[Congressional Record Volume 150, Number 39 (Thursday, March 25, 2004)]
[Senate]
[Pages S3185-S3189]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE (for himself, Mr. Kennedy, Mr. Reed, Mr. Feingold, 
        Mr. Kohl, Mr. Durbin, Mr. Bingaman, Mr. Graham of Florida, Mr. 
        Reid, and Mr. Dodd):
  S. 2234. A bill to amend title XVIII of the Social Security Act to 
ensure that prescription drug card sponsors pass along discounts to 
beneficiaries under the medicare prescription drug discount card and 
transitional assistance program; to the Committee on Finance.
  Mr. DASCHLE. Mr. President, the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 created a temporary drug 
discount card program. We expect that program to go into effect this 
summer. Under the new law, it is the only prescription drug assistance 
seniors will see until 2006. And it isn't much. This program has a lot 
of problems and I am very skeptical that it will provide meaningful 
assistance to most beneficiaries.
  Today, the administration announced which private companies have been 
selected to receive beneficiary enrollment fees and provide the cards 
to beneficiaries. The applicants included

[[Page S3186]]

big pharmaceutical companies, pharmaceutical benefit managers, and 
HMOs. And the list of approved companies is a who's who of the 
insurance industry.
  One of the most glaring problems with the program is that the 
Medicare legislation fails to ensure that these private companies pass 
along the discounts they negotiate to beneficiaries. Today, I am 
introducing legislation to remedy that failure. My bill would require 
card sponsors to pass at least 90 percent of the discounts along to 
beneficiaries. It seems like common sense, but, true to form, the 
Republican Medicare bill allows the private companies to keep the 
discounts as profits. And the administration's regulations only require 
that they pass along a ``share'' of the discounts they negotiate. Well, 
I think that's giving them too much leeway.
  The administration is promising seniors discounts in order to 
convince them to pay private companies a $30 fee. My bill would ensure 
that these private companies pass the discounts along to those seniors. 
It's only fair. The sponsors will still have plenty of room for 
benefitting from participating in the program--they get the $30 
enrollment fee and they will be able to retain up to 10 percent of the 
negotiated price concessions.
  Despite all the hoopla, the cards themselves are nothing new. Some 
low-income beneficiaries will see $600 in assistance on their cards, 
and that is real help. Unfortunately, the process for gaining access to 
that money is so cumbersome, I worry that many will not get it. And I 
have serious doubts about whether the cards will add any other 
meaningful assistance. The General Accounting Office has found that 
similar cards now available on the market offer discounts on average of 
less than 10 percent--that's about what seniors could save by 
comparison shopping at local pharmacies.
  Worse, under the Medicare drug program, seniors will only be able to 
use one Medicare-endorsed card. Before the program, people could use as 
many cards as they wanted and compare discounts. And the real kicker is 
that once seniors pay a fee to participate, they're locked into that 
card for a year. But the card sponsor isn't locked into anything. It 
can change everything whenever it wants--even the amount of the 
discount or whether a discount is offered on a particular drug.
  And here's the worst part, this drug card program may already be 
harming all American drug consumers. As the Wall Street Journal noted 
just yesterday, recent drug price increases are eroding even the meager 
savings the administration predicts. What's more, all Americans are 
already paying higher drug prices. According to the Wall Street 
Journal, since the Bush administration proposed a Medicare drug card in 
2001, the prices of many drugs the elderly use have ``surged.'' For 
example, the article notes that since that time, the price of Lescol, a 
cholesterol drug, has increased by more than a third. Similarly, the 
price for Celebrex, a popular drug for arthritis pain, has risen 23 
percent since the administration proposed the cards.
  The administration is claiming the discount cards will result in 
beneficiary savings of between 10 and 25 percent. But the 
pharmaceutical industry's price hikes negate what little savings the 
administration optimistically predicts. Unfortunately, the discount 
cards are just one example of the new law's failure to address drug 
prices. The Boston University School of Public Health recently found 
that the new Medicare law could lead to an additional $139 billion in 
profits for the drug companies. The new law actually prohibits Medicare 
from using its negotiating power to obtain lower drug prices for 
seniors. And the reimportation provisions are meaningless. We know from 
experience that seniors can save much more than 10 to 25 percent by 
getting their drugs from Canada.
  As Families USA points out on its website, the drug cards actually 
create an incentive for the drug companies to raise their prices: 
``Neither the new law nor the regulations specify the `base prices' to 
which discounts will be applied. Any discount will be meaningless if 
the base price is undefined--especially if the base price continues to 
rise very substantially. It would be like a department store marking up 
prices on products so that it can later offer them `on sale' at 
tremendous `savings.' ''
  The bill I am introducing addresses only one flaw in a program 
riddled with problems. I feel that it is a critical step. At the very 
least, we should ensure that if this program does offer some sort of 
price concession, that Medicare beneficiaries--not private companies 
like HMOs--are the ones to profit from the results.
  I ask unanimous consent that the text of the bill be printed in the 
Record following my remarks.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2234

