Washington Post story said:

       . . . a combination of increasing imports and falling 
     exports clipped more than half a percentage point off the 2.4 
     percent increase in U.S. gross domestic product last year. . 
     . .

  The Post further noted that:

       . . . .nearly one-fourth of the year's [trade] deficit in 
     goods trade was with China, which sold $103 billion more 
     goods to the United States than it bought here.

  What does this mean? It means jobs. That is what it means. These 
numbers describe where the jobs are, who wins and who loses. With 
respect to the global economy, and with respect to trade agreements, we 
are losing, we are losing jobs.
  That does not mean much to the economic thinkers and the newspaper 
editorialists and others whose jobs are not in jeopardy, but it means a 
lot to the millions of people who used to have good jobs that paid 
well, with good benefits, whose jobs are now gone. Because they cannot 
compete in global trade when a U.S. manufacturer moves its plant 
abroad, so they can produce where they can hire 14-year-old kids, work 
them 14 hours a day, pay them 14 cents an hour, and dump the chemicals 
into the streams and into the air, and then ship the product back to 
Toledo or Fargo or Los Angeles or Denver, and then say to the American 
producer: You cannot compete with this; tough luck; you cannot compete 
in the global economy.
  That is not what we ought to allow in terms of global trade.
  We have deficits as far as the eye can see. With China, we have trade 
deficits of $103 billion; with Canada, deficits of $50 billion.
  This chart shows the deficits we have: $50 billion with Canada, $37 
billion with Mexico. And, by the way, before we did the United States-
Canada-Mexico trade agreement, so-called NAFTA, we had a very small 
trade deficit with Canada and a small trade surplus with Mexico. Now we 
have turned both of them into very large trade deficits.
  On the chart, you can see virtually the only trading partner with 
which we have a surplus at this point is Australia. But this 
administration is going to remedy that because now they are engaged in 
trade talks with Australia, to set up a free trade agreement with 
Australia. So we may not have a trade surplus with Australia for long. 
If those same trade negotiators who negotiated all of our trade 
agreements are engaged in Australia, we will lose within a week or two 
and be back to red ink with respect to Australia.
  Not only do we have trade deficits with virtually every major trading 
partner, we have deficits in almost every sector of goods trade. We 
have a $110 billion deficit in vehicles, $47 billion deficit in 
consumer electronics, $58 billion deficit in clothing.
  Some might say: Well, agriculture is a bright spot because we are a 
net exporter of agricultural goods. But the fact is, we are losing in 
agriculture as well. Our modest surplus in agricultural products was 
reduced 30 percent over just last year. And major areas of agricultural 
trade are now in deficit. Our surplus in meat declined by $1 billion. 
We have a deficit in livestock trade which reached $1.5 billion last 
year. We had a deficit in vegetables and fruits of $2.5 billion last 
year.
  Now, let me talk just a for moment about China.
  We have a trade deficit with China.

[[Page S3003]]

  We did a bilateral trade agreement with China. I don't have any idea 
who negotiated that either, but the fact is it is a trade agreement 
that doesn't work. It works for them, but not for us.
  After we negotiated a bilateral agreement with China, our negotiators 
agreed that following a phase-in period, we will allow China to have a 
tariff on automobiles that is 10 times higher on U.S. automobiles going 
to China than any Chinese automobiles sold in this country. We agreed 
we would allow China, a country that has a $100 billion trade surplus 
with us or we in deficit with them, to impose tariffs on automobiles 10 
times higher than the tariffs on Chinese automobiles sent to this 
country. I don't know who does this kind of negotiating. On whose 
behalf do they think they are negotiating?
  We have a deficit in toys with China, $14 billion in toys. The 
following Post article describes why. The title is ``Worked Until They 
Drop; Few Protections for China's New Laborers.''
  This is a story about Li Chunmei, a 19-year-old. She was literally 
worked to death at a factory in China. They made stuffed animals for 
the U.S. marketplace. Let me read a couple portions of the article. 
This is a picture of that young lady.
  On the night she died, they said, she had been on her feet for 16 
hours running back and forth inside the toy factory carrying toy parts 
from machine to machine. Long hours were mandatory, and at least 2 
months had passed since Li and other workers had enjoyed even a Sunday 
off--2 months had passed since they were allowed even a Sunday off. Her 
roommates had already fallen asleep when Li started coughing up blood. 
They found her in the bathroom a few hours later, curled up on the 
floor, moaning softly in the dark, bleeding from her nose and mouth. 
They called an ambulance and she died before it arrived. The cause of 
her death was unknown, but what happened to her last November in this 
industrial town in southeast Guangdong province is described by family, 
friends, and coworkers as an example of what China's more daring 
newspapers call guolaosi. The phrase means overworked to death. They 
actually have a phrase for being worked to death in China.
  This is the playing field for international competition. Children 
being worked to death. This is what we are competing with.
  Aside from this, the tragedy of this, the fact is, our market is open 
to Chinese goods. Shoes, shirts, trousers, trinkets, toys, every day 
and every way we are flooded with Chinese goods. But Chinese markets 
all too often are still closed to ours.
  The Farm Bureau, a conservative farm organization, says the Chinese 
market is really no more open today than it was when China entered the 
WTO. The Farm Bureau has supported fast track, has been largely 
supportive of the trade approaches, but the fact is they are critical 
of the implementation of China's WTO accession, saying:

       At the end of [WTO] negotiations, China was a $2 billion 
     market. We expected substantial growth, but we haven't seen 
     [it] because China hasn't done what it's supposed to do.

  That is from Teresa Howes, senior director of trade for the American 
Farm Bureau. Good for them.
  The bottom line is, our agricultural products aren't getting into 
China. Yet Chinese goods move into our marketplace all the time.
  You don't have to travel to China to figure out why we have this kind 
of trade deficit. Go to Canada. Take a look at our wheat trade with 
Canada.
  The fact is, we have a massive quantity of Canadian grain coming into 
our country sold by a monopoly, the Canadian Wheat Board, that would be 
illegal in this country, undercutting farmers, taking money directly 
out of their pockets, and you can't do much to stop it. We now do have 
a couple of trade actions, but it has taken forever to get them. I have 
no idea what the result will be, but the fact is, this has gone on for 
8 to 10 years, and our farmers have not gotten effective action to stop 
it.
  Our trade deficit with Europe I mentioned last week. We can't get 
American beef into Europe. We take Europe to the WTO. We go there and 
we win. Europe says: So what; it doesn't matter to us. We don't intend 
to let your beef in.
  So our country ratchets up its backbone, stiffens its resolve, and we 
say: OK, you do that, we will stick it to you. And what does our 
government do? It imposes import duties on Roquefort cheese, goose 
liver, and truffles. That will scare the dickens out of the EU, won't 
it? We will take action against Roquefort cheese, goose liver, and 
truffles.
  I would like to meet those officials in the trade ambassador's 
office. That was under the previous administration. I don't understand 
that at all. When will our country decide it is going to stand up for 
our economic interests?
  How about trade with Korea? We have a very large deficit with Korea. 
Last year Korea sent us 618,000 automobiles. Do you know how many U.S. 
cars got into Korea? Two thousand eight hundred. Is it because Koreans 
don't like U.S. automobiles? No. It is because Korea has the strategy 
to ship their cars to the American marketplace and keep American cars 
out of theirs. What does that mean? That means jobs. We lose them. 
Korea gains them. Is it fair trade? Absolutely not. Shame on us for 
allowing it.
  If you don't want to talk about cars and Korea, talk about potato 
flakes. We raise a lot of potatoes in my part of the country, potato 
flakes for confection foods. There is a 300 percent tariff on potato 
flakes to Korea.
  I just don't understand how we continue to allow this sort of thing. 
How does it make sense for our country to allow this to happen?
  What about Japan? In Japan we have had a trade deficit of $50 to $60 
billion every year forever since I have come to Congress. It keeps 
going up. Fourteen, 15 years ago we reached a beef agreement with 
Japan. You would have thought we won the Olympics. The negotiators had 
fiestas and jubilation, and the Washington Post had huge stories about 
our beef agreement with Japan. Good for us. Our negotiators were on the 
ball. But nearly 14 years after the beef agreement, there is still a 40 
percent tariff on every pound of American beef going into Japan. They 
don't have enough T-bone steaks in Tokyo; their market is closed. We 
can't get more in. We have a 40 percent tariff on every pound. That 
doesn't make any sense to me.
  What is our country doing? We just sit around and chant a mantra, 
like a religious group on a street corner with a mantra: Free trade, 
fast track, free trade, fast track, the global economy.
  The fact is, the global economy has moved forward much faster than 
the rules for the global economy. The result is that the American 
workers and farmers and businesses have been injured because of it. It 
is just a plain fact. There isn't anyway you can explain it away. A 
$470 billion trade deficit in the year 2002 in merchandise trade cannot 
be explained away by anyone.
  This is either a priority and crisis or it is not. If you believe it 
is--and I do--then this country needs to do something about it.
  It is not to build walls around our country, but it is to say to the 
Europeans, the Koreans, the Chinese, the Mexicans, the Canadians, and 
others, we are open for business. Our market is open to you, but on the 
basis of fair trade. If your markets are closed to us, don't come to us 
asking for admission to our marketplace.
  If you are going to work 14-year-old kids and pay them 15 cents an 
hour and work them all day, don't come to our marketplace. We don't 
allow it. This country fought for 100 years for the basic principle of 
a safe place in which to work, minimum wages, child labor laws, 
preventing dumping of chemicals into the streams and the air, the 
ability and the right to collectively bargain. All of these things were 
developed through great strife over a century. Now we have people 
deciding, we can fly our jet around the world and look down and find a 
more friendly place in which to produce, move our factory there, and 
not have to worry at all about those issues. And so they moved their 
factory--and, incidentally, some of those companies decided to renounce 
their citizenship as well, to become citizens of the Bermuda. Why? Why 
would they want to become citizens of the Bermuda? To save on their tax 
bill and not pay taxes in this country.

