Return to NTA HomeEXTENSION OF FAST-TRACK PROCEDURES
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| . | 1929 | 1930 | 1931 | 1932 | 1933 |
|---|---|---|---|---|---|
| GNP | $103.4 | $89.5 | $76.3 | $56.8 | $55.4 |
| U.S. international trade | $9.6 | $6.8 | $4.5 | $2.9 | $3.2 |
| U.S. international trade percent of GNP | 9.3 | 7.6 | 5.9 | 5.1 | /1/ 5.6 |
Using the numbers in that same Chart I it can be seen that U.S. imports amounted to $4.3 Billion or just slightly above 12 percent of total world trade. When account is taken of the fact that only 33 percent, or $1.5 Billion, of U.S. imports was in the Dutiable category, the entire impact of Smoot/Hawley has to be focused on the $1.5 Billion number which is barely 1.5 percent of U.S. GNP and 4 percent of world imports.
What was the impact? In dollars Dutiable imports fell by $462 Million, or from $1.5 Billion to $1.0 Billion, during 1930. It's difficult to determine how much of that small number occurred in the second half of 1930 but the probability is that it was less than 50 percent. In any case, the total impact of Smoot/Hawley in 1930 was limited to a `damage' number of $231 Million; spread over several hundred products and several hundred countries!
A further analysis of imports into the U.S. discloses that all European countries accounted for 30 percent or $1.3 Billion in 1929 divided as follows: U.K. at $330 Million or 7 1/2 percent, France at $171 Million or 3.9 percent, Germany at $255 Million or 5.9 percent, and some 15 other nations accounting for $578 Million or 13.1 percent for an average of 1 percent.
These numbers suggest that U.S. imports were spread broadly over a great array of products and countries, so that any tariff action would by definition have only a quite modest impact in any given year or could be projected to have any important cumulative effect.
This same phenomenon is apparent for Asian countries which accounted for 29 percent of U.S. imports divided as follows: China at 3.8 percent, Japan at $432 Million and 9.8 percent, and with some 20 other countries sharing in 15 percent or less than 1 percent on average.
Australia's share was 1.3 percent and all African countries sold 2.5 percent of U.S. imports.
Western Hemisphere countries provided some 37 percent of U.S. imports with Canada at 11.4 percent, Cuba at 4.7 percent, Mexico at 2.7 percent, Brazil at 4.7 percent and all others accounting for 13.3 percent or about 1 percent each.
The conclusion appears inescapable on the basis of these numbers; a potential adverse impact of $231 Million spread over the great array of imported products which were Dutiable in 1929 could not realistically have had any measurable impact on America's trading partners.
Meanwhile, the Gross National Product (GNP) in the United States had dropped an unprecedented 13.5 percent in 1930 alone, from $103.4 Billion in 1929 to $89 Billion by the end of 1930. It is unrealistic to expect that a shift in U.S. international imports of just 0.2 percent of U.S. GNP in 1930 for example ($231 Million on $14.4 Billion) could be viewed as establishing a `precedent' for America's trading partners to follow, or represented a `model' to follow.
Even more to the point an impact of just 0.2 percent could not reasonably be expected to have any measurable effect on the economic health of America's trading partners.
Note should be taken of the claim by those who repeat the Smoot/Hawley `villain' theory that it set off a `chain' reaction around the world. While there is some evidence that certain of America's trading partners retaliated against the U.S. there can be no reliance placed on the assertion that those same trading partners retaliated against each other by way of showing anger and frustration with the U.S. Self-interest alone would dictate otherwise, common sense would intercede on the side of avoidance of `shooting oneself in the foot,' and the facts disclose that world trade declined by 18 percent by the end of 1930 while U.S. trade declined by some 10 percent more or 28 percent. U.S. foreign trade continued to decline by 10 percent more through 1931, or 53 percent versus 43 percent for world-wide trade, but U.S. share of world trade declined by only 18 percent from 14 percent to 11.3 percent by the end of 1931.
