[Congressional Record Volume 149, Number 055 (Monday, April 7, 2003)]
[Senate]
[Pages S4887-S4890]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       DROWNING IN TRADE DEFICITS

  Mr. DORGAN. Mr. President, today I will speak about trade. On 
occasion, I have come to talk about our problems in international trade 
because it relates to the center of the issues we need to be concerned 
about with respect to our country's economy; and that is jobs, a 
growing economy that produces good jobs that pay well, that expands 
opportunities for the American people. Yet our trade strategy in this 
country has been a bankrupt trade strategy for a long while.
  I will use a chart to describe what I am talking about. The current 
trade strategy in America is producing nothing but red ink, and not 
just a small amount of red ink, but we are literally drowning in trade 
deficits. This is the merchandise trade deficit in this country. These 
are trade deficits that are completely out of control. Last year, there 
was $470 billion in trade deficits.

[[Page S4888]]

  April 1 was April Fools Day, and that is the day the U.S. Trade 
Representative released its 2003 report on trade barriers. This is the 
2002 report. The 2003 report is not yet available in hard copy, but I 
am told it is as thick and as voluminous as the 2002 report. It 
describes the trade barriers that we find overseas and around the world 
for American goods produced by American workers in American factories. 
It lists country by country and barrier by barrier foreign markets that 
are closed to our products.
  Frankly, despite all the talk about free trade and expanded trade, 
there has been very little progress in prying open these markets. Let 
me use one example that demonstrates better than almost any other of 
how difficult it has been for us to make real progress on these issues. 
I will describe it in the context of our trade with Japan in beef--yes, 
beef. Fifteen years ago now, we reached a trade agreement with Japan so 
that American beef could be sold into the Japanese marketplace. That 
trade agreement provided that for every pound of American beef that 
went into Japan, there would be a 50-percent tariff. That is after our 
negotiators reached an agreement. We have a very large trade deficit 
with Japan, but our negotiators reached an agreement that said at the 
end of this agreement there will now be a 50-percent tariff on every 
pound of American beef going into Japan, and then it will reduce over 
time. But if we get increased quantities into Japan, it will snap back.

  So 15 years after our beef agreement with Japan, and those who 
negotiated having had a fiesta of sorts on the front pages of all of 
our papers talking about this enormous success that we would now get 
more American beef into Japan, there is now a 38\1/2\-percent tariff, 
and it is about to go back to 50 percent. The USTR report now says that 
Japan plans to increase the tariff to 50 percent because of an increase 
in beef imports this year.
  The only reason there is an increase in this year is that the 
Japanese consumers are finally starting to eat beef again after mad cow 
disease was found in Japan some years ago. So Japan decided that a 
38\1/2\-percent tariff is not enough. Now it will go back to 50 
percent, 15 years after we reached an agreement with this country to 
take more American beef.
  This chart shows the agreements we have with other countries in terms 
of the balance of trade. My colleagues will see that red represents 
deficits. We have trade deficits with virtually every major trading 
partner, with the exception of Australia, and we are about to remedy 
that because we are about to enter into an agreement with Australia. I 
assume they will be able to turn a positive trade balance into a 
deficit very shortly.
  It does not matter which agreement we have had, whether it is NAFTA 
or GATT, what we have done is create circumstances where all of our 
major trading partners are running trade surpluses with us.
  I will talk a bit about the country of China. We have major trade 
deficits with China, with Europe, Canada, Mexico, Korea, and Japan. Are 
they getting better? No, they are getting much worse. Does it hurt this 
country? Of course it does. It means jobs that would have been in this 
country to produce goods and services the American people want instead 
exist in other countries. So the jobs that used to represent American 
jobs are now belonging to some other country producing those products 
to ship back into this country.
  Let me talk about trade with China in the context of wheat. I come 
from a State that produces beef and wheat so I am naturally interested 
in that. I will discuss other products as well. The U.S. trade official 
in charge of trade with China recently left his job, and he had the 
courage to say publicly that China has failed miserably to live up to 
its promises that it made on agricultural trade when it joined the WTO 
in November of 2001. In fact, our trade official said the United States 
would be well justified in filing a WTO case against China. He said the 
evidence of unfair trade by the Chinese is ``undeniable,'' and the 
Chinese themselves privately acknowledge they are cheating on 
agricultural trade.
  The official said the administration did not have the spine to take 
action because the Chinese might be offended. He said the 
administration was worried that a WTO case would be seen as an in-your-
face thing to do to China so soon after China joined the WTO.
  When China joined the WTO in November of 2001, the Chinese agreed to 
significantly expand the amount of imported wheat that would come into 
China at low tariffs. They agreed for 2002 it would set a tariff rate 
on imported wheat at 8\1/2\ million metric tons. That means 8\1/2\ 
million metric tons of wheat could enter the Chinese marketplace at low 
tariffs. But according to the Congressional Research Service, Chinese 
imports were less than 8 percent of what we expected to move into 
China. China was supposed to allow 8\1/2\ million metric tons, but it 
imported about 662,000 metric tons, and only 169,000 of that was from 
U.S. producers. How could that be? China's millers increasingly demand 
high quality wheat--the wheat we produce, wheat we can produce 
efficiently.