  Bermuda has a navy that has the strength of 26 people; there are 26 
people in the Bermudan military. My feeling is if a company renounces 
their

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American citizenship to become a citizen of the Bermuda, the next time 
their assets are threatened anywhere in the world through 
expropriation, have them call in the Bermudan Navy; see if there is a 
Bermudan destroyer to move into the region. I don't think so.
  What I want is for this country to say, yes, we are the leader in 
expanded trade, and, yes, expanded trade helps all in the world--but 
only if it is done on a basis that is not a race to the bottom, and on 
the basis that it brings everybody up.
  The White House doesn't want to talk about it. The President won't 
talk about it. Neither did President Clinton. The Congress doesn't want 
to deal with it. Why? Because the minute you do talk about this, they 
say, well, you are raising this trade issue, you are some sort of 
xenophobic isolationist stooge who doesn't get it, but we get it; we 
all see over the horizon. They say, you don't understand the global 
economy.
  What I understand is that when last year we imported $470 billion or 
more in goods than we sent out, this country is obligated to repay that 
at some point with a lower standard of living. You can argue that our 
budget deficit is money that we owe to ourselves. You cannot argue that 
with a trade deficit. A $470 billion trade deficit means we owe that 
liability to those living outside this country, which gives them a 
claim on this country's assets and a claim on a lower standard of 
living in the future for American citizens.
  We must get at the business of solving this problem. I am not saying 
we should put walls around our country. I want our marketplace to be 
reasonably open, but I want us to be a leader in developing the basic 
rules of trade that are fair to this country's interests.
  That has not been the case, regrettably. I wish I didn't have to make 
this speech. I made it repeatedly during the Clinton administration, 
and I will probably make it during the Bush administration because 
trade deficits are consistently going one way, and that is up. Jobs are 
consistently going one way, and that is out.
  We were told by the economists in support of those who wanted NAFTA 
passed--and I voted against it--that what we will get from Mexico under 
NAFTA is the product of low-skilled labor. Do you know what we get from 
Mexico now, with the big trade deficit we have with them? We get the 
product of high-skilled labor. The three largest imports from Mexico 
are the products of high-skilled, not low-skilled labor: automobiles, 
automobile parts, electronics. They are all products of high-skilled 
labor. This is exactly the opposite of what economists and politicians 
said who pushed this fast-track NAFTA onto this Congress.
  What we are doing now, having passed fast track over my objection in 
recent months, is once again negotiating new trade agreements. When 
those agreements come back to Congress, nobody in Congress will have 
any opportunity to offer even one amendment to change an obvious 
problem in the trade agreement. I think that shortchanges this country. 
I hope very much the trade ambassador, for whom I have a lot of 
respect, but a great deal of disagreement with--I hope he and others in 
this town will understand, including my colleagues, that this is a very 
serious abiding problem for this country. We cannot ignore it.
  This country ignores this growing trade deficit of nearly $1.5 
billion a day, 7 days a week, at its own peril. We must solve this 
problem, and the sooner the better.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.