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Drug Discount Card 
     Improvement Act of 2004''.

     SEC. 2. ENSURING THAT PRESCRIPTION DRUG CARD SPONSORS PASS 
                   ALONG DISCOUNTS TO BENEFICIARIES.

       (a) In General.--Section 1860D-31(e)(1)(A)(ii) of the 
     Social Security Act (42 U.S.C. 1395w-141(e)(1)(A)(ii)), as 
     added by section 101 of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173; 117 Stat. 2071), is amended by striking ``take into 
     account'' and inserting ``reflect at least 90 percent of 
     all''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of section 
     101 of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2066).
      By Mr. HOLLINGS:
  S. 2235. A bill to rename the Department of Commerce as the 
Department of Trade and Commerce and transfer the Office of the United 
States Trade Representative into the Department, to consolidate and 
enhance statutory authority to protect American jobs from unfair 
international competition, and for other purposes; to the Committee on 
Finance.
  Mr. HOLLINGS. Mr. President, I ask unanimous consent that a copy of 
an article I wrote for the Washington Post Outlook section be printed 
and that the text of the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2235

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Domestic Workforce 
     Protection Act''.

     SEC. 2. COMMERCE DEPARTMENT RENAMED AS DEPARTMENT OF TRADE 
                   AND COMMERCE.

       (a) In General.--The Department of Commerce is hereby 
     redesignated the Department of Trade and Commerce, and the 
     Secretary of Commerce or any other official of the Department 
     of Commerce is hereby redesignated the Secretary or official, 
     as appropriate, of Trade and Commerce.
       (b) Reference to Department, Secretary, etc. of Commerce 
     Deemed Reference to Department, Secretary, etc. of Trade and 
     Commerce.--Any reference to the Department of Commerce, the 
     Secretary of Commerce, or any other official of the 
     Department of Commerce in any law, rule, regulation, 
     certificate, directive, instruction, or other official paper 
     in force on the effective date of this Act shall be deemed to 
     refer and apply to the Department of Trade and Commerce or 
     the Secretary of Trade and Commerce, respectively.

     SEC. 3. TRANSFER OF THE OFFICE OF THE UNITED STATES TRADE 
                   REPRESENTATIVE TO WITHIN THE DEPARTMENT OF 
                   COMMERCE AND TRADE.

       Section 141(a) of the Trade Act of 1974 (19 U.S.C. 2171(a)) 
     is amended by striking ``Executive Office of the President'' 
     and inserting ``Department of Trade and Commerce''.

     SEC. 4. TERMINATION OF DEFERRAL TO ELIMINATE TAX BENEFITS FOR 
                   OFFSHORE PRODUCTION.

       (a) General Rule.--Paragraph (1) of section 951(a) of the 
     Internal Revenue Code of 1986 (relating to amounts included 
     in gross income of United States shareholders) is amended--
       (1) by striking ``and'' after the semicolon in subparagraph 
     (A)(iii);
       (2) by striking ``959(a)(2).'' in subparagraph (B) and 
     inserting ``959(a)(2); and''; and
       (3) by adding at the end thereof the following:
       ``(C) the amount determined under section 956A with respect 
     to such shareholder for such year (but only to the extent not 
     excluded from gross income under section 959(a)(3)).''.
       (b) Amount of Inclusion.--Subpart F of part III of 
     subchapter N of chapter 1 of the Internal Revenue Code of 
     1986 is amended by inserting after section 956 the following 
     new section:

     ``SEC. 956A. EARNINGS OF CONTROLLED FOREIGN CORPORATIONS.

       ``(a) General Rule.--In the case of any controlled foreign 
     corporation, the amount

[[Page S3187]]

     determined under this section with respect to any United 
     States shareholder for any taxable year is the lesser of--
       ``(1) the excess (if any) of--
       ``(A) such shareholder's pro rata share of the amount of 
     the controlled foreign corporation's assets for such taxable 
     year, over
       ``(B) the amount of earnings and profits described in 
     section 959(c)(1)(B) with respect to such shareholder, or
       ``(2) such shareholder's pro rata share of the applicable 
     earnings of such controlled foreign corporation determined 
     after the application of section 951(a)(1)(B).
       ``(b) Applicable Earnings.--For purposes of this section, 
     the term `applicable earnings' means, with respect to any 
     controlled foreign corporation, the sum of--
       ``(1) the amount referred to in section 316(a)(1) to the 
     extent such amount was accumulated in taxable years beginning 
     after February 29, 2004, and
       ``(2) the amount referred to in section 316(a)(2),

     reduced by distributions made during the taxable year and 
     reduced by the earnings and profits described in section 
     959(c)(1) to the extent that the earnings and profits so 
     described were accumulated in taxable years beginning after 
     February 29, 2004.
       ``(c) Special Rule Where Corporation Ceases To Be 
     Controlled Foreign Corporation During Taxable Year-.--If any 
     foreign corporation ceases to be a controlled foreign 
     corporation during any taxable year--
       ``(1) the determination of any United States shareholder's 
     pro rata share shall be made on the basis of stock owned 
     (within the meaning of section 958(a)) by such shareholder on 
     the last day during the taxable year on which the foreign 
     corporation is a controlled foreign corporation,
       ``(2) the amount of such corporation's assets for such 
     taxable year shall be determined by only taking into account 
     quarters ending on or before such last day, and
       ``(3) in determining applicable earnings, the amount taken 
     into account by reason of being described in paragraph (2) of 
     section 316(a) shall be the portion of the amount so 
     described which is allocable (on a pro rata basis) to the 
     part of such year during which the corporation is a 
     controlled foreign corporation.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section, including regulations to prevent the avoidance 
     of the provisions of this section through reorganizations or 
     otherwise.''.
       (c) Previously Taxed Income Rules.--
       (1) In general.--Subsection (a) of section 959 of the 
     Internal Revenue Code of 1986 (relating to exclusion from 
     gross income of previously taxed earnings and profits) is 
     amended by striking ``or'' at the end of paragraph (1), by 
     adding ``or'' at the end of paragraph (2), and by inserting 
     after paragraph (2) the following:
       ``(3) such amounts would, but for this subsection, be 
     included under section 951(a)(1)(C) in the gross income 
     of,''.
       (2) Allocation rules.--
       (A) Subsection (a) of section 959 of the Internal Revenue 
     Code of 1986 is amended by striking ``paragraph (2)'' in the 
     last sentence and inserting ``paragraphs (2) and (3)''.
       (B) Section 959(f) of the Internal Revenue Code of 1986 is 
     amended--
       (i) by striking paragraph (1) and inserting the following:
       ``(1) In general.--For purposes of this section--
       ``(A) amounts that would be included under subparagraph (B) 
     of section 951(a)(1) (determined without regard to this 
     section) shall be treated as attributable first to earnings 
     described in subsection (c)(2), and then to earnings 
     described in subsection (c)(3), and
       ``(B) amounts that would be included under subparagraph (C) 
     of section 951(a)(1) (determined without regard to this 
     section) shall be treated as attributable first to earnings 
     described in subsection (c)(2) to the extent the earnings so 
     described were accumulated in taxable years beginning after 
     February 29, 2004, and then to earnings described in 
     subsection (c)(3).''; and
       (ii) by striking ``section 951(a)(1)(B)'' in paragraph (2) 
     and inserting ``subparagraphs (B) and (C) of section 
     951(a)(1)''.
       (3) Conforming amendment.--Subsection (b) of section 989 of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``section 951(a)(1)(B)'' and inserting ``subparagraph (B) or 
     (C) of section 951(a)(1)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after February 29, 2004, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.
       (e) Technical and Conforming Changes.--The Secretary of the 
     Treasury shall, within 90 days after the date of enactment of 
     this Act, submit to the Committee on Ways and Means of the 
     House of Representatives and to the Committee on Finance of 
     the Senate, a draft of any technical and conforming changes 
     in the Internal Revenue Code of 1986 that are necessary to 
     reflect throughout such Code the changes in the substantive 
     provisions of law made by this section.