  One explanation is, to import wheat under this Chinese TRQ, a Chinese 
importer needs a license. The license is granted by the Chinese 
government. The Chinese government decides only 10 percent of the 
licenses are going to be available to private importers; 90 percent are 
reserved for the Chinese government itself. If the Chinese government 
decides not to take American wheat into its marketplace, it will not do 
it. That is exactly what they have done. They commit to 8.5 million 
tons of imported wheat and make sure 90 percent will never be brought 
into the country.
  I came to the Senate when this happened and quoted a Chinese 
agricultural official in the South Asian Post. For the Chinese 
consumption they were saying a bilateral agreement will open up trade 
between the United States and China. What he said in the South Asian 
Post, do not expect that is what we will accept into China. He said 
that to the Chinese. But they were telling the Americans a different 
story.
  March 17, the USTR official named Bruce Quinn, who was the director 
of the China desk at USTR, now the former director of the China desk, 
told wheat industry meetings that USTR should file a case against China 
at the WTO. What made Mr. Quinn's comments particularly interesting is 
they were made on the last week in the job for him. He was moving to 
another agency. He felt then he could speak freely. He said about the 
Chinese government: The Chinese officials have never disagreed with the 
United States technical criticism about China administering tariff-free 
quotas. They just make the political argument you have to understand 
China, China is a special case. He said the inter agency trade policy 
review gave the ambassador's office the green light to proceed to take 
action against the WTO for China, but too many in the administration 
feel it is an in-your-face thing to do so soon after joining the WTO. 
Soon after making these comments in the last week on the job, the 
administration disavowed its comments, saying he was not speaking for 
the administration, but nobody said Mr. Quinn had said something wrong 
or what he said was wrong.
  Why should we be reluctant to file a case against China at the WTO if 
evidence of cheating is rampant, so rampant that even the Chinese 
government admits it? Isn't that what the WTO was supposed to provide, 
a forum for dealing with unfair and illegal trade practices? If we let 
the Chinese government or China off the hook in the first year or two 
of this bilateral agreement, what will happen in the future?
  Some might say this is about wheat and they are not wheatgrowers. For 
those who might view the proceedings and think we do not grow wheat and 
do not see it as a big deal selling grain or wheat to China, this is 
just one example of many that represents this monumental trade deficit. 
Our trade deficit in goods this past year was $470 billion. One-fourth 
of that, $103 billion, was with China alone. The deficits of Canada, 
$50 billion. Mexico, $37 billion. And Japan and Europe. Not only do we 
have deficits with trading partners, but we have deficits in almost 
every sector of trading: $110 billion deficit in vehicles, $47 billion 
trade deficit in consumer electronics, $58 billion deficit in clothing.
  I mention the trade deficit with China. Just to give an example of 
what causes much of this, in many cases it is

[[Page S4889]]

incompetent trade negotiators on our part. We negotiate a bilateral 
with China and our trade negotiators agree, after a phase-in with 
respect to the U.S. and China, we will agree to a 10 times higher 
tariff on U.S. automobiles that we attempt to sell in China than would 
be imposed on Chinese automobiles in the United States. We say we will 
impose 2.5 percent on Chinese automobiles that are shipped here and you 
impose a 25 percent tariff on U.S. automobiles in China. I don't know 
who would agree to that. Whoever it is does not deserve to be paid by 
the American taxpayers. It is an incompetent position to engage in 
bilateral negotiations and tie our consumers', our employees' hands 
behind their back in international trade. We will do that by saying you 
can go ahead and impose tariffs 10 times the amount of tariffs we would 
impose on equivalent goods.