Reference was made earlier to the Duty Free category of U.S. imports. What is especially significant about those import numbers is the fact that they dropped in dollars by an almost identical percentage as did Dutiable goods through 1931 and beyond: Duty Free imports declined by 29 percent in 1930 versus 27 percent for Dutiable goods, and by the end of 1931 the numbers were 52 percent versus 51 percent respectively.
The only rational explanation for this phenomenon is that Americans were buying less and prices were falling. No basis exists for any claim that Smoot/Hawley had a distinctively devastating effect on imports beyond and separate from the economic impact of the economic collapse in 1929.
Based on the numbers examined so far, Smoot/Hawley is clearly a mis-cast villain. Further, the numbers suggest the clear possibility that when compared to the enormity of the developing international economic crisis Smoot/Hawley had only a minimal impact and and international trade was a victim of the Great Depression.
This possibility will become clear when the course of the Gross National Product (GNP) during 1929-1933 is examined and when price behaviour world-wide is reviewed, and when particular Tariff Schedules of Manufacturers outline in the legislation are analyzed.
Before getting to that point another curious aspect of the `villian' theory is worthy of note. Without careful recollection it is tempting to view a period of our history some 50-60 years ago in terms of our present world. Such a superficial view not only makes no contribution to constructive policy-making. It overlooks several vital considerations which characterized the Twenties and Thirties:
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1. The international trading system of the Twenties bears no relation to the interdependent world of the Eighties commercially, industrially and financially in size or complexity.
2. No effective international organization existed, similar to the General Agreement for Tariffs and Trade (GATT) for example for resolution of disputes. There were no trade `leaders' among the world's nations in part because most mercantile nations felt more comfortable without dispute settlement bodies.
3. Except for a few critical products foreign trade was not generally viewed in the `economy-critical' context as currently in the U.S. As indicated earlier neither President Hoover nor President Roosevelt viewed foreign trade as crucial to the economy in general or recovery in particular.
4. U.S. foreign trade was relatively an amorphous phenomenon quite unlike the highly structured system of the Eighties; characterized largely then by `caveat emptor' and a broadly laissez-faire philosophy generally unacceptable presently.
These characteristics, together with the fact that 66 percent of U.S. imports were Duty Free in 1929 and beyond, placed overall international trade for Americans in the Twenties and Thirties on a very low level of priority especially against the backdrop of world-wide depression. Americans in the Twenties and Thirties could no more visualize the world of the Eighties than we in the Eighties can legitimately hold them responsible for failure by viewing their world in other than the most pragmatic and realistic way given those circumstances.
For those Americans then, and for us now, the numbers remain the same. On the basis of sheer order of magnitude of the numbers illustrated so far, the `villian' theory often attributed to Smoot/Hawley is an incorrect reading of history and a mis-understanding of the basic and incontrovertible law of cause and effect.
It should also now be recalled that, despite heroic efforts by U.S. policy-makers its GNP continued to slump year-by-year and reached a total of just $55.4 billion in 1933 for a total decline from 1929 levels of 46 percent. The financial collapse of October, 1929 had indeed left its mark.
By 1933 the 1929 collapse had prompted formation in the U.S. of the Reconstruction Finance Corporation, Federal Home Loan Bank Board, brought in a Democrat President with a program to take control of banking, provide credit to property owners and corporations in financial difficulties, relief to farmers, regulation a stimulation of business, new labor laws and social security legislation. /2/
/2/ Beard, Charles and Mary, New Basic History of the United States.
So concerned were American citizens about domestic economic affairs, including the Roosevelt Administration and the Congress, that scant attention was paid to the solitary figure of Secretary of State Cordell Hull. He, alone among the Cabinet, was conviced that international tade had material relevance to lifting the country back from depression. His efforts to liberalize trade in general and to find markets abroad for U.S. products in particular from among representatives of economically stricken Europe, Asia and Latin America were abruptly ended by the President and the 1933 London Economic Conference collapsed without result.
