[Congressional Record Volume 150, Number 30 (Wednesday, March 10, 2004)]
[House]
[Pages H1002-H1008]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          INTERNATIONAL TRADE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from Oregon (Mr. DeFazio) is recognized 
for 60 minutes as the designee of the minority leader.
  Mr. DeFAZIO. Mr. Speaker, I come to the floor tonight to talk about 
the issue of trade. The Bush administration rolled up yet another 
record for the month of January, and I believe it deserves notice. It 
is quite an achievement. Our trade deficit widened to $43.1 billion in 
January. One month, $43.1 billion.
  Now, they have been telling us for the last year just be patient, the 
dollar is overvalued, it is going to drop a little bit. And as soon as 
the dollar drops a little bit, why then, U.S. manufacturers will become 
more competitive and people will start to buy our goods again.
  Well, I had two questions for them. I said what do we make anymore 
since we are exporting so much of our manufacturing to China? And will 
it not perhaps mean instead that Americans will buy more expensive 
goods that are made overseas and that, in fact, our trade deficit will 
widen? Despite all the Ph.D.s and experts and luminaries they have down 
there, apparently my concerns have been proven out and not the 
administration's.
  In terms of goods, our deficit went from 44 last year to this year 
$48 billion. In terms of services, we had a minor increase of about 
$300 million.
  So, the fact is we are hollowing out the manufacturing of the United 
States of the America. There is a new trend where we are hollowing out 
what was supposed to be the next generation of jobs and intellectual 
technology, and I will get to that a little bit later.
  What does the Bush administration say in reaction to this huge and 
growing deficit in trade and the debt we are mounting up overseas? 
China alone, $124 billion trade deficit last year. China is now the 
largest foreign holder of United States debt. And they are beginning to 
acquire assets in the United States of America with the huge pile of 
dollars they are amassing with this extraordinary trade deficit.
  Now, the Bush administration's answer is, well, more of the same, 
free trade, free trade, free trade. They are unabashed radical, knee-
jerk free traders. At least they are consistent. It is good. They went 
on the attack yesterday saying there are only two choices: the failing 
trade policies of today, which are hollowing out manufacturing, our 
industrial base, losing jobs, outsourcing, exporting jobs to other 
countries, quality jobs, losing the next generation of intellectual 
technology jobs, jeopardizing, I believe, in the future the security of 
the United States as more and more critical sectors and technologies 
are exported overseas.
  Just last week in the Wall Street Journal, General Electric, there 
was an article about how they have sold a whole $1 billion worth of 
turbines to China. There was just a small price they had to pay. It is 
a state-of-the-art, newly developed turbine, took them half a billion 
dollars to develop it. The Chinese demanded, in violation of the WTO 
and rules-based trade, which the Bush administration is such a great 
fan of, demanded that they give them the technology in exchange for 
this rather insignificant purchase. Because the technology is going to 
be worth far, far more; and the Chinese admit they are going to use the 
technology to build competing turbines. But GE in a very short sighted 
way decided they would be blackmailed. They were going to give them the 
technology and get $1 billion worth of sales. It will look good on this 
year's balance sheet, but not too good 3 or 5 years from now when the 
Chinese are eating their lunch internationally using the technology 
which GE went to so much trouble to develop.
  But this is repeated time and time and time again by the Chinese. I 
have a small company in my district called Videx. They developed a new 
kind of scanning technology. They developed an electronic lock. They 
are selling in 44 countries, including, their mistake, China, where 
they were selling about a $1 million a year. But it turns out, they say 
in China if you bring in intellectual property within 24 hours it is 
counterfeited and for sale.
  And the Videx company had followed all the laws and protections, went 
to the trouble of getting supposed Chinese protection and patents and 
all that. One day they found their entire company had been cloned in 
China including their Web site. In fact, the Chinese, the fake Chinese 
Videx, had gone them one up. They had a little fake American flag 
waving at the top of their Web site, this Chinese company.
  They even copied and translated into Chinese the U.S. copyright and 
patents on their software. They did not make a very good product, the 
company found out, because they started getting product support calls 
from people who thought they were clients of the U.S. Videx, but were 
actually clients of the phony Chinese Videx. This happens time and time 
again.
  When I went to the Bush administration and asked that perhaps we 
could get some help, get my two Senators to join me in this for Videx, 
they are a totally American company, they have 160 employees in my 
district, they do all of their outsourcing in the United States of 
America, that is all their subcontracting, not in China, and employ 
people even in Texas to help build their product, the response, after a 
lengthy delay from the Bush administration, was that the United States 
of America will not file intellectual property complaints against China 
for theft of intellectual property, will not help this relatively small 
company Videx, because the big corporations, the multinational 
corporations who are exporting their factories to China would not like 
that

[[Page H1003]]

because it might cause problems with the Chinese government.