  The trade deficit with Canada, similarly, is a deficit that in some 
respects comes from the Canadians as a result of the trade agreement 
being allowed to continue, a Canadian wheat board, which would be 
illegal in this country, a state trading enterprise would be illegal in 
this country. In Canada, it sells into this marketplace at secret 
prices, undercuts our farmers, and essentially thumbs its nose at 
American officials when they say we want the evidence of selling below 
acquisition costs in our marketplace and, therefore, dumping illegally 
in our marketplace. And the Canadians say, We are sorry; we do not 
intend to disclose anything to you, or any prices in this country.
  Trade deficit with Europe, $82 billion last year. The WTO was 
supposed to provide us with a forum to resolve trade disputes. The fact 
is, it has not with respect to Europe. We went to the WTO, got a 
dispute resolution in our favor against Europe dealing with the import 
of U.S. beef to Europe which Europe was preventing. And despite that, 
we are still not getting U.S. beef into the European marketplace.
  Trade deficit with Korea, $13 billion in 2002. I spoke before about 
cars from Korea, but let me give an example. We have just received the 
2002 figures for automobile trade with Korea. The Koreans sold 633,000 
Korean cars in this country. We sold 3,200 in Korea; 633,000 this year 
and 3,200 that way.
  Now, why we do not sell more vehicles? Take the Dodge Dakota pickup 
truck. In February of this year, DaimlerChrysler started to sell that 
pickup truck in Korea. The Dodge Dakota truck is made in Detroit, 
Michigan. Korea does not manufacture pickups like Dodge Dakotas, so 
DaimlerChrysler thought it had a good potential market in Korea and 
started to market the vehicle to small business owners. It was very 
successful. It got orders for 60 pickup trucks in February, another 60 
in March. That does not sound like much, especially when Korea is 
sending us 633,000 vehicles in a year, but it is a start. At an 
annualized rate that would amount to a 50-percent increase in car 
imports from the U.S. into Korea, into the marketplace just from the 
Dodge Dakota pickup alone.
  Guess what happened? In March, last month, an official with the 
Ministry of Construction and Transportation decided the Dakota pickup 
posed a hazard in the marketplace so he announced the cargo covers on 
pickups, on Dodge Dakotas, were illegal and the drivers of those 
pickups would be fined if they put a cargo cover on the pickup truck. 
The newspapers had giant headlines: Government ministry finds Dodge 
Dakota covers illegal. Guess what happened? The Korean people got the 
message. Korean car purchasers canceled 55 of the 60 orders scheduled 
for March and now you cannot find a buyer for a Dodge Dakota in Korea, 
where in the last couple of months hundreds were lining up. Once again, 
we discover that trade is not free and it is not fair.

