[Congressional Record (Bound Edition), Volume 150 (2004), Part 14]
[Senate]
[Pages 19347-19350]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          INTERNATIONAL TRADE

  Mr. DORGAN. Mr. President, I wanted to come to the Senate floor to 
speak about international trade, a subject about which I've spoken many 
times before.
  I have just finished reading a book by Lou Dobbs. It is a quite 
remarkable book. And I wanted to share some of its observations with my 
colleagues.
  At the outset, let me say that Lou Dobbs describes himself in this 
book as a lifelong Republican. This issue of trade is not the ideas of 
one political party or the other; the book is about a failed trade 
strategy which undermines the strength of this country by shifting 
American jobs overseas. The title of his book is ``Exporting America: 
Why Corporate Greed is Shipping American Jobs Overseas.''
  Lou Dobbs has been vilified for writing this book. But it is a rare 
and wonderful book. I am not in the business of selling anybody's 
books, but to those who are interested in this issue of what is 
happening to American jobs, who are interested in what is happening 
with our trade strategy, this is a good book to read.
  We have lost nearly 2 million private sector jobs in this President's 
term, a fair amount of it to outsourcing. The outsourcing issue is one 
we need to explore in some depth.
  I offered an amendment on the Senate floor not long ago. It says, let 
us eliminate out of our tax system incentives for American companies to 
shift their jobs overseas. If companies decide to ship jobs overseas, 
we ought not give them a tax break. That makes no sense at all.
  Now, on page 19 of this book, Mr. Dobbs writes:

     . . . American multinational companies that are outsourcing 
     and offshoring are also essentially firing their customers. 
     India can provide our software; China can provide our toys; 
     Sri Lanka can make our clothes; Japan can make our cars. But 
     at some point we have to ask, what will we export? At what 
     will the Americans work? And for what kind of wages? No one 
     I've asked in government, academia, or even the private 
     sector has been answering those questions.

  On page 31, Mr. Dobbs says:

       Big business is saying that all we need to do to become the 
     most competitive nation on Earth is to cut wages, throw out 
     our environmental, worker safety, investor protection, 
     product liability, and consumer laws, and eliminate corporate 
     tax obligations altogether--and while we're at it, let's 
     repeal those unfriendly antitrust laws. There's no doubt the 
     result would be sharply lower wages and higher profits, but 
     the result would also be a plummeting standard of living and 
     the shattering of the American dream.

  For writing a book that expresses a radical thought that we ought to 
be standing up for American jobs and try to find ways to stop shipping 
American jobs overseas, Mr. Dobbs has been wildly vilified.
  The executive director of the Business Roundtable says this of Mr. 
Dobbs:

       It's as if whatever made Linda Blair's head spin around in 
     The Exorcist had invaded the body of Lou Dobbs and left him 
     with the brain of Dennis Kucinich.

  That's from John Castellani, executive director of the Business 
Roundtable. It is such a colorful quote. But it isn't even original. 
Daniel Henninger of the Wall Street Journal had written those same 
words about Lou Dobbs just 2 months earlier.
  Let me share a few other of Mr. Dobbs' observations. One of the 
points he makes, which I have also made on the floor of the Senate 
often, is that the actual rules of trade are now being set by 
corporations. They have no allegiance to nations, much less individual 
communities or towns. They certainly have no allegiance to government. 
And the corporations set the rules of trade. Mr. Dobbs says:

       Corporations have overwhelmed governments in the borderless 
     global economy. And corporate logos in many cases have more 
     powerful symbolic importance than national flags. In part, 
     that's because more than half of the largest 100 economies in 
     the entire world are corporations.

  Mr. Dobbs in his book used figures from the year 2000 to come up with 
his conclusions. At the time, Wal-Mart was equivalent to the 25th 
largest economy in the world. I have actually looked at the figures 
from 2003. What you see is that Wal-Mart, when you compare countries 
and corporations by size, is number 20 in the world. Wal-Mart is bigger 
than Austria, Indonesia, Sri Lanka, Saudi Arabia, Pakistan, Turkey, 
Denmark, and Poland, to name a few. But, then, the list of top 100 
economies also includes ExxonMobil, so is General Motors, Royal Dutch/
Shell, Ford Motor, DaimlerChrysler, and dozens of other corporations.
  On page 40 of his book, Lou Dobbs says this:

       We might begin by reminding our business leaders and 
     politicians that Americans want to be regarded as citizens, 
     not just consumers, and that they need to see this country of 
     ours first as a nation, not [just] a marketplace.