                              {time}  2130

  A pretty extraordinary statement. And that is what the Bush 
administration is now going to emphasize. They support these failing 
trade policies. They are trying to cover up the outsourcing of jobs. 
They have now banned at the White House the term outsourcing, job 
exports.
  They talk about level playing fields. Well, it is not a level playing 
field when other countries can, when their government condones the 
theft of your intellectual property and will do nothing about it and 
your own home government will do nothing about it in terms of dealing 
with that foreign government. But now the Bush administration says they 
may in the future file some minor complaints about some of the tariffs 
the Chinese have. They would not want to tread on the Chinese's toes 
here. They do not want to go after the big problem here, which is the 
outright theft of American technology or the blackmailing in violation 
of the WTO of American corporations to sell there, and other practices 
of the Chinese government, the things that are costing us so much 
productive capacity and jobs.
  The Bush administration says they want a level playing field. Well, 
if it is not going to be level there, where is it going to be level? 
Are they saying that they will bring up the wages of the Chinese 
workers, that they will see that the Chinese follow worker health and 
safety protections? That they are going to see that the Chinese begin 
to enforce minimal environmental laws?
  No, I guess what they mean by level playing field is in the vision of 
the Bush people we will drag Americans down to that level and then we 
will be competitive. If only Americans would work for $1 a day, they 
could compete with the Chinese. Because they are competing not in old 
crummy, labor-intensive shacks and factories, but in state-of-the-art 
world-class factories built significantly with American capital, 
multinational capital and American capital that is being invested in 
China to access the cheap labor, to access the lack of worker health 
and safety protections, to access the lack of environmental protections 
so they can dump the waste right out the back door.
  So the level playing field is a pretty phony argument. They are 
banning the word at the White House, globalization, outsourcing, as I 
said. And they are going to call people who want to call for a new 
trade policy, one that does not fail our country so badly. One that 
does not run a $500 billion-a-year trade deficit; one that is not 
hollowing out our manufacturing trade capabilities; one that is not 
seeing some of our best technology either extorted or stolen by the 
Chinese and other unfair traders.
  They have no answer to those things. They just say more of the same 
is going to help, and anybody who wants to do anything about that is an 
isolationist. Well, they are either fools or they are deliberately, as 
some have said, facilitating Benedict Arnolds and others who are 
exporting American jobs, technology and undermining this country. It is 
not clear which on certain days because when you see today's news, you 
have got to wonder what is really going on down there.
  Six months ago, the President announced he was going to create a job, 
a job in America, that related to manufacturing. That was the 
President's promise 6 months ago. Here we are 6 months later, and he is 
on the verge of creating that job tomorrow. Congratulations to the 
President. One job related to manufacturing. That job will be the so-
called manufacturing czar, someone who is going to try to find out what 
is wrong. Why is the U.S. hemorrhaging its productive capability to 
China and other unfair traders with extraordinarily low wages? For most 
Americans and for me it is pretty obvious; but to the Bush 
administration it is not, so they need a manufacturing czar. It took 
them 6 months to find the right guy.
  It would have been good if maybe the manufacturing czar could be by 
the President's side when his name is released tomorrow. They will be 
doing this in Ohio, which has suffered horribly with the loss of 
productive capability. But the gentleman in question is not available. 
His name is Tony Raymundo, is not available because he is in China. He 
is in China where his company is building a factory. It is kind of like 
an awfully bad joke here. The Bush administration in dealing with China 
and the outsourcing of jobs is going to put a manufacturing czar in 
their administration who is over in China overseeing the construction 
of his own plant in China. And, no, I am not making this up. That is 
actually true.
  So the Bush administration says soon they are going to push hard, as 
I said earlier. They are going to ban the word outsourcing, 
globalization. They are going to empower the word ``insourcing'' at the 
White House. They are going to brand people like me who have been 
raising the alarm both in Democrat administrations and Republican 
administrations about the failing trade policies of this country. I 
bitterly opposed Bill Clinton's push for NAFTA, and I think that was a 
shameful moment in the Clinton administration and began the undoing of 
our productive capacity. I think it was only really facilitating Bush 
One and Reagan who had negotiated the agreement. But, unfortunately, 
Bill Clinton saw fit to jam it through the Congress. But now Bush is 
taking all that one step further.
  His newest free trade agreements, first, he wants to expand NAFTA, 
which promised the United States hundreds of thousands of job and trade 
surpluses with Mexico, which has brought us huge and growing trade 
deficits with Mexico and lost us hundreds of thousands of jobs, 
actually the reverse effect of what they have promised. But the 
President wants to replicate NAFTA all the way through Central and 
South America. The President has a proposal called CAFTA. CAFTA would 
expand NAFTA to all of Central and South America. Imagine how many jobs 
and much capacity we could export to Central and South America if the 
same rules applied all across that entire region.
  The President is right now; it is held up because the Republican 
majority is a little bit nervous on voting on such a gigantic expansion 
of a failing policy in an election year. But you can be certain if the 
President is reelected, we will either have a special session or at the 
beginning of the next session of Congress he will be jamming through 
this mega-expansion of NAFTA, doing what Bill Clinton did with NAFTA, 
10, 20 times over.
  But even better, the President has shown us a model in some of his 
proposed free trade agreements which also certainly does exceed the 
problems with the Clinton administration on trade. The Chile and 
Singapore agreements are cases in note, free trade agreements voted for 
by this Congress and signed blithely by the President last year. In the 
case of Chile, it is the first-ever trade agreement to mandate the 
importation of foreign skilled labor.
  Yeah, that is right. It is an actual section of the bill that 
establishes a new category of Chilean workers to be imported into the 
United States to be trained in the jobs that will be exported when the 
companies move to Chile. It is efficient for those companies, that is 
true, but does not do a whole heck of a lot for the American workers 
left here holding the bag when their job has fled south to Chile. But 
that is quite an extraordinary new improvement if you think, as the 
President's chief economic adviser does, that exporting jobs is good. 
Now, I am not making that up either.
  Mr. Mankiw, the President's Chief Economic Adviser in the economic 
report to the President signed by the President of the United States, 
endorsed by him, says, ``Outsourcing is just a new way of doing 
international trade. More things are tradeable than were tradeable in 
the past and that is a good thing. Shipping jobs to low cost countries 
is the latest manifestation of the gains from trade that economists 
have talked about for a century.''
  Is that not peachy. That is Mr. Mankiw, the President's Chief 
Economic Adviser, expressing the opinions of the President and his 
administration that the export, the outsourcing, a word now banned at 
the White House, of U.S. jobs overseas is a net benefit to our country 
under the theory that things will be produced more cheaply there which 
will be good for American consumers. Of course, a little fallacy with 
their logic here is if Americans