  I have a chart that shows just one example of one sector, and these 
are last year's numbers, but, as I indicated, they are the same as this 
year, essentially. They ship us all their cars and this represents good 
jobs. We cannot get American cars into Korea. Just ask yourself: If the 
American consumers want to buy Hyundais and Daewoos and cars that are 
produced in Korea to come into this country, should they have the 
right? Absolutely. But what if a Korean wants to buy a Mustang? What if 
a Korean wants to buy a Ford Mustang convertible? Should they have that 
opportunity, that right? Do they now? Of course not. The Koreans are 
making sure we are not getting American cars into Korea. The result is 
an increased trade deficit, fewer good jobs in this country, and the 
further result is nobody seems to care. All they want to do is 
negotiate another incompetent agreement.
  One of my feelings about the USTR is they come to this Congress 
asking for fast-track authority, which I think is nuts, saying to 
Congress: Tie your hands behind your back; let us negotiate an 
agreement in secret, and when we bring it to you, you decide by rule 
you cannot amend it.
  I think that is plain nuts. Nonetheless, they were able to persuade 
enough people in the Senate and the House.
  So they have fast-track authority so the next agreement they make 
with another country, they will bring it to the Congress, take it or 
leave it, no amendments in order. If they hadn't had fast track when 
they did the United States-Canada agreement, we wouldn't be stuck with 
the problem we have with the Canadian Wheat Board dumping into our 
marketplace, cutting into our farmers. But you couldn't offer an 
amendment. Who knows what will be in the next agreement they make? But 
when they make the agreement with another country, it will come here, 
likely pass the Senate and House, and the newspapers that support all 
this will trumpet this as an expansion of trade and it is free trade 
and it is wonderful and everybody--all boats are lifted by it.
  That is total nonsense. I am in favor of expanded trade and expanded 
opportunity, but I am in favor of trade officials in this country 
having a spine and backbone to stand up for the interests of this 
country.
  Should we continue to decide it is our lot in life to compete with 
somebody who is making 30 cents an hour, working 70 hours a week? 
Should we compete with a 12-year-old working 12 hours a day making 12 
cents an hour? That happens, by the way. Is that fair competition?
  That product is produced in any number of countries overseas and then 
shipped to the marketplace in Toledo or Fargo or Manchester or New York 
City. Is that fair trade? Is that what our producers ought to compete 
against? Or should we have some basic standards which say that what we 
fought for for over a century in this country--the right to work in a 
safe workplace, the right to organize, the right to be paid a fair 
wage, the right not to expect you have to work next to children; all of 
those rights that were fought for in this country--some people died for 
them; some people chained themselves to the factory gates for those 
rights--should all those be rights over which producers pole-vault to 
rush to another country to produce and say we don't have to worry about 
that, we don't have to worry about dumping pollution into the stream or 
the air, hiring 12-year-old kids, putting them in an unsafe workplace, 
we can do that because we have the right to do that and we have the 
right to ship our products to our country?
  They ought not have that right because that is not fair trade. It is 
not fair competition, and we should not ask American workers and 
producers to compete against that.
  There are so many issues to talk about with respect to international 
trade. In the end, I come back to the notion that it represents the 
strength of our economy to maintain a strong manufacturing base. No 
country will long remain a strong economic power if it does not retain 
a basic manufacturing base. Our manufacturing base is very quickly 
moving from this country to countries where production costs are lower. 
It is one thing to say we lose in international competition. It is 
quite another to say we are going to set up the competition in a manner 
that is fundamentally unfair and guarantees you lose.
  In my judgment, whether it is farmers or manufacturing workers or 
textile plants, if we can't compete and win against fair competition, 
then our plants should not make it at all. But the competition ought to 
be required to be fair.
  None of these trade agreements require that--none of them. Whether it 
is someone who is ranching out there today, producing cattle for a 
market and expecting to be able to move it into Japan without a 50-
percent tariff or somebody who is raising potatoes in

[[Page S4890]]

the Red River Valley expecting to be able to move potato flakes into 
Korea without a 300-percent tariff or somebody producing Durham wheat, 
expecting not to compete against the state cartel in Canada that 
undersells them at secret prices, or, yes, a big automobile company in 
this country that expects not to have to compete against those who 
produce elsewhere and keep their markets closed to us--all of those are 
very serious problems relating to this country's economy and this 
country's ability to produce good jobs that pay well for the American 
people.
  A $470 billion trade deficit this year--somebody is going to have to 
pay that bill. You can make the case--at least economists do--that the 
budget deficit is money we owe to ourselves. You cannot make that case 
with the trade deficit. This is money we owe to other countries that 
will inevitably be repaid with a lower standard of living in this 
country. That is why it is important at some point that we pay 
attention to it and view this as a crisis.

  You can't get the editorial pages of the major newspapers to say so. 
You can't even get an op-ed piece published in the Washington Post 
unless you have a vision about trade that exactly matches theirs and 
the prevailing view in this town, which is: There are free traders--
that is what they say--there are free traders who see beyond the 
horizon, who have a world view that is learned and is to be commended.
  Then there are the others and the others are xenophobic isolationist 
stooges who just have never gotten it and understood that things have 
changed in the world.
  Those are the two sides. If you are someone who says an unkind word 
at all about this structure of trade agreements that requires us to 
compete unfairly and allows others to compete unfairly against us, you 
don't have a chance of having that view expressed in the major 
newspapers in this country. That is regrettable because that means we 
don't have an aggressive debate on international trade.
  The debate should never be about: Is expanding trade something that 
helps our country and helps others around the world? The debate ought 
to be about as we globalize--and we are globalizing our economies very 
quickly--will the rules of international trade in this global economy 
keep up with the galloping globalization? The answer to that, until 
now, regrettably, has been no. The rules have not kept pace, and that 
is why we find ourselves in this position.
  I yield the floor.
  I make a point of order that a quorum is not present.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. CORNYN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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