  It seems to me it is a good starting point for this discussion. There 
is so much effort these days to outsource almost everything, not 
understanding

[[Page 19348]]

that it begins to diminish and erode the basic economic strength of our 
country.

       Forty state governments are now outsourcing what were 
     American jobs.

  Again, this is from Mr. Dobbs's book.

       The state of Indiana's Department of Workforce Development 
     is responsible for helping out of work Indiana citizens find 
     jobs. Ironically, the department awarded a $15 million 
     contract to update its computers to a firm in Bombay, India. 
     The project would have provided employment to sixty-five 
     workers coming from India on L-1 visas.

  Why would they do that? Because of the millions of dollars it would 
save. But I expect the taxpayers of Indiana would have preferred their 
tax dollars be used to help those who are out of work in Indiana.
  Again, this is quoting Lou Dobbs:

       Only after a loud public outcry did the governor of Indiana 
     cancel the contract.

  A recent survey found that 40 States plus the District of Columbia 
have food stamp help desks that use operators in foreign countries.
  In January of 2004, the Times of India ran a story with this 
headline: ``Silicon Valley Falls to Bangalore.'' It says:

       BANGALORE: The inevitable has happened. Bangalore, which 
     grew under the shadow of America's Silicon Valley over the 
     last two decades, has finally overtaken its parent.
       Today, Bangalore stands ahead of Bay Area, San Francisco 
     and California, with a lead of 20,000 techies, while 
     employing a total number of 150,000 engineers.

  Service jobs are being exported from this country. It is true in 
almost every single area.
  Massachusetts General Hospital had a firestorm on its hands when it 
was learned that the hospital was sending x rays and MRIs to India for 
examination, even though it is illegal for technicians in India to 
diagnose U.S. patients. And even though Medicare does not pay for work 
done outside the United States, hospitals have found a way around that. 
They just have an American doctor do a cursory review of the work and 
then sign off on it.
  This again is from Lou Dobbs's book.
  Recently, we had a statement by Mr. Greg Mankiw, who is the head of 
domestic policy, the top economist in the Bush administration, that 
caused a great deal of consternation. He said that this administration 
supports outsourcing.
  Lou Dobbs, I think correctly, points out in his book that both 
Democratic and Republican administrations have done very little to 
address these issues and, in fact, in many cases have made them worse. 
So this is not about one party or the other. Neither political party, 
in my judgment, has developed a set of policies that would address 
this. I think both political parties have largely been silent on this 
issue or have done things that have made this problem worse.
  But the current administration has said that outsourcing is really a 
good policy. In February, the Los Angeles Times reported that the 
administration, the White House, was endorsing outsourcing.
  This is what Lou Dobbs had to say about Mr. Mankiw. He said:

       A number of people on Capitol Hill thought Mankiw should 
     have resigned, but I disagreed. On my broadcast . . . I 
     called for the President to fire him. Not merely because I 
     obviously disagreed with him, but because Mankiw's statement 
     raised the administration's support of overseas outsourcing 
     to a declaration of government policy.

  To drive home the point, Mr. Mankiw, the chairman of the President's 
Council of Economic Advisers, told reporters that the President plainly 
supported shifting jobs overseas, provided those jobs could be done 
more cheaply overseas. This is what Mr. Mankiw said to reporters:

       Outsourcing is just a new way of doing international trade.
       More things are tradable than were tradable in the past. 
     And that's a good thing.
       Maybe we will outsource a few radiologists. What does that 
     mean? Well, maybe the next generation of doctors will train 
     fewer radiologists and will train more general practitioners 
     or surgeons. . . . Maybe we have learned that we don't have a 
     comparative advantage in radiologists.

  And the President's report said this about outsourcing:

       One facet of increased services trade is the increased use 
     of offshore outsourcing in which a company relocates labor-
     intensive service industry functions to another country.

  In fact, the President's report says when it comes to trade, white-
collar jobs should be no different from manufacturing jobs.
  Well, after many of us raised some real questions about this, 
including Lou Dobbs, the White House spokesman, Scott McClellan said:

       We certainly don't want to do anything that would undermine 
     free trade.

  Mr. Dobbs concludes: I believe this is a declaration of Government 
policy with respect to outsourcing.
  So this is what is happening in the private sector with respect to 
the outsourcing of jobs.
  The Wall Street Journal ran a feature article that I read some while 
ago that was interesting to me. It was an article on IBM's outsourcing 
practices. It described internal company memos which described a 
strategy to systematically outsource American jobs overseas.
  This is from an IBM memo. It says: ``Do not be transparent regarding 
the purpose/intent'' and cautions that the ``Terms `On-shore' and `Off-
shore' should never be used.'' The company expects to shift about 3,000 
jobs from the U.S. overseas. So they advise managers on how to 
communicate the news to the affected employees. The memo says that 
anything written to employees should first be ``sanitized'' by human 
resources and communications staffers.
  The plan IBM had, according to the Wall Street Journal, would move 
jobs from U.S. locations, including Connecticut, New York, North 
Carolina, and Colorado. It would transfer them to India, to China, and 
to Brazil. It says:

       Some of the foreign programmers will come to the U.S. for 
     several weeks of on-the-job training by the people whose jobs 
     they will take over.

  That's an aspect of offshoring that many high-tech workers regard as 
particularly humiliating.
  So this internal memo directs managers to say this to workers about 
to lose their jobs:

       This action is a statement about the rate and pace of 
     change in this demanding industry. . . . It is in no way a 
     comment on the excellent work you have done over the years.

  So see you later. We are going to move your job to India or China or 
Brazil. Thank you. You have done excellent work. The fact that you have 
lost your job is in no way a comment on the excellent work you have 
done.
  Now, what are our trade officials doing about this? I will tell you 
what--they are trying to facilitate even more outsourcing, by enabling 
corporations to use even cheaper overseas labor.
  Let me review some of the trade agreements we have been doing 
recently. Let me talk about CAFTA, the Central American Free Trade 
Agreement. This would integrate our economy with that of El Salvador, 
among others.
  This is from a recent news story, describing how El Salvador is 
scarred by child labor. Subsistence work in sugarcane fields leads to 
injuries, continuing poverty.

       Jesus Franco, 14 years of age, has scars crisscrossing his 
     legs from his ankles to his thighs and more on his small 
     hands. For more than half of his young life, he has spent 
     long days cutting sugarcane. He has the machete scars to 
     prove it, and so do his four sisters, age 9 to 19. His story 
     is repeated countless times across Latin America, where 
     children even younger than he are found working in cane 
     fields at subsistence wages, $75 a month, which isn't even 
     enough to pay for basic food needs.

  So we are now going to integrate our economies with those of El 
Salvador, Guatemala, Honduras, and Costa Rica in a Central America Free 
Trade Agreement and set up our sugar producers for failure. That is 
what this is about, among other things.
  Let me tell you about some kids who came to a hearing we had, who 
were working in a factory overseas producing rugs. These were kids who 
were locked in the factories, young kids 10, 11, 12 years old, 
producing carpets and rugs. We discovered that some of them had gun 
powder put on the tips of their fingers, and then it was lit so that it 
would burn the tips of their fingers and create big scars on all their 
fingertips. They did that so that when these young kids were sewing 
with needles,

[[Page 19349]]

when they stuck their fingers, it wouldn't hurt because they had been 
scarred by the burns. Young kids with scarred fingers using needles to 
produce carpets to be sent to our stores. Free trade? Hardly.
  Let me give some other examples. I have spoken often about Huffy 
bicycles. They were made in Ohio, manufactured in a plant by people who 
made $11 an hour and were proud of their jobs. Huffy bicycles were 20 
percent of the American marketplace for bicycles. They were sold in 
Sears and Wal-Mart and K-Mart. Huffy bicycles had a decal on the front 
of the American flag.
  Well, Huffy bicycles aren't made in the United States anymore. They 
are made in China. They closed the plant, fired the workers, and said: 
$11 an hour is too much for workers in Ohio who make bicycles. We will 
make them in China. And, by the way, the last job was to take the flag 
decal off the bike and replace it with a decal of a globe. Now Huffy 
bicycles, if you buy them, are made in China, made by people who work 
for 33 cents an hour. They work 12 to 14 hours a day, 7 days a week. 
Should we compete with that? Can we compete with that, with kids and 
others making 33 cents an hour? Huffy bicycles are gone. The people in 
Ohio who made them were fired. And Chinese workers now work 7 days a 
week at 33 cents an hour to make Huffy bicycles.
  Another American company that moved its production overseas is Radio 
Flyer. They made the little red wagons. Everybody has ridden in a 
little red wagon. It was American for 100 years. This is pure 
Americana, except Radio Flyer is not made here any longer. After 100 
years, the jobs of the American people who made the little red wagon 
are gone. The workers were fired. The jobs moved to China for low labor 
costs.
  The list goes on and on. Fig Newton cookies. That is an all-American 
cookie. Every kid grew up with a Fig Newton cookie someplace on the 
shelf. But Fig Newton cookies are now made in Mexico. So when someone 
says to you, let's have some Mexican food, you can say: How about Fig 
Newtons. They left the United States. The people who made them are out 
of jobs.
  The list goes on and on and on. The question is, Where will it end 
and when will it end? Should American workers be asked to compete with 
a 14-year-old working in a sugar field for subsistence wages? Should 
American workers in a textile plant be asked to compete with a 9-year-
old kid who has gun powder burns on his or her fingertips to spare them 
the pain of the stabbing of needles when they make the carpets? Should 
an American worker be asked to compete with someone who makes 33 cents 
an hour working in a plant in China making bicycles or Radio Flyer 
little red wagons?
  Let me describe the plight of a young woman in China and describe the 
circumstances under which we are asked to compete these days by those 
who want to find the lowest wages available on the face of the Earth 
and fatten profits, even while they diminish the standard of living. 
This is a story from the Washington Post. It is entitled ``Worked Till 
They Drop. Few Protections for China's New Laborers.''
  This picture is of a girl named Li Chunmei.
  It reads:

       On the night she died, Li Chunmei must have been exhausted.
       Co-workers said she had been on her feet for nearly 16 
     hours, running back and forth in the Bainan Toy Factory, 
     carrying toy parts from machine to machine. This was the busy 
     season before Christmas when orders peaked from Japan and the 
     United States for the factory's stuffed animals.
       Long hours were mandatory, and at least two months had 
     passed since Li and the other workers had enjoyed even a 
     Sunday off.
       Lying on her bed that night, staring at the bunk above her, 
     the slight 19-year-old complained she felt washed out. The 
     factory food was so bad, she said, she felt as if she had not 
     eaten at all. ``I want to quit,'' one of her roommates . . . 
     remembered her saying. ``I want to go home.''
       Her roommates had already fallen asleep when Li started 
     coughing up blood. They found her in the bathroom a few hours 
     later, curled up on the floor, moaning softly in the dark, 
     bleeding from her nose and mouth. Someone called an 
     ambulance, but she died before it arrived.
       The exact cause of her death remains unknown. But what 
     happened to her last November in this industrial town in 
     southeastern Guangdong Province is described by family, 
     friends, and co-workers as an example of what China's more 
     daring newspapers call . . . ``over-work death.''
       The story of her death highlights labor conditions that are 
     the norm for a new generation of workers in China, tens of 
     millions of migrants who flock from the nation's impoverished 
     countryside to its prospering coast.

  The question for this country is, Do we want to ask the American 
consumer to compete against companies that work a young girl to death, 
that put a young boy in a cane field with scars on his legs and arms, 
or put a young child in a factory making carpets? Is that what we want 
to ask our economy to do? Clearly that is importing low wages to this 
country. It is not just exporting American jobs, it is importing low 
wages.
  I want to turn for a moment to a Nobel prize-winning economist named 
Paul Samuelson. I studied Samuelson in college.
  Samuelson wrote the textbook on economics. If you went to college in 
the last 30, 40 years, you studied Samuelson. Professor Paul Samuelson 
is now 89 years old.
  I have such respect for this man, Paul Samuelson. He has, just this 
month, started weighing in, at age 89, on the issue of outsourcing.
  He has always been a free trader, a believer in Ricardo and the 
doctrine of comparative advantage, and Adam Smith. You know, the common 
sense notion that if you can produce the textiles in England--the sheep 
and the wool and the textiles--and you can raise the grapes in Portugal 
to produce the wine, it makes good sense for England to trade the 
textiles for the wine, and the English can drink and the Portuguese can 
wear wool. That is the trade we have all learned in textbooks--classic 
economics, the doctrine of comparative advantage.
  The New York Times reports, however, that Paul Samuelson is 
rethinking the effects of outsourcing.

       At 89, Paul Samuelson, the Nobel Prize-winning economist 
     and professor emeritus at MIT, still seems to have plenty of 
     intellectual edge and the ability to antagonize and amuse. 
     His dissent from mainstream economic consensus about 
     outsourcing and globalization will appear later this month in 
     a distinguished journal, cloaked in clever phrases and 
     theoretical equations, but clearly aimed at the orthodoxy in 
     his profession.

  I will give you a couple quotes:

       Being able to purchase groceries 20 percent cheaper at Wal-
     Mart does not necessarily make up for the wage losses.
       If you don't believe that outsourcing changes the average 
     wages in America, then you believe in the tooth fairy.

  That is Paul Samuelson, speaking today.
  The fact is, when we talk about the issue of trade and fair trade, 
for some reason, we have just lost common sense.
  Let me describe our trade with Korea in the area of automobiles. In 
2003, we imported from Korea 692,000 cars. Guess how many American cars 
we sold in Korea? We sold 3,800. I will say that again. Ships brought 
Korean cars here, nearly 700,000 of them, and we were able to sell not 
quite 4,000 cars in Korea. Why is that? Is it because we produce a 
dramatically inferior car? No. The Koreans want access to our 
marketplace. They want to sell to the American consumer, but they don't 
want American vehicles in Korea. They just don't.
  We sit around thumbing our suspenders and smoking cigars and 
pontificating about free trade, never willing to say to the Koreans: If 
you want to trade with us, I will tell you what, then be fair. If our 
market is open to you, your market must be open to us. If not, sell 
your cars in Zambia. Go try to sell them there. You don't sell them in 
the American marketplace unless your market is open to our product.
  How about China? It is interesting. We did a bilateral trade 
agreement with China. I would love to find the negotiator who made that 
deal for us.
  Here is what our negotiator agreed to. After a phase-in, the Chinese 
will impose a 25-percent tariff on American cars that would be sold in 
China. And we will only have a 2.5-percent tariff on

[[Page 19350]]

Chinese cars they want to sell in the United States. The Chinese can 
have a tariff 10 times the size of ours on reciprocal automobile trade.
  I think that is stark raving nuts. Who on Earth could have negotiated 
such an incompetent deal? Do we not have people who will stand up for 
the interests of this country for a change?
  Here is what I suggest for that trade negotiator. That trade 
negotiator should have worn this shirt during the negotiations.
  You know we just finished the Olympics. We asked the Olympic athletes 
to wear a uniform so we could look down and see where they are from, 
and it always says USA. God bless them. I would love our trade 
negotiator, just once, to wear a uniform that says USA.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. DORGAN. Madam President, I ask unanimous consent for 3 additional 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. I would love, just once, to ask our trade negotiators to 
wear a uniform so at least they know on whose behalf they are 
negotiating.
  I am so tired of what is happening in international trade 
negotiations. Will Rogers said, 70 years ago, that the United States of 
America has never lost a war and never won a conference. He must surely 
have been thinking about our trade negotiators. It doesn't matter what 
it is--the United States-Canada FTA, CAFTA, NAFTA, WTO--all our 
negotiators have to do is show up and lose. They do it routinely.
  This isn't a partisan issue, international trade. I think both 
Republicans and Democrats have let this country down. We need a new 
trade strategy.
  Globalization is here, that is true. We are not going to turn back 
globalization, but we at least, by God, ought to have rules that are 
fair to this country and to the workers of this country and to the 
businesses of this country that do business here and stay here.
  I have one final point. This Senate did not even have the strength 
and the backbone to at least shut down the perverse tax incentives that 
reward companies that export U.S. jobs. If we cannot take the first 
baby step in the right direction, it is a pretty hopeless situation.
  We will have an opportunity to address these issues next year. I hope 
Republicans and Democrats today will decide in unison that exporting 
these jobs hurts this country, and there are policies and approaches we 
can do to change the fortune of this country's economic future.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. CORNYN. Madam President, I ask unanimous consent that I be 
allowed to speak in morning business for so much time as I may consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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