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“THE TRADE DEFICIT” mentioning the U.S. Dept. of Commerce was published in the Senate section on pages S341-S344 on Feb. 3, 2000.
The publication is reproduced in full below:
THE TRADE DEFICIT
Mr. DORGAN. I will talk for a moment about the issue of the trade deficit that faces this country. I would like to do so, understanding that this country is full of good economic news. And there is a lot of reason for all of us to be optimistic about the future. The good economic news that was described last week--in fact, a week ago this evening--by President Clinton in the State of the Union Address tells us that unemployment is way down and more people are working than virtually ever before in this country; home ownership is up at record levels; inflation is down, down, way down; income is up; the stock market is up. There are so many evidences of good news in our country. Crime rates are also down. There is evidence all around us that things are better in America. All of us feel good about that. We live at a wonderful time in a wonderful country. It is quite a remarkable opportunity all of us have.
But we must be vigilant about some storm clouds on the horizon. One of those storm clouds for this country's economy is the burgeoning trade deficit, the imbalance between what we buy from other countries and what we sell to other countries and the resulting deficit that comes from selling less and buying more.
The trade deficit in this country is virtually exploding. We have a trade deficit that is higher than any trade deficit ever experienced anywhere on this Earth at any time. Does it matter? Is anybody talking about it? Was it mentioned in the State of the Union Address last week? No. Everyone wants to ignore the fact that we are rolling around pretty well, even though the trade deficit is increasing dramatically, and it somehow doesn't matter. We have wrestled this ``500-pound gorilla'' called the Federal budget deficit, with great pains, over many years. Finally, the scourge called the budget deficit, which was growing like a tumor--growing forever--is now gone.
But the budget deficit, while gone, is being replaced by a trade deficit that is growing at an alarming rate. I want to describe part of that today. Everyone talks about the past 107 months of economic expansion. I want to talk about that, but I also want to talk about the trade deficit that could put an end to that economic expansion if we don't do something to resolve this burgeoning deficit.
I will put up a chart that describes what we face for a trade deficit. This chart goes back to 1991. It shows the amount of goods and services we export and the amount we import. The red, of course, represents the imbalance, the trade deficit. In January, the Commerce Department announced that the trade deficit had widened to $26.5 billion in November alone, a new monthly record. But a new monthly record was set in 8 of the last 11 months. Our goods and services trade deficit--that is, all goods and services--in 1999 will be $266 billion. That will exceed the previous year's $164 billion by 62 percent. Understand that the goods and services trade deficit will have ratcheted up by 62 percent in 1 year alone.
We imported $92 billion worth of goods and exported $59.5 billion in goods in November. Now, if current trends continue, the growth in our international debt will simply not be sustainable. The foreign debt in this country is projected to be $1.7 trillion in 1999. That is not debt we owe to ourselves as the Federal budget deficit was; that is debt owed to foreigners who have a claim to assets in this country--$1.7 trillion. Almost all economists will tell us that is not sustainable and we must do something to address it.
When we become more dependent on receiving and retaining foreign capital to finance this imbalance, the day will come when foreigners lose faith in this economy and begin to pull out of our financial markets. When that happens, the value of the dollar will fall, interest rates will rise, corporate profits and stock prices will decline, and then we will have a slowdown in this economy.
Senators Byrd and Stevens and I authored legislation, which is now law, creating a trade deficit review commission. That commission is now impaneled and underway, looking into the nature, causes, consequences, and remedies of this trade deficit. They will report their findings in August. In the meantime, this trade deficit escalates. This is the deficit in goods alone--what is called the merchandise trade deficit. This shows what happens to your manufacturing base. This is the most alarming deficit of all--$343 billion--and you can see what has happened to this trade deficit since 1991. It is a dramatic escalation--$343 billion in a single year.
It would be useful to look at how our bilateral agreements have contributed to our bilateral goods deficit.
Between 1998-99, our merchandise trade deficit with Canada went from
$14 billion to $28 billion. Mexico--incidentally, I might mention that, before Congress passed NAFTA--without my vote; I didn't vote for it--we had a trade surplus with Mexico and a relatively small deficit with Canada. NAFTA turned that into a large deficit with Canada and a very large deficit with Mexico.
The European Union: You can see what happened in the last year with respect to trade deficits with the European Union. They have increased dramatically.
China and Japan: What happened there is almost unforgivable in terms of an economic relationship. China had, in 1999, a merchandise trade deficit of over $60 billion with the United States, up from about $53 billion in the previous year. Japan's is $67 billion. These aren't getting better, they are getting worse.
What does all that mean for this country? We just negotiated a trade agreement with China. One of the major issues of great controversy in this Chamber in the coming months will be whether China should be granted permanent normal trade relations, the same as we grant other countries. We will debate that sometime soon.
That will be the source of great controversy for a number of reasons. Some in this Chamber will believe the Chinese have not made progress on human rights. Others will perhaps believe the Chinese are not abiding by fair labor standards that we would consider important in this country. Still others will believe China hasn't complied with previous trade agreements. So there will be a substantial amount of debate about this issue.
I have been interested in the bilateral trade agreement negotiated with China because we have a very large trade deficit with China. I wonder, when our negotiators negotiated, did they negotiate with some idea that we will bring that into balance? Can we send more goods into China? Can we sell more to China? Or will we simply continue to be a sponge for China and watch their goods come here while they still retain a relatively closed market to many of our goods?
Once when I was in China, I met with the President of that country. I talked to the President of China about trade issues. I said: You must buy more pork from the United States. You must buy more wheat from the United States. You must buy more from the United States. You ship us your trousers, your shirts, your shoes, your trinkets. Boats come from China loaded with all of the things you produce. Our consumers are happy to buy them. But we are not so lucky when American producers are trying to sell goods into the Chinese economy. We are told: No, you can't sell wheat in these circumstances in China; no, we won't purchase your pork; or, no, we won't purchase this or that. In fact, the things we do have, you want to make copies and violate the intellectual property rights of our producers. And we are not going to enforce that. We are going to look the other way when your plants press out the CDs with copyrighted music made by American artists.
My point is this: I think China is a very big, strong, interesting country that is going to be a significant part of our lives in the future. I am not sure what kind of influence they will have on our future, but it will be significant. I want China to play a constructive role in our future. I want us to play a constructive role in their future. So I want us to have engagement and opportunity. I want us to have trade relationships that are fair. I want China to move in a more significant way to improve their record on human rights and to move in a way that provides more opportunity for their workers to have a fair say in their economy. But having said all of that, I don't have great confidence that the trade agreements we have with countries such as China are intent on ending these kinds of trade circumstances that are unfair to our country.
Two weeks ago, for example, after a bilateral trade negotiation with China was announced as a great success, the Chinese WTO negotiator, Vice Minister Long Yungtu, went to Kweichow in south China to talk about it. He was quoted in the South Asia Post as saying: You know, the agreement we have with the United States, this notion of buying a certain number of millions of tons of wheat doesn't mean we are going to buy any wheat in the United States. That is just theory. That is all theoretical. The notion that we will now accept meat from several thousand meat-packing plants in the United States doesn't mean we intend to have any U.S. meat come into our country. That is all just theoretical.
When I read what Minister Long, the man who negotiated the Chinese side of the agreement, said, I wrote to him and asked about that. I understand people get misquoted from time to time. I also asked Charlene Barshefsky, our trade ambassador, to find out what this means. So far I have not heard a word from the Chinese negotiator. I have not heard a word from the U.S. trade ambassador. I hope to hear from both.
I would like to see some progress in these areas. I want us to have a good trading relationship with China, Japan, Europe, Canada, and Mexico. But a good trading relationship to me is not defined as a circumstance where they plug our market with all of the goods from their country and then keep their market closed to many of our producers of commodities and goods. That doesn't make any sense to me.
This country can't allow that to happen any longer. We must insist on a reciprocal opportunity in foreign markets. A trade relationship with another country must be mutually beneficial to us and to them. We have far too often negotiated trade agreements that are one-way streets with foreign goods coming into the U.S. economy, but not a similar opportunity for U.S.-produced goods, including agricultural commodities and manufactured goods, to go into other economies. That is one of the reasons we have this massive trade deficit that is growing at an alarming rate.
I was going to speak about our situation with Canada and durum. I will reserve that for another time. I know we are nearing the end of the day. Some have other things they want to do. I am going to close with a point about trade enforcement.
It is one thing to have trade agreements that are bad agreements. We have had plenty of those. Our trade negotiators have not done well for this country, in my judgment. But it is another thing to have trade agreements that are reasonably decent but are unenforceable. That is also, I think, what happens even with those agreements that were decent agreements in the first place.
In the Department of Commerce where we monitor trade agreements, the number of people whose job it is to work on enforcement issues with respect to China and our trade agreements with China is 10. We have nearly a $65 billion merchandise trade deficit with China. We have all kinds of problems getting into the Chinese marketplace with American goods, and we have 10 people whose job it is to work on the issue--10.
Or Japan--we have had a trade deficit with Japan of $45 billion to
$60 billion forever. Do you know how many people work on that issue? Sixteen.
Canada and Mexico together--we turned a surplus with Mexico into a big deficit, and we doubled the deficit with Canada. That is all the result of this wonderful trade agreement called NAFTA for which we had people stand up and brag on the floor of the Senate saying that you have to pass this because if you do we will have more American jobs. It will be better for everybody.
I didn't vote for NAFTA. But the Congress passed it. Guess what. All of those economists are now unwilling to show their face around here because they predicted several hundred thousand new American jobs. In fact, we lost several hundred thousand opportunities, and a trade surplus with Mexico turned into a huge deficit. And a trade deficit with Canada doubled because this country didn't negotiate a reasonable trade agreement with Canada and Mexico. This country lost. Do you know how many people are working on this issue at the Department of Commerce? Ten for two countries, and a combined trade deficit of over
$50 billion. We have 10 people working on it.
There was a story not too long ago that said that U.S. officials who are responsible for monitoring trade agreements sometimes couldn't even locate the text of the agreements. It is one thing to be incompetent. It is another thing to exercise benign neglect over things that are your responsibility. But it is quite another thing to be in charge of something and then just lose it.
Do those of us who have concerns about this have legitimate concerns? Yes. We need to negotiate better trade agreements. We need to enforce trade agreements. And we need to make certain that the relationships we have with other countries are mutually beneficial to us and to them. That has not been the case, sadly.
At the WTO conference in Seattle, which turned out to be such a fiasco with demonstrators in the streets, with some thugs in the streets who defaced buildings, broke windows, and that sort of thing, one thing happened that was quite remarkable. I want to say, however, there were very few people who I call thugs who used paint cans up and down the streets of Seattle. It was regrettable that they defaced buildings and destroyed property. But the bulk of the people in the streets of Seattle--literally tens of thousands of them--were perfectly peaceable. They demonstrated up and down the streets in ways that were perfectly peaceable. They were there to demonstrate for legitimate reasons. They demonstrated about a range of issues about which they cared deeply and passionately.
There will never be, in my judgment, a place in the world where there are negotiations about trade in which there won't be people showing up to ask legitimate questions about labor standards and environmental standards because you can't fight in a country such as ours for 75 years and have people die in the streets demonstrating for the right to form unions and then decide, well, we will just pole-vault over all of those things and go and produce our goods in Sri Lanka or some other country where you do not have to worry about labor unions because they don't allow workers to form unions. We won't pay a livable wage, we won't have safe workplaces, and we won't restrict people from dumping chemicals into the streams and into the air. We'll hire kids for 12 cents an hour, work them 12 hours a day, and put them in unsafe plants. And, if you do not like it, tough luck.
That is the attitude of some in the rest of the world, and the people who demonstrate in the street are saying that isn't fair because we fought 75 years in this country for a minimum wage, for safe labor standards, and for a whole range of issues that are very important to who we are and what we are, and we are not going to allow those to be traded away in trade agreements. They have a legitimate concern. There will always, in my judgment, be Americans in the streets unless they are part of the negotiations. That is why the WTO needs to be much more open and much more inclusive. Having secret negotiations and excluding people is not a way to resolve these issues.
Globalization, galloping along, must be accompanied by rules that are fair and thoughtful dealing with these serious issues of labor standards, environmental standards, and other issues. They must be accompanied by thoughtful rules.
In Seattle, I met with a group of Parliamentarians from Europe. I and a number of my Republican and Democrat colleagues went together to the WTO meetings in Seattle with great hope, and regrettably those meetings didn't produce much in terms of agreement. They produced a great deal of chaos in the streets, and among the negotiators nothing much happened. But during one memorable meeting for me with a group of Parliamentarians from Europe something happened that was quite remarkable. Michel Rocard, who was a former Prime Minister of France and is now a member of the European Parliament in Europe, leaned across the table to me and said something interesting. He said:
We talk about the beef dispute, beef hormones, and the dispute with Roquefort cheese, and all of these issues we have with Europe. They are nettlesome, difficult issues with Europe on the trade disputes.
As we were talking about the differences between Europe and the United States, Mr. Rocard, who was the former Prime Minister of France, leaned forward to me and he said:
I want you to understand something, Mr. Senator. We talk about our differences, but I want you to understand something about how I feel about your country. I was a 14-year-old boy standing on the streets of Paris, France, when the U.S. Army came in to kick the Nazis out of our country. A young black American soldier handed me an apple as he walked past. It was the first apple I had seen in several years. I will never forget how a 14-year-old boy felt about this young American soldier walking down the street in Paris, to liberate my country, and this young soldier handing me, this young French boy, an apple.
It occurred to me that we forget, I think, what this country means, what it has been to so many others in the world; what we have done and what we have yet to do in the world. I tell you that story only to say that while we have substantial trade disputes, our country has done a lot for a lot of people around the world. We liberated Europe. We beat back the forces of fascism. This country was perhaps the only country that was capable of doing that at that time.
After the Second World War, for the first 25 years after that, we said to Europe not only did we kick the Nazis out of France and American soldiers moved across Europe and liberated the Europeans and defeated Hitler, not only that, but this country has decided to create a Marshall Plan to rebuild Europe. We rebuilt the economies of Europe.
For 25 years, in addition to spending money for the Marshall Plan to rebuild Europe and rebuild the economies of Europe, we also said our trade policy will be our foreign policy. We made concessional trade agreements with everybody because it was not a problem for us. We were big enough and strong enough so that with one hand tied behind our backs, we could beat almost anybody in the world with international trade. So our trade policy was our foreign policy, and it was to help other countries get back on their feet.
But things changed. After about a quarter of a century, from the Second World War on, at that point we began to see our allies gaining strength, having better economies, doing a better job. All of a sudden, we had some tough, shrewd economic competitors. And in the second 25 years post-Second World War, our competition has changed. Our competition has been tougher in international trade. But in this country, much of our trade policy has remained foreign policy.
Instead of our being hard-nosed competitors with a reasonable trade policy that cares about our producers and the economic health of our producers, our trade policy has remained largely focused on foreign policy. That needs to change. We cannot always say it does not matter what our deficits are with China or Japan. We cannot say it does not matter--of course it matters. This has economic consequences to us. Our trade policy with respect to Japan needs to be a hard-nosed trade strategy that says you have tough competitors. But we need to compete with fair rules, and the rules of trade between the United States and Japan are fundamentally unfair. They are fundamentally unfair. I will come some other time to talk about the specifics of that. That was all fine, post-Second World War for a quarter of a century, but it is not fine anymore, and it is going to begin to injure this country and sap economic strength from this country.
No one wants a future of economic growth for this country more than I do. But the way to assure continued months of economic prosperity and continued years of prosperity will be to deal with problems that exist. One set of problems and storm clouds on this country's horizon is a huge, growing trade deficit that nobody seems to care about and nobody seems to want to talk about and no one seems willing to do anything about. I just hope one of these days enough of us in the Senate can say to our colleagues, can say to the administration, and can say to our trading partners and our allies, that things are going to have to change. We believe in the global economy. I believe in expanding trade opportunities. I do not believe in putting up walls, and I do not believe in restricting trade. But I believe very much this country needs to say to our trading partners that we insist and demand fair trade rules. We demand it.
It was fine 40 years ago that we did not have them because we did not need them and we were helping other countries get back on their feet. That is not the case any longer. With Japan, we need some equilibrium and fairness. If you want to ship your products to this country, God bless you. They are welcome, and our consumers will be advantaged by having the ability to buy them. But we demand the same of your consumers. We demand the ability of your consumers to buy that which is produced in this country.
When you go to a grocery store in Tokyo and pay $30 or $35 for a pound of T-bone steak, you do that because they do not have enough beef. They don't have enough beef. That is because we don't get enough American beef in, because it is limited. Why? Because we have a trade agreement that provides, as we speak, a 40-percent tariff on every single pound of American beef going into Japan. If we did that on anything Japan sends into this country, it would be considered an outrage. We would be held up to ridicule, saying how on Earth dare the United States do this? Yet for every single pound of U.S. beef going into Japan as I speak, today, there is a 40-percent tariff attached to it. It is not fair.
My point is this country can compete. Its producers can compete anywhere in the world any time. But only if we negotiate trade agreements and enforce trade agreements that are fair to our country and our producers and that are mutually beneficial to us and to our trading partners.
Mr. President, I yield the floor. I make a point of order a quorum is not present.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DORGAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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