     SEC. 5. DISALLOWANCE OF DEDUCTIONS FOR CERTAIN OFFSHORE 
                   ROYALTY PAYMENTS.

       (a) In General.--Part IX of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 is amended by adding at the 
     end the following:

     ``SEC. 280I. CERTAIN OFFSHORE ROYALTY PAYMENTS.

       ``(a) In General.--In the case of a corporation, no 
     deduction shall be allowed for the payment of a royalty to an 
     affiliated entity organized and operated outside the United 
     States in exchange for the use of rights to a copyrighted or 
     trademarked product if those rights were transferred by the 
     corporation or a related party to that entity.
       ``(b) Exception.--Subsection (a) does not apply to the 
     payment of a royalty if the taxpayer establishes, to the 
     satisfaction of the Secretary, that--
       ``(1) the transfer of the rights to the entity was for a 
     sound business reason (other than the reduction of liability 
     for tax under this chapter); and
       ``(2) the amounts paid or incurred for such royalty 
     payments are reasonable under the circumstances.''.
       (b) Clerical Amendment.--The part analysis for such part is 
     amended by adding at the end the following:

``280I. Certain offshore royalty payments.''.

       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2003.

     SEC. 6. INCREASE IN AUTHORITY OF THE INTERNAL REVENUE SERVICE 
                   TO THWART USE OF TAX HAVENS BY CORPORATIONS.

       (a) In General.--Subchapter B of chapter 78 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following:

     ``SEC. 7625. AUTHORITY TO FRUSTRATE USE OF CORPORATE TAX 
                   HAVENS.

       ``(a) In General.--The Secretary is authorized--
       ``(1) to deny any otherwise allowable deduction or credit 
     under chapter 1,
       ``(2) to recharacterize, reallocate, and resource income,
       ``(3) to recharacterize transactions, and
       ``(4) to disregard any transaction, trust, or other legal 
     entity,

     determined by the Secretary to be necessary to prevent the 
     use by a corporation of a tax haven to avoid liability for 
     tax under this chapter.
       ``(b) Tax Haven Defined.--In this section, the term `tax 
     haven' means any country that meets the tax haven criteria 
     established by the Organization for Economic Co-operation and 
     Development.''.
       (b) Conforming Amendment.--The subchapter analysis for 
     subchapter B of chapter 78 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following:

``6725. Authority to frustrate use of corporate tax havens''.

     SEC. 7. ASSISTANT ATTORNEY GENERAL FOR TRADE.

       (a) Position Established.--The Attorney General shall 
     appoint an Assistant Attorney General for Trade.
       (b) Duties.--The Assistant Attorney General for Trade 
     shall--
       (1) investigate anticompetitive conduct by foreign 
     companies that has an adverse impact on the economy of the 
     United States (including manufacturing, agriculture, and 
     employment) or the global competitiveness of United States 
     companies;
       (2) investigate violations of international trade 
     agreements to which the United States is a party that have an 
     adverse impact on the economy of the United States (including 
     manufacturing, agriculture, and employment) or the global 
     competitiveness of United States companies and take 
     appropriate action to seek redress or punishment for those 
     violations; and
       (3) investigate and initiate appropriate action against 
     other activities throughout the world that have an adverse 
     impact on the economy of the United States (including 
     manufacturing, agriculture, and employment) or the global 
     competitiveness of United States companies.
       (c) Authority Is in Addition to Other Authorities.--The 
     authority granted to the Assistant Attorney General for Trade 
     by this section is in addition to, and not in derogation or 
     in lieu of, any authority provided by law to any other 
     officer or agency of the United States charged with 
     enforcement of the trade laws of the United States or of 
     international agreements to which the United States is a 
     party.
       (d) Compensation.--Section 5315 of title 5, United States 
     Code, is amended by striking ``(10)'' in the item relating to 
     Assistant Attorney General and inserting ``(11)''.

     SEC. 8. EMPLOYMENT OF ADDITIONAL CUSTOMS INSPECTORS FOR 
                   ILLEGAL TRANSSHIPMENTS OF TEXTILES.

       The Secretary of Homeland Security shall hire, train, and 
     deploy 1,000 customs agents in addition to the number of 
     customs agents otherwise authorized by law or otherwise 
     employed by the Department of Homeland Security for the 
     purpose of detecting and preventing illegal transshipments of 
     textiles to avoid textile import quotas and in violation of 
     trade agreements to which the United States is a party.

     SEC. 9. INCREASED DOMESTIC PRODUCTION OF NATIONAL DEFENSE 
                   CRITICAL GOODS.

       (a) In General.--The Secretary of Commerce, in consultation 
     with the Secretary of Defense, the Director of the Central 
     Intelligence Agency, the Secretary of State, the Secretary of 
     Homeland Security, and the Administrator of the Small 
     Business Administration shall develop a program to encourage 
     and support increased domestic production of goods and 
     products that are essential or critical to national security 
     in order to decrease the United States' dependence upon 
     imports of such goods and products.

[[Page S3188]]

       (b) Support Program.--The Secretary of Commerce shall 
     implement the program developed under subsection (a) to the 
     maximum extent feasible through existing programs, including 
     programs administered by the Small Business Administration. 
     The Secretary shall transmit to the Congress a report, within 
     18 months after the date of enactment of this Act, describing 
     the program and making such recommendations, including 
     legislative recommendations, as the Secretary deems necessary 
     for expanding the scope or improving the efficacy of the 
     program. The Secretary may submit the report in both 
     classified and redacted form.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Commerce such sums as 
     may be necessary to carry out the program.

     SEC. 10. SENSE OF THE SENATE CONCERNING APPROPRIATIONS FOR 
                   CERTAIN PROGRAMS.

       It is the sense of the Senate that the Congress should 
     appropriate the full amount authorized by law to carry out 
     the Regional Centers for the Transfer of Manufacturing 
     Technology program under section 25 of the National Institute 
     of Standards and Technology Act (15 U.S. C. 278k) and the 
     Advanced Technology Program authorized by section 28 of that 
     Act (15 U.S. C. 278n).

     SEC. 11. TRANSFER OF INTERNATIONAL TRADE COMMISSION 
                   FUNCTIONS.

       (a) Abolishment of ITC.--Effective on the first day of the 
     seventh month beginning after the date of enactment of this 
     Act, the United States International Trade Commission 
     established by section 330 of the Tariff Act of 1930 (19 
     U.S.C. 1330) as in effect on the last day of the sixth month 
     beginning after the date of enactment of this Act is 
     abolished.
       (b) Transfer of Functions.--Except as otherwise provided in 
     this Act, all functions that on the last day of the sixth 
     month beginning after the date of enactment of this Act are 
     authorized to be performed by the United States International 
     Trade Commission are transferred to the Department of 
     Commerce effective on the first day of the seventh month 
     beginning after the date of enactment of this Act and shall 
     be performed by the Assistant Secretary of Commerce for 
     Import Administration.
       (c) Determination of Certain Functions.--If necessary, the 
     Office of Management and Budget shall make any determination 
     of the functions that are transferred under this section.

     SEC. 12. INCIDENTAL TRANSFERS.

       The Director of the Office of Management and Budget, in 
     consultation with the Secretary of Commerce, shall make such 
     determinations as may be necessary with regard to the 
     functions, offices, or portions thereof transferred by this 
     Act, and make such additional incidental dispositions of 
     personnel, assets, liabilities, grants, contracts, property, 
     records, and unexpended balances of appropriations, 
     authorizations, allocations, and other funds held, used, 
     arising from, available to, or to be made available in 
     connection with such functions, offices, or portions thereof, 
     as may be necessary to carry out this Act. The Director shall 
     provide for the termination of the affairs of all entities 
     terminated by this Act and, in consultation with the 
     Administrator, for such further measures and dispositions as 
     may be necessary to effectuate the purposes of this Act.

               [From the Washington Post, March 21, 2004]

               Protectionism Happens To Be Congress's Job

                        (By Ernest F. Hollings)

       Free trade is like world peace--you can't get there by 
     whining about it. You must be willing to fight for it. And 
     the entity to fight for free trade is the U.S. Congress.
       Instead, Congress--whose members are shouting ``fair 
     trade'' and ``level the playing field''--is the very group 
     tilting the playing field when it comes to trade.
       By piling items onto the cost of doing business here, 
     Congress has helped end the positive trade balance that the 
     United States ran right up until the early 1980s. Over the 
     past 40 years, the minimum wage went up, the Environmental 
     Protection Agency was established, and the Occupational 
     Safety and Health Administration was set up. Lawmakers added 
     the Equal Pay Act, the Age Discrimination in Employment Act 
     and the Employment Retirement Income Security Act. Then came 
     the sharp increase in payroll taxes for Social Security in 
     1983, measures requiring plant closing notice and parental 
     leave, and the Americans With Disabilities Act. Health costs 
     increased, too, making it $500 a car cheaper in health costs 
     alone for General Motors to make Pontiacs in Canada. All this 
     helped give us a trade deficit that hit a record $43.1 
     billion in January alone.
       Even if wages were equalized, it would still pay for U.S. 
     companies to move operations to places such as China, which 
     requires none of these aspects of America's high standard of 
     living. Recently, columnist George Will wrote: ``The export 
     of jobs frees U.S. workers for tasks where America has a 
     comparative advantage.'' But in global competition, what 
     matters is not the comparative advantage of our ability so 
     much as the comparative disadvantage of our living standard.
       To really level the playing field in trade would require 
     lowering our living standard, which is not going to happen. 
     We value our clean air and water, our safe factories and 
     machinery, and our rights and benefits. Both Republicans 
     and Democrats overwhelmingly support this living standard 
     and many are prepared to raise its. The only course 
     possible, then, is to protect the standard.
       To talk in these terms raises cries of ``protectionism.'' 
     But the business of government is protection. The oath of the 
     public servant is ``to preserve, protect and defend.'' We 
     have the Army to protect us from enemies without and the FBI 
     to protect us from enemies within. We have Medicare and 
     Medicaid to protect us from ill health, and Social Security 
     to protect us from poverty in old age. We have the Securities 
     and Exchange Commission to protect us from stock fraud; 
     banking laws to protect us from usurpers; truth in lending 
     laws to protect us from charlatans.
       When it comes to trade, however, multinational corporations 
     contend that we do not need to protect, but to educate and to 
     improve skills; productivity is the problem, they say. But 
     the United States is the most productive industrial nation in 
     the world, with skills galore. BMW is producing better-
     quality cars in South Carolina than in Munich. There are 
     other obstacles that need addressing. For 50 years we have 
     tried to penetrate the Japanese market, but have barely done 
     so. To sell textiles in Korea, U.S. firms must first obtain 
     permission from the private Korean textile industry. If you 
     want to sell in China, it's a lot easier if you produce in 
     China.
       ``But we will start a trade war,'' is the cry. Wake up! We 
     have been in a trade for more than 200 years. And it's the 
     United States that started it! Just after the colonies won 
     their freedom, the mother country suggested that the United 
     States trade what we produced best and, in exchange, Britain 
     would trade back with what it produced best--as economist 
     David Ricardo later described in this theory of ``comparative 
     advantage.'' Alexander Hamilton, in his famous ``Report on 
     Manufactures,'' told the Brits, in so many words, to bug off. 
     He said, we are not going to remain your colony shipping you 
     our natural resources--rice, cotton, indigo, timber, iron 
     or--and importing your manufactured products. We are going to 
     build our own manufacturing capacity.
       The second bill ever adopted by Congress, on July 4, 1789, 
     was a 50 percent tariff on numerous articles. This policy of 
     protectionism, endorsed by James Madison and Thomas 
     Jefferson, continued under President Lincoln when he launched 
     America's steel industry by refusing to import from England 
     the steel for the Transcontinental Railroad. President 
     Franklin Roosevelt protected agriculture, President 
     Eisenhower protected oil and President Kennedy protected 
     textiles. This economic and industrial giant, the United 
     States, was built on protectionism and, for more than a 
     century, financed it with tariffs. And it worked.
       The Washington mantra of ``retrain, retrain'' comes up 
     short. For example, Oneita Industries closed its T-shirt 
     plant in Andrews, SC, back in 1999. The plant had 487 
     employees averaging 47 years of age. Let's assume they were 
     ``retrained'' and became 487 skilled computer operators. Who 
     is going to hire a 47-year-old operator over a 21-year-old 
     operator? No one is going to take on the retirement and 
     health costs of the 47-year-old. Moreover, that computer job 
     probably just left for Bangalore, India.
       In global competition there is a clash between standards of 
     living. I supported free trade with Canada because we have 
     relatively the same standard of living. But I opposed free 
     trade with Mexico, and therefore voted against the North 
     American Free Trade Agreement (NAFTA), preferring to raise 
     the standards in Mexico, as Europe did with Portugal, Spain 
     and Greece before admitting them to Europe's common market. 
     To be eligible for a tree trade agreement you should first 
     have a free market, labor rights, ownership of property, 
     contract rights of appeal and a respected judiciary. Mexico 
     lacked these, and after NAFTA there was an immediate flow of 
     jobs out of the United States because of Mexico's lesser 
     standards. Australia, on the other hand, has labor rights, 
     environmental rights and an open market, so the trade 
     agreement reached with Australia this month should be 
     approved.
       We must engage in competitive trade. To eliminate a 
     barrier, raise a barrier. Then eliminate them both.
       Our trouble is that we have treated trade as aid. After 
     World War II, we were the only country with industry, and in 
     order to prosper we needed to spread prosperity. Through the 
     Marshall Plan, we sent money, equipment and expertise to 
     Europe and the Pacific Rim. And it worked. Capitalism 
     defeated communism in the Cold War. Our hope in crying ``free 
     trade'' was that markets would remain open for our exports. 
     But our cries went unheeded, and now our Nation's security is 
     in jeopardy.
       National security is like a three-legged stool. The first 
     leg--values--is solid. Our stand for freedom and democracy is 
     respected around the world. The second leg of military 
     strength is unquestioned. But the third leg, economic leg, is 
     fractured and needs repair. We are losing jobs faster than we 
     can create them. Some time ago the late Akio Morita, founder 
     of Sony Corp., was lecturing leaders of third-world 
     countries, admonishing them to develop their manufacturing 
     capacity to become nation states. Then, pointing at me in the 
     audience, he stated, ``That world power that loses its 
     manufacturing capacity will cease to be a world power.''

[[Page S3189]]

       What should we do? First, we need to stop financing the 
     elimination of jobs. Tax benefits for offshore production 
     must end. Royalty deductions allowed for offshore activities 
     must be eliminated, and tax havens for corporations must be 
     closed down.
       Next, we need an assistant attorney general to enforce our 
     trade laws and agreements. At present, enforcement is largely 
     left to an injured party. It can take years to jump over 
     legal hurdles. Then at the end, based on national security, 
     the president can refuse to implement a court order. Rather 
     than waste time and money, corporate America has moved 
     offshore.
       We need to organize government to produce and protect jobs, 
     rather than export them. The Commerce Department recently co-
     sponsored a New York seminar, part of which advised companies 
     on how to move jobs offshore. This aid for exporting jobs 
     must stop. The Department of Commerce should be reconstituted 
     as a Department of Trade and Commerce, with the secretary as 
     czar over the U.S. trade representative. The department's 
     International Trade Administration should determine not only 
     whether goods have been dumped on the U.S. market, but how 
     big the ``injury'' is to U.S. industry. The International 
     Trade Commission should be eliminated.
       While it is illegal to sell foreign-made goods below cost 
     in the U.S. market (a practice called dumping), we refuse to 
     enforce such violations. The Treasury Department reports $2 
     billion worth of illegal transshipments of textiles into the 
     United States each year. Customs agents charged with drug 
     enforcement and homeland security are hard-pressed to stop 
     these transshipments. We need at lead at 1,000 additional 
     Customs agents.
       It won't be easy. A culture of free trade has developed. 
     The big banks that make most of their money outside the 
     country, as well as the Business Roundtable, the Conference 
     Board, the National Association of Manufacturers, the U.S. 
     Chamber of Commerce, the National Retail Federation (whose 
     members make bigger profits on imported articles) and the 
     editorial writers of newspapers that make most of their 
     profits from retail ads--all these descend on Washington 
     promoting ``free trade'' to members of Congress. Members 
     looking for contributions shout the loudest.
       Not just jobs, but also the middle class and the strength 
     of our very democracy are in jeopardy. As Lincoln said, ``The 
     dogmas of the quiet past, are inadequate to the stormy 
     present. . . . As our case is new, so we must think anew, and 
     act anew. We must disenthrall ourselves, and then we shall 
     save our country.''
       Today's dogma is the belief that protectionism will mean 
     trade war and economic stagnation. But we are already in a 
     trade war, one from which the president and the Congress are 
     AWOL.
                                 ______