[[Page H1004]]

cannot find jobs, and we have growing unemployment and job loss under 
this administration, then no matter how cheap the goods get produced in 
China and some other place that might even produce things more cheaply, 
Americans are not going to be able to afford those goods for long; and 
ultimately that will lead to some very severe economic problems. But 
they persist. They are stubborn at least. And the President is going to 
push for more free trade.
  Now, we have some research here about outsourcing, a word banned at 
the White House now, but that is the export of American jobs which they 
are no longer going to reference at the White House; and one company, 
Deloitte Research, predicts 2 million jobs will be exported in the next 
5 years; Forester Research, 3.3 million white collar jobs in the next 
15 years. Those were the intellectual technology, high-technology 
skilled jobs that we had heard for so long, what did they say to me 
when I raised concerns early on about these trade policies? They say, 
Congressman, you do not understand. These are the old obsolete 
manufacturing jobs. We do not want them anymore. I said, I do not 
understand how we can be a great Nation, a great power, if you do not 
make things anymore. They say, Do not worry about it. We will not make 
the things but will design them, and we will have all of the brain 
power. We will retrain all those workers to run computers and work in 
the high-tech industry.
  Now we find that industry is flooding overseas very quickly and 
expect 3.3 million of those next-generation jobs will flow overseas the 
next 15 years. The question becomes, what is next? They said, we do not 
know, but do not worry, something always comes along. That is a heck of 
a thing to bet your economy on.
  Mark Zandy of economy.com estimates 995,000 jobs have been lost 
overseas since March, 2001. That is about a third of the jobs that the 
President has lost on his watch, since he has been President, have been 
lost overseas. Yet he believes that our trade policy is working, and 
the head of his economic council says it is working just exactly as it 
is designed. It is exporting jobs overseas. That was the intention of 
the trade policy and they are standing behind that. But they will not 
use the word outsourcing anymore down at the White House.
  The Gardner Group estimates that 10 percent of jobs at U.S. 
information technology vendors will move offshore within the next year. 
IBM is exporting 5,000 jobs to India, China, and Brazil. They will save 
$168 million a year by doing so. This is a very, very disturbing trend. 
Computer programming jobs in the U.S. that pay 60 to 80,000, nice wage, 
but it also recompenses someone for a heck of a lot of education and 
training. They go for about 8,000 in China; 5,000 in India; 5,000 in 
Russia.
  So when the President says we will have a level playing field, I 
guess he is telling people to go to college for 5 or 6 years, get a 
masters degree, become a skilled computer programmer, run up 40, 
$50,000 in debt or more in obtaining that education, and they should 
work for $5,000 a year because that will give the President his level 
playing fields in these areas because Mr. Mankiw says it is good that 
those jobs are so much cheaper there.
  Think of how much cheaper the products will be. Of course, what most 
of us see is the products really are not that much cheaper, but the 
profits which flow to a relatively small number of people; the profits 
are much better.
  According to a recent survey of 1,091 CEOs, 27 percent planned to 
export jobs within the next 3 years; 20 percent, one-fifth of the CEOs 
polled in America expect to export jobs in the next 12 months. They 
say, and there is a new big business coalition that has come together 
about this, and like the White House, they want to ban the word 
outsourcing. I think that quite soon John Ashcroft is going to begin 
having people who use the word outsourcing arrested. But the word they 
want to use now is worldwide sourcing. And these business lobbyists, as 
it says in this article here, business lobbyists are talking to the 
Bush administration about adopting this language. But, of course, as we 
know from the article I read earlier, the Bush White House did in fact 
adopt that term just yesterday to emphasize, and they have of course 
banned any discussion of the exported jobs.
  We have got a few other problems. Here is Craig Barrett, the CEO of 
Intel. This is 1/26/04, New York Times: ``If you look at India, China 
and Russia, they all have strong education heritages. Even if you 
discount 90 percent of the people there as uneducated farmers, you 
still end up with about 300 million people who are educated. That is 
bigger than the U.S. workforce. The big change today from what has 
happened over the last 30 years is that it is no longer just low-cost 
labor you are looking at; it is well-educated labor that can 
effectively do any job that can be done in the United States.''
  He goes on to say, this is Craig Barrett, the CEO of Intel, the 
company that was going to produce the next generation of jobs for 
educated and skilled Americans here: ``Unless you are a plumber or 
perhaps a newspaper reporter or one of those jobs which is 
geographically situated,'' cutting lawns at the estates of rich people, 
for instance, ``you can be anywhere in the world and do just about any 
job.'' Barrett was asked, Are we not talking about an entire generation 
of lowered expectations in the United States for what an individual 
entering the job market will be facing?

                              {time}  2145

  He responded. It is tough to come to another conclusion than that. If 
you see this increased competition for jobs, the immediate response to 
competition is lower prices and that is lower wage rates. Back to what 
the President is talking about with a level playing field. Americans 
should go to college, graduate and expect, as skilled computer 
programmers, to work for 5 or 6,000 a year in the world of Mr. Mankiw, 
President Bush and the CEO of Intel, Craig Barrett. That does not sound 
like a tremendous bargain to me, I think, or to most Americans who I 
represent.
  Jeffrey Immelt, CEO of General Electric, now here is a company who 
does not just engage in intellectual property. They make great 
products. I fly on planes back and forth across the country, will be on 
one tomorrow, and a lot of them have GE engines. I have been to the 
plant they still have in the United States, great stuff, incredible 
product. But here is an investor meeting in 2002.
  When I am talking to GE managers, I talk China, China, China, China. 
You need to be there. You need to change the way people talk about it, 
how they get there. I am a nut on China. Outsourcing from China is 
going to grow to $5 billion. Well, it has already eclipsed $5 billion. 
He was a little modest in his estimates. Outsourcing, that is, U.S. job 
exports to China with U.S. or multinational producers, U.S. capital 
producing jobs there, producing products there and shipping them back 
to the United States. Every discussion today has to center on China. 
The cost basis is extremely attractive, i.e., cheap wages. You can take 
an 18-cubic foot refrigerator, make it in China, land it in the United 
States, land it for less than we can make an 18-cubic foot refrigerator 
today ourselves.
  This list, I cannot possibly do justice to and read the entire list, 
but this is a list from Lou Dobbs on CNN, someone who formerly was a 
great supporter and advocate of free trade policies until he studied it 
a bit, until he looked at the impact on hollowing out the intellectual 
might of our country, the industrial might of our country, the loss of 
jobs. Every night now on CNN he talks about the issue of exporting 
America, outsourcing jobs.
  He has a list here of companies that are exporting America. They are 
companies either sending American jobs overseas or choosing to employ 
cheap overseas labor instead of American workers. As you can see, it is 
quite small print, and it goes on for pages and pages. It is available 
on his Web site. He has talked about it extensively, but the list is 
shocking, and I would urge that for reading for all Americans, 
particularly those who are unemployed because of these policies, have a 
lot of time on their hands and wonder what happened to their job. They 
can read this list and see perhaps where it went.
  Now, all this is bad enough, but guess what. We are asking American 
taxpayers to subsidize the export of jobs

[[Page H1005]]

to foreign countries. It has been estimated that if we repealed any 
reference in the U.S. Tax Code to overseas income, that that means no 
taxes at all. I mean, once a U.S. company went over there, we would not 
even think about taxing them. We would save $20 billion a year. That is 
how much they are able to deduct from their U.S. income by producing 
overseas with cheap foreign labor. We are through some other programs 
actually giving direct subsidies to companies to set up manufacturing 
overseas.
  So, in terms of solutions to this problem, the first and easiest 
thing it seems that we need to do is stop any taxpayer subsidy for 
these conglomerates, multinationals and even some U.S. firms from 
outsourcing their jobs, a word again not allowed at the White House, to 
India or China or Mexico or elsewhere. Then after we do that, we need 
to begin to actually use the rules of trade.
  Remember, the President came to Congress a little more than a year 
ago, and he said the Chinese, really, the only way we are going to get 
them to clean up their act, it is true, they are violating intellectual 
property left and right, they are doing all sorts of things to 
undermine us, but the only way we are going to become truly competitive 
in China is if we give them what is called Permanent Most Favored 
Nation status; that is, we would no longer annually review, as is 
required of all Communist countries and they are a Communist 
dictatorship, their trade status and determine whether or not we would 
renew it.
  That drove some of the largest corporations in this country 
absolutely berserk because they wanted huge amounts of capital and 
produce their goods over there, and the prospect of having China lose 
Most Favored Nation status on an annual basis would drive them into a 
lobbying frenzy every year.
  So they successfully lobbied the Bush administration, saying we are 
going to make it permanent, never again will we review China for unfair 
trade, but instead we will shift our emphasis to the World Trade 
Organization, and we will have rules-based trade. I have already talked 
about the company in my district that has been cloned in China, 
illegally, copying their U.S. copyrighted and patented and even Chinese 
copyrighted and patented product in violation of Chinese law, U.S. law, 
international law, and the rules of the World Trade Organization, and 
the Bush administration has said they will do nothing about.
  In fact, every year the President's special trade representative puts 
out a report which documents page after page after page of intellectual 
property theft by Chinese firm. Again, as I said earlier, apparently 
within 24 hours of bringing intellectual property into China it will be 
copied and available on the market, sometimes good quality, sometimes 
lesser quality.
  So how many complaints has the Bush administration filed since the 
objective was to get China into the WTO and use rules-based trade to 
really teach them a lesson against China? Well, none, none, zero. How 
many have they failed on the issue of intellectual property worldwide? 
None, none, not one. It seems that it was a false promise. I am not 
supporter of the WTO, but we are stuck in it, and I do not think we 
should be in it, then we should at least use its rules that would 
advantage American people, American consumers, American workers, we 
should use it, because we certainly see it used by other countries to 
our disadvantage, but this administration is refusing to do that.

