[Congressional Record (Bound Edition), Volume 149 (2003), Part 16]
[Senate]
[Pages 22555-22556]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     HELPING DOMESTIC MANUFACTURERS

  Mr. FEINGOLD. Mr. President, I rise today to offer some comments on 
one of the most serious problems we face in this Nation--the severe 
erosion of our manufacturing base.
  This crisis has been well documented, and the statistics are 
dismaying. According to the Economic Policy Institute, between January 
1998 and August 2003, manufacturing employment dropped by three 
million, and manufacturing's share of total gross domestic product fell 
from 16.3 percent in 1998 to 13.9 percent in 2002. In my own State of 
Wisconsin, 77,000 manufacturing jobs have been lost just in the last 
2\1/2\ years.
  Of course, as shocking as those numbers are, they do not begin to 
convey the depth of the personal tragedies behind them. Millions of 
families have had their breadwinner thrown out of work, and entire 
communities have been ravaged. When the factory shuts down, everybody 
in town feels the impact. Across my home State of Wisconsin communities 
are trying to cope with this crisis on a daily basis. There are, no 
doubt, a number of reasons for this sudden loss of manufacturing jobs, 
but at the absolute center has been our appalling trade policy. The 
trade agreements into which we have entered have failed to protect our 
businesses and workers against unfair competition from overseas 
competitors. This failed trade policy was the result of an unholy 
alliance of leaders of both the Democratic and Republican parties over 
the past decade and more. I opposed those trade agreements, and until 
this country's trade policy is changed we will see more and more jobs 
shipped overseas.
  We have seen this most clearly in the manufacturing jobs lost to 
China, but the problem is broader than just China. People have turned a 
blind eye to the impact of these trade agreements for too long. It is 
time for reality to set in here in Congress: These trade agreements 
have failed the American people. They have taken Americans' livelihoods 
and shipped them overseas. People in my State are left wondering who 
these trade agreements were for, if they weren't for America's workers? 
These men and women are the heart and soul of the economy in Wisconsin, 
and these agreements have taken their jobs out from under them.
  The tool and die industry is one of the hardest-hit parts of the 
manufacturing sector in my State. In the town of Kewaskum, it was 
reported that the county board has taken the extraordinary step of 
making a loan to a local tool and die company to help it stay afloat in 
the face of competition with China. That is not typical for a county 
board, but it just goes to show how hard communities across Wisconsin, 
and across the country, are fighting to keep manufacturing businesses 
alive. These businesses are the lifeblood of our communities, and we 
turn our back on them every time we say yes to another one of these 
kinds of trade agreements.
  Mr. President, no single policy can adequately address this problem. 
If we are to stop this hemorrhaging of manufacturing jobs it will take 
a concerted effort on several fronts, and over the next few weeks I 
will come to the floor to discuss some of the steps I think we ought to 
take.
  Today I want to very briefly discuss one, and that is tax policy. A 
number of my colleagues have advocated changing our Tax Code to help 
beleaguered domestic manufacturers. In the other body, Representatives 
Crane and Rangel have proposed legislation to help domestic 
manufacturers by providing them with a tax incentive to keep production 
here at home, and to encourage those runaway plants that left our shore 
to return. In our body, Senator Hollings has introduced the Senate 
companion to that proposal, S. 970, the Jobs Protection Act, and I am 
proud to be a cosponsor of that measure.
  Under this bill, the new tax incentive for domestic manufacturers is 
offset by repealing the extraterritorial income provisions of the Tax 
Code. This offset means that the bill is paid for, and won't increase 
our already exploding budget deficit. I think that feature is essential 
to any measure we propose to spur economic growth for, as we know, 
budget deficits undermine long-term economic growth.
  The repeal of the extraterritorial income provision deserves at least 
a brief comment. The foreign sales corporation tax benefit, and it 
successor, the extraterritorial income, ETI, tax subsidy, were 
challenged by the European Union before the World Trade Organization as 
illegal export subsidies, and the WTO ruled in favor of the EU.
  I opposed the ETI provisions when they were before the Senate in the 
fall of 2000 in part because, as I noted at the time, I fully expected 
the WTO to rule against them, which would subject American firms and 
workers to a possible multibillion dollar tax on American products 
purchased in the EU.
  I regret to say that we now face that very problem. If we fail to 
repeal the ETI provisions enacted in November of 2000, American firms 
and workers will bear the brunt of billions of dollars in trade 
sanctions.
  This situation is a testament to the failed trade policy that has, in 
great part, led to the crisis we are seeking in American manufacturing. 
Our tax policy is being held hostage to the rulings of an international 
bureaucracy, making decisions largely in secret.
  As I noted 3 years ago, while the ETI tax subsidy may be bad tax 
policy, it is our tax policy--a policy arrived at through the elected 
Representatives of the people of this Nation. The ability of some 
international bureaucracy to impose punitive taxes or tariffs on 
American goods should offend all of us. Unfortunately, that is what we 
face because of the action Congress took in 1994 to ratify the GATT. 
And unless we eliminate the ETI export tax subsidy, American firms and 
American workers are at risk.
  Faced with that situation, the best possible choice is to take this 
opportunity to repeal the ETI tax subsidy and use the additional 
revenue raised by that repeal to help our domestic manufacturers, many 
of whom are directly impacted by the WTO's ruling against the ETI tax 
subsidy.
  As I noted earlier, I have cosponsored legislation offered by Senator 
Hollings, and I was pleased to do so, but that bill certainly is not 
the only possible model, and I am willing to consider supporting other 
approaches so long as they are focused on domestic operations and are 
also fiscally responsible. I understand the chairman and ranking member 
of the Finance Committee are developing a measure that may fit the 
bill. I commend them for doing so, and look forward to reviewing their 
proposal. Our manufacturers are facing a crisis that is in great part 
the result of the policies promoted by our Government over the past 
several years. It is essential that we reform those policies to stop 
more jobs from being shipped overseas. But we must also take other 
steps to help American workers, and this sensible change to our Tax 
Code should be one of them.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  The PRESIDING OFFICER. In my capacity as a Senator from the State of

[[Page 22556]]

Alabama, I ask unanimous consent that the order for the quorum call be 
rescinded.
  Without objection, it is so ordered.

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