The Secretary did manage to make modest contributions to eventual trade recovery through the Most Favored Nation (MFN) concept. But it would be left for the United States at the end of World War II to undertake an economic and political role of leadership in the world; a role which in the Twenties and Thirties Americans in and out of government felt no need to assume, and did not assume. Evidence that conditions in the trade world would have been better, or even different, had the U.S. attempted some leadership role can not responsibly be assembled. Changing the course of past history has always been less fruitful than applying perceptively history's lessons.
The most frequently used members thrown out about Smoot/Hawley's impact by those who believe in the `villain' theory are those which clearly establish that U.S. dollar decline in foreign trade plummeted by 66 percent by the end of 1933 from 1929 levels, $9.6 billion to $3.2 billion annually.
Much is made of the co-incidence that world-wide trade also sank about 66 percent for the period. Chart II summarizes the numbers.
| . | 1929 | 1930 | 1931 | 1932 | 1933 |
|---|---|---|---|---|---|
| United States | |||||
| Exports | 5.2 | 3.8 | 2.4 | 1.6 | 1.7 |
| Imports | 4.4 | 3.0 | 2.1 | 1.3 | 1.5 |
| Worldwide: | |||||
| Exports | 33.0 | 26.5 | 18.9 | 12.9 | 11.7 |
| Imports | 35.6 | 29.1 | 20.8 | 14.0 | /3/ 12.5 |
The inference is that since Smoot/Hawley was the first `protectionist' legislation of the Twenties, and the end of 1933 saw an equal drop in trade that Smoot/Hawley must have caused it. Even the data already presented suggest the relative irrelevance of the tariff-raising Act on a strictly trade numbers basis. When we examine the role of a world-wide price decline in the trade figures for almost every product made or commodity grown the `villain' Smoot/Hawley's impact will not be measurable.
It may be relevant to note here that the world's trading `system' paid as little attention to America's revival of foreign trade beginning in 1934 as it did to American trade policy in the early Thirties. [From 1934 through 1939 U.S. foreign trade rose in dollars by 80% compared to world-wide growth of 15%. Imports grew by 68% and exports climbed by a stunning 93%. U.S. GNP by 1939 had developed to $91 Billion, to within 88% of its 1929 level.]
Perhaps this suggests that America's trading partners were more vulnerable to an economic collapse and thus much less resilient than was the U.S. In any case the international trade decline beginning as a result of the 1929 economic collapse, and the subsequent return by the U.S. beginning in 1934 appear clearly to have been wholly unrelated to Smoot/Hawley.
As we begin to analyze certain specific Schedules appearing in the Tariff Act of 1930 it should be noted that sharp erosion of prices world-wide caused dollar volumes in trade statistics to drop rather more than unit volume thus emphasizing the decline value. In addition, it must be remembered that as the Great Depression wore on, people simply bought less of everything increasing further price pressure downward. All this wholly apart from Smoot/Hawley.
When considering specific Schedules, No. 5 which includes Sugar, Molasses, and Manufactures Of, maple sugar cane, sirups, adonite, dulcite, galactose, inulin, lactose and sugar candy. Between 1929 and 1933 import volume into the U.S. declined by about 40% in dollars. In price on a world basis producers suffered a stunning 60% drop. Volume of sugar imports declined by only 42% into the U.S. in tons. All these changes lend no credibility to the `villain' theory unless one assumes, erroneously, that the world price of sugar was so delicately balanced that a 28% drop in sugar imports by tons into the U.S. in 1930 destroyed the price structure and that the decline was caused by tariffs and not at least shared by decreased purchases by consumers in the U.S. and around the world.
Schedule 4 describes Wood and Manufactures Of, timber hewn, maple, brier root, cedar from Spain, wood veneer, hubs for wheels, casks, boxes, reed and rattan, toothpicks, porch furniture, blinds and clothespins among a great variety of product categories. Dollar imports into the U.S. slipped by 52% from 1929 to 1933. By applying our own GNP as a reasonable index of prices both at home and overseas, unit volume decreased only 6% since GNP had dropped by 46% in 1933. The world-wide price decline did not help profitability of wood product makers, but to tie that modest decline in volume to a law affecting only 6 1/2 % of U.S. imports in 1929 puts great stress on credibility, in terms of harm done to any one country or group of countries.