  I will give another example and it is very timely, the issue of oil. 
The OPEC countries have meetings every month it seems lately, and they 
decide on quotas and what they are doing intentionally with those 
quotas is restricting the supply of oil, creating artificial shortages 
to drive up the price, 38 bucks a barrel now, seen the price at the 
pump, heading up toward $2 in my State, and I hear it is even higher in 
other parts of the country. I bet you Memorial Day it will be pushing 
two and a half, three bucks in places around the country.
  The oil companies always tag on a little extra margin so they are 
doing fine. Their profits are up, but the OPEC countries obviously are 
getting a bundle of money from us, too.
  The only problem with that is that five of the eight major countries 
in OPEC are in the WTO, and guess what. Rules based trade, the WTO, 
does not allow countries to get together, producers to get together and 
collude to restrict supply to drive up the price. Again, this is 
something I asked the Clinton administration to investigate and file a 
complaint with the WTO on, and they refused. I have asked the Bush 
administration to file a complaint on this, and I got back after 6 
months a nice letter from the White House counsel saying, no, they 
would not do that and in their opinion that it was just fine if OPEC 
colluded to drive up the price of oil in violation of the rules of the 
World Trade Organization, international law, U.S. law to gouge U.S. 
consumers. They really just did not think that it merited a complaint 
or their attention.
  So this whole thing that the Bush administration is now going to push 
after banning the word ``outsourcing,'' after calling people who are 
calling for new trade negotiations, for new trade rules, for rules that 
do not hollow out this country, the Bush administration calling people 
like me and others isolationists, they want to just say there is 
nothing but what they are doing which is failing or isolationism.
  I say there is another way to deal with this within the existing 
frameworks by pursuing complaints, by protecting American consumers, 
and try to keep some of those jobs home. I would go further than that. 
I would say ultimately we are going to have to look at managed trade 
because you simply cannot, as the President is saying here, asking 
American workers or the head of Intel to compete with $5,000-a-year 
engineers overseas, we cannot drive our country down that far and our 
people down that far, maintain our great stature and our standard of 
living. We should not be asking them to do that. We should not be 
thinking about doing that. We should not be allowing our companies to 
be blackmailed, to give their state-of-the-art technology to countries 
like China for a pittance. We have got to stand up for our own.
  We are essentially in a trade war. This guy wants to be the war 
President. Well, I tell you what. This war is a war that has some 
extraordinarily serious implications for the future, not only of the 
military security of this country, but the economic security of this 
country, the basis of the wealth of this country, and we are fighting 
right now with both hands tied behind our back and a blindfold and ear 
plugs down there at the White House. They do not want to hear about it. 
They do not want to engage in it. Well, if they do not start doing that 
soon, we are looking at some very, very dire implications for the 
future of the American economy.
  Mr. PALLONE. Mr. Speaker, will the gentleman yield?
  Mr. DeFAZIO. I yield to the gentleman from New Jersey.
  Mr. PALLONE. Mr. Speaker, I just wanted to commend the gentleman for 
coming to the floor this evening and discussing the issue of these 
trade groups and the impact on the outsourcing, and I really believe 
that this is the most important issue facing the country right now.
  I just wanted to come and maybe I could ask you a couple of questions 
relating to what you said. I thought it was very interesting, I read an 
article a couple of months ago, maybe it was less, in the New York 
Times, about NAFTA, and I voted against NAFTA. I voted against Fast 
Track. I think the only one of these I may have voted for was the 
Jordan one because they had negotiated it so that there were sufficient 
labor and environmental safeguards, but generally speaking, I have 
opposed all these major trade agreements exactly because I am worried 
that we give away the store and we do not provide any protections that 
arrive at what I call fair trade.
  Even the President, if you listen to him, will say that even though 
he is a free trader, he believes in fair trade in the sense that there 
is supposed to be some reciprocity, but as you point out, that 
reciprocity never exists. There is never anytime that I can remember 
when the President invoked any rule or said that we were going to, as 
you said, file a WTO complaint or complain about other countries' 
treatment with regard to trade.

  Anyway, this article said that with regard to NAFTA, essentially the

[[Page H1006]]

United States lost big time. Mexico, interestingly enough, lost big 
time because their standard of living and their workers wages actually 
declined I think during the time that NAFTA. It said the only country 
that may have gained somewhat was Canada, and I am not an expert on 
this. They said the reason for that was the Canadian government 
basically involved themselves in what you might call economic 
nationalism. In other words, they knew they were getting into this 
NAFTA agreement, they knew that some jobs were going to be lost, but 
their system provides that at the government level, if some jobs are 
lost to the U.S. or to Mexico, that they quickly figure out areas where 
they can train people and basically take over through national policy 
the manufacturing or whatever it happens to be, and they provide very 
generous benefits to people who lose their jobs so they do not lose 
their pension or their health benefits or whatever else.
  So it was sort of their aggressiveness and their willingness to be 
involved in figuring out where to be aggressive in terms of trade that 
made them a winner, so to speak.
  Again, these are gross generalizations, but I was listening to what 
you said because it seems like we do not in any way involve ourselves 
in what you might call economic nationalism. Nobody in the Bush 
administration is in charge, or even I guess would imagine that they 
would try to look at the flow of trade in the way to try to take an 
advantage for American workers or protect American workers.

                              {time}  2200

  And even if you look at the European countries, if somebody loses 
their job, they usually have something, some wages or some income or 
some benefits that they can live on. It is almost like we just cry 
uncle. We say, okay, we are going to sign all these free trade 
agreements; we do not really care. Let the chips fall where they may. 
We lose jobs, it does not matter. Everything is outsourced; it does not 
matter.
  It is this complete lack of concern about the American worker, which 
I think was epitomized with the President's economic report, which the 
gentleman mentioned several times, where his chief economic adviser, 
whatever his title is, said that outsourcing was a good thing.
  I completely agree with the gentleman. If you take this to its 
extreme and say we are going to sign more of these free trade 
agreements, which the President is now negotiating with Central America 
and there have been several that have passed here in the last couple of 
years, Singapore, I forget there are so many, and there are more he is 
negotiating, now Morocco, I think, is ready, if we just say it is okay, 
laisse faire, or whatever the word is, I just do not see any end to it. 
There is no way we are going to compete.
  I guess my question to the gentleman is, Is it really true a lot of 
these countries, the gentleman mentioned China, practice economic 
nationalism? They take advantage of these free trade agreements to 
either subsidize an industry or capture a market and we do not do 
anything of that sort? I wanted the gentleman to comment on that.
  Mr. DeFAZIO. Well, Mr. Speaker, let us go to Europe, which is a 
higher cost competitor than the United States with all the social 
welfare and all the other programs over there. Airbus is now exceeding 
Boeing in terms of production. Now how can that be? Well, all of their 
costs of development are subsidized by the European consortium. If you 
buy an Airbus plane, they will throw in goodies. Buy an Airbus. Well, 
there are no slots to land at Heathrow. Buy an Airbus, we have a spot 
to land at Heathrow, prime time. Oh, okay.
  So they use the laws and the rules of their own countries and the 
European Economic Union to further their own critical technology and 
high technology and high-value manufacturers like Airbus. Boeing is now 
going to China and Japan. It will not be long before we do not make 
planes in this country any more. Then what happens?
  So they have a much more global view and long-term view of where they 
want to be positioned in the world economy, and we are just engaging in 
laisse faire, saying, no, our highest priority is the cheapest 
production of a good by the cheapest unit of labor somewhere out there, 
and we do not care what it does to our economy or the people at home 
because it is good for consumers. But, again, consumers are not able to 
consume much if they do not have jobs.
  Mr. PALLONE. If the gentleman will continue to yield, Mr. Speaker, 
the reality is when we challenge the President, the gentleman from 
Oregon, myself, and others, and say, look, your economic report that 
came out essentially says that that is your policy, let the jobs go 
wherever they want, we do not care, whatever, this will save American 
consumers, the President and a lot of Republicans here in the House 
backed off from that and said, oh, no, we really do not mean that.
  I think they realize if they say it the way we just did, which is 
essentially the way the economic report of the President said it, it is 
just not acceptable. Nobody buys that. Rationally you cannot sell that, 
so to speak, to the American people. So now they are backing off and 
saying we really did not mean outsourcing was good, but they have not 
changed their policy in any way. They are still trying to negotiate all 
these free trade agreements without any safeguards.
  Mr. DeFAZIO. Right. They want to keep doing, in fact, more of the 
same thing, but they want to pretend they are doing something else. And 
then they come up with all sorts of words. Like I said, they banned the 
word outsourcing at the White House. Mr. Mankiw was taken to the 
woodshed and beaten severely for having been so truthful about what 
they are doing. He is an academic; and he thought, well, I should put 
up the theory to show why it is what we are doing what we are doing. So 
they want to keep exporting America and our jobs and outsourcing, but 
they are going to call it something else.
  I think it is particularly bizarre that their new manufacturing czar, 
who it took 6 months to find, is over in China and unavailable for 
comment because he is building a plant over there. That kind of goes to 
the issue too.
  Mr. PALLONE. The amazing thing, too, is we saw a document yesterday, 
and I do not remember the name of it, but I will kind of summarize it, 
that basically showed that as far as the economy was concerned the 
stock market continues to go up, there is still a demand in the United 
States for manufactured goods, and so far the consumer spending is out 
there, people willing to spend money and buy things; but the big flaw 
in this economy and the reason why we are not doing that well 
economically is because of the loss of jobs.
  So if we just managed to somehow practice, I call it economic 
nationalism, I do not know if that is the word, and say, okay, look, we 
are just not going to let all these jobs go overseas, we are going to 
be careful about it, we are going to demand that American companies 
hire people here, we may pass certain laws that make it more difficult 
for them to send jobs or production overseas, that probably the economy 
would be in pretty good shape. The jobs would be there.
  It is not like we are a poor country. It is just that we are shipping 
everything overseas without any regard whatsoever for our own public.
  Mr. DeFAZIO. In fact, the Bush administration said that the huge 
growth in the trade deficit, the $43.1 billion last month, we are 
borrowing $43.1 billion from overseas to finance our purchase of goods 
made overseas, putting people out of work here was showing that our 
economy was reviving. Well, wait a minute.
  Mr. PALLONE. That is amazing.
  Mr. DeFAZIO. What about jobs here? What about production here? They 
are happy with the way this is going.
  Mr. PALLONE. The gentleman is exactly right. I have actually had 
discussions with Republican colleagues, and they have said to me, well, 
you act as if the economy is not doing well; and they point to all 
these indicators like the stock market and productivity and all these 
different things. And I just kind of stare at them and say, well, what 
does that matter if people do not have work, if people do not have 
jobs, if people do not have income? Ultimately, we will suffer, because 
if we do not have jobs, we will not be able to buy anything.
  What was it Henry Ford said? I am not going to be able to build cars 
unless people can afford to buy them. It just seems like you cannot 
convince

[[Page H1007]]

the President or the Republican leadership that somehow the job problem 
is a problem. They do not buy into the idea that it is a problem, yet 
they will not admit that their policies are what they are. They just 
continue to say, well, this will solve itself somehow. This will come 
around and the jobs will be created.
  The President keeps saying, well, we are going to create more jobs 
next month, and then the February report came out and said there were 
no new private sector jobs net resulting. So I am just sort of baffled. 
Because I go home and this is what people talk about to me, they talk 
about how they had an IT job and it went overseas. I talked to some 
physicians the other day who told me that now their x-rays are shipped 
overseas, and they have them back the next day.
  The public just sees this gradual creeping up of every type of 
employment being lost overseas, and we just keep passing these free 
trade agreements. It is just very frustrating to me because I think 
that this issue has to be addressed. And it does not seem like it is 
that hard to address it, yet we do not see any effort on the part of 
the Bush administration to do anything about it.
  Mr. DeFAZIO. Mr. Speaker, if I could, we are politicians talking. I 
was doing a round of town hall meetings in my district, and this is a 
pretty short letter so I would like to read it. Rayburn M. South, 
Oakland, Oregon, rural town in Oregon, and he wrote what he considered 
to be the State of the Union.
  He said, I could not afford a new car. He is an older gentleman, does 
not have a large income, $18,000 to $20,000. I bought a used car and 
drove it home. Looking it over, it was made in Mexico, a Nissan. I had 
to buy a jack so I could service my car. Went to Sears, bought a 
Craftsman jack. Came home, unpacked it. Made in China. Then I needed a 
pair of shoes. Came home, looked at the bottom of the shoe. Made in 
China. Ran out of batteries for my light. Came home, took the paper off 
the batteries, maximum alkaline batteries. Made in China. Christmas 
came. Someone gave me a shirt. Cutting the tape out, one read ``Made in 
China.'' Then my TV went on the blink. Looked around at TVs. Bought a 
good old RCA. I thought it was a good old American brand. Brought it 
home, unpacked it. Made in Mexico. Then I called my cousin in North 
Carolina. She was laid off. Her job went to Mexico. I called my other 
cousin in North Carolina. She is working 2 days a week. She does not 
know where her job is going. Seems like the people in China and Mexico 
are doing pretty good. We have a Congress, Senate, and President. 
Surely there is something you can do to help our people. Something 
stinks. Sincerely, Rayburn M. South, Oakland, Oregon.
  He speaks with more wisdom than most of our colleagues here in 
Congress who are ignoring the reality of this problem and just saying, 
oh, just hang in there, something will happen. Well, the something that 
is happening is really pretty bad.
  As I think I said earlier, they told us if only the value of the 
dollar drops, our goods will become cheaper, and we will sell more 
abroad. The value of the dollar is down 35 percent, and yet the amount 
of goods that we imported is up over a year ago by $5 billion, a 
deficit in goods. So how far does the dollar have to drop and what are 
the implications for the U.S. consumers and our standing in the world 
if the dollar gets into something like Argentina?
  I spoke a couple of years ago to a couple of economists, and I said I 
am pretty worried. I look at Argentina, and I said, I think that used 
to be one of the wealthiest countries in this hemisphere. They have an 
educated populace and a lot of stuff going for them, and look. I said 
their economic collapse is extraordinary. I said, but when I look at 
where we are, their deficit in trade was less than ours as a percent of 
GDP and their foreign debt was obviously much, much lower than ours. We 
owe over $2 trillion around the world because of these trade policies. 
I said, I think maybe we could become Argentina.
  I said to these economists, I think this could happen in 5 or 8 
years. And they sort of leaned over to one another and whispered; and 
then one of them said, no, no, no, it will take at least 10. But the 
response was not, no, we are not at risk of becoming Argentina; no, we 
are not hollowing out our wealth, our manufacturing, our future; no, we 
are not exporting new technology jobs; no, everything is going to work 
out. The response was, well, it will take a little longer than that to 
totally destroy our standing in the world and our economy.
  That is a pretty alarming statement; but they said, oh, yeah, that is 
kind of the way things are going.
  Mr. PALLONE. The other thing, Mr. Speaker, the gentleman has just 
pointed out, which is important, is that we do not have to accept what 
is happening. In other words, some people have said, okay, we have 
already signed some of these free trade agreements, they are in effect, 
the WTO is in effect, the U.S. is in it. But the bottom line, as the 
gentleman pointed out, is there is a lot we can do.
  First of all, we can sort of review all these agreements. I think it 
was John Kerry who said that once elected President that he would spend 
like the first 6 months reviewing all the existing free trade 
agreements to see to what extent they are harming the United States. 
And as the gentleman pointed out, the U.S. can file complaints with the 
WTO, can investigate how these other companies subsidize things and 
dump them in the United States. There are a lot of things we can do 
that this administration is not doing.
  And most important, stop signing new free trade agreements with other 
countries. Because I guess the majority of countries still do not have 
free trade agreements with the United States, and so simply not 
continue the policy until we review it and see how we can protect 
ourselves.
  Mr. DeFAZIO. Oh, Mr. Speaker, my colleague just used a bad word. 
Protect. We should protect the American standard of living? We do not 
want to become protectionists. That is what this administration would 
say.
  I agree with my colleague. There is something at risk here. I think 
we are in an economic war, as I said earlier. I think we need to 
protect ourselves and maybe fight back. And this administration is 
choosing not to do that because there are a few people here in this 
country who are accumulating just fabulous wealth by outsourcing, by 
moving jobs and production overseas, producing goods much more cheaply. 
They are selling them at roughly the same price back here in the United 
States, but the profit margin is a lot larger.
  I noticed a number of years ago when we could still buy shirts made 
in America. I think that is probably something we cannot do any more. 
But I used to go through the labels looking for them, and 5 or 8 years 
ago I could still find some. I would notice they were right on the rack 
next to shirts made in Bangladesh or somewhere else, and they were all 
the same price.
  The Bangladesh shirt did not sell for 15 cents. It sold for $25. The 
U.S.-made shirt sold for $25. The person who made the U.S. shirt made 
enough money to raise a family, buy a home, be a productive citizen in 
our economy and live a good life. The Bangladeshi was earning less than 
a dollar a day, very often child labor or whatever else, but they sold 
for the same price.
  That is what is going on now, except now there is this new spin where 
the Bush people say they want a level playing field. And if their level 
playing field does not bring other people up, which they are indicating 
they have no intention of forcing, then what they are saying is they 
are expecting Americans to come down, as the CEO of Intel said. If 
people want to compete, they have to look at competing with engineers 
from Russia who earn $5,000 a year.
  Mr. PALLONE. It is just amazing. I was at a clothing store for kids 
with my wife buying some things for the kids, and I searched throughout 
and I think I counted 50 countries that were on the labels, and the 
only thing I could find that was made in the United States were some 
socks. And then another day I was at Cracker Barrel on the way back to 
New Jersey on 95, and I had to wait in line, so I just looked around to 
see if there was anything made in the U.S. I found one shawl, or 
something like that, that was made in North Carolina. A cotton shawl. 
That was the only thing in the place.

                              {time}  2215

  As the gentleman said, they were certainly no more expensive than the

[[Page H1008]]

other things in the store. They looked like they were on the way out. 
Once they were sold, I felt like I was looking at the last item. My own 
town of Long Branch was a major textile center. My grandmothers on both 
sides both worked in textile factories and raised the kids that way.
  The Bush administration does not do anything to try to promote 
American manufacturing or American jobs. They basically follow this 
policy that it is okay for everything to flow out of the country. It 
has got to stop. Maybe because they have refused to acknowledge that is 
their policy is something, but unless they actually change their policy 
in day-to-day operations, it is not going to make any difference.
  Mr. DeFAZIO. Mr. Speaker, I thank the gentleman. The implications are 
dire, not only for the standard of living of Americans, our productive 
capacity, our future standing in the world as a great power, but just 
one last item. During the war with Iraq, we used a lot of cruise 
missiles. There is a critical component of the cruise missile made in 
Europe, either Sweden or Switzerland make that component, and they 
refused to sell us any because they did not support the war.
  What is going to happen in 10 years when China is looking at invading 
Taiwan or Mongolia for its resources, and the United States has to go 
to the Chinese and say can we buy some weapons from you because we 
think next year we are going to have to defend ourselves from you.
  I do not understand the hawks around here who are blithely allowing 
this hollowing out of our wealth and capacity to happen. I know it is 
enriching the contributor class in this country, which has a lot of 
clout at the White House and in Congress; but it is very disturbing to 
me. There are so many reasons why Members should be appalled by the 
trade policy. The policy at the White House is to change the names, not 
the policy.
  Mr. Speaker, I thank the gentleman for participating on this, and for 
all the time he spends on the floor on this and on so many other 
issues.

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