[Congressional Record Volume 150, Number 43 (Wednesday, March 31, 2004)]
[Senate]
[Pages S3452-S3453]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  JOBS, PROTECTIONISM, AND FREE TRADE

  Mr. INOUYE. Mr. President, one of the primary issues today is jobs, 
and one insight into the problem was outlined by my friend, Senator 
Fritz Hollings, in an article that appeared in the Washington Post's 
Outlook section on Sunday, March 21, 2004. The article was headlined 
``Protectionism Happens To Be Congress's Job.'' I ask unanimous consent 
that the article be printed in the Record.

[[Page S3453]]

  There being no objection, the article was ordered to be printed in 
the Record, as follows:

               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 it. 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 war 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 his 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 ore--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, S.C., 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 free trade agreement you should first 
     have a free market, labor rights, ownership of property, 
     contract rights, 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, the 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.''
       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 least 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.

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