Schedule 9, Cotton Manufactures, a decline of 54% in dollars is registered for the period, against a drop of 46% in price as reflected in the GNP number. On the assumption that U.S. GNP constituted a rough comparison to world prices, and the fact that U.S. imports of these products was infinitesimal. Smoot/Hawley was irre levant. Further, the price of raw cotton in the world plunged 50% from 1929 to 1933. U.S. growers had to suffer the consequences of that low price but the price itself was set by world market prices, and was totally unaffected by any tariff action by the U.S.
Schedule 12 deals with Silk Manufactures, a category which decreased by some 60% in dollars. While the decrease amounted to 14% more than the GNP drop, volume of product remained nearly the same during the period. Assigning responsibility to Smoot/Hawley for this ve ry large decrease in price beginning in 1930 stretches credibility beyond the breaking point.
Several additional examples of price behaviour are relevant.
One is Schedule 2 products which include brick and tile. Another is Schedule 3 iron and steel products. One outstanding casualty of the financial collapse in October, 1929 was the Gross Private Investment number. From $16.2 Billion annually in 1929 by 1933 it has fallen by 91% to just $1.4 Billion. No tariff policy, in all candor, could have so devastated an industry as did the economic collapse of 1929. For all intents and purposes construction came to a halt and markets for glass, brick and steel products with it.
Another example of price degradation world-wide completely unrelated to tariff policy is Petroleum products. By 1933 these products had decreased in world price by 82% but Smott/Hawley had no Petroleum Schedule. The world market place set the price.
Another example of price erosion in world market is contained in the history of exported cotton goods from the United States. Between 1929 and 1933 the volume of exported goods actually increased by 13.5% while the dollar value dropped 48%. This result was wholly unrelated to the tariff policy of any country.
While these examples do not include all Schedules of Smoot/Hawley they clearly su ggest that overwhelming economic and financial forces were at work affecting supply and demand and hence on prices of all products and commodities and that these forces simply obscured any measurable impact the Tariff Act of 1930 might possibly have had under conditions of several years earlier.
To assert otherwise puts on those proponents of the Smoot/Hawley `villian' theor y a formidable challenge to explain the following questions:
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1. What was the nature of the `trigger' mechanism in the Act that set off the alleged domino phenomenon in 1930 that began or prolonged the Great Depression when implementation of the Act did not begin until mid-year?
2. In what ways was the size and nature of U.S. foreign trade in 1929 so significant and critical to the world economy's health that a less than 4% swing in U.S. imports could be termed a crushing and devastating blow?
3. On the basis of what economic theory can the Act be said to have caused a GNP drop of an astounding drop of 13.5% in 1930 when the Act was only passed in mid-1930? Did the entire decline take place in the second half of 1930? Did world-wide trade begin its decline of some $13 Billion only in the second half of 1930?
3. Does the fact that duty free imports into the U.S. dropped in 1930 and 1931 and in 1932 at the same percentage rate as dutiable imports support the view that Smoot/Hawley was the cause of the decline in U.S. imports?
4. Is the fact that world-wide trade declined less rapidly than did U.S. foreign trade prove the assertion that American trading partners retaliated against each other as well as against the U.S. because and subsequently held the U.S. accountable for starting an international trade war?
5. Was the international trading system of the Twenties so delicately balanced that a single hastily drawn tariff increase bill affecting just $231 Million of dutiable products in the second half of 1930 began a chain reaction that scuttled the entire system? Percentage-wise $231 Million is but 0.65% of all of 1929 world-wide trade and just half that of world-wide imports:
The preponderance of history and facts of economic life in the international area make an affirmative response by the `villain' proponents an intolerable burden.
It must be said that the U.S. does offer a tempting target for Americans who incessantly cry `mea culpa' over all the world's problems, and for many among our trading partners to explain their problems in terms of perceived American inability to solve those problems.
In the world of the Eighties U.S. has indeed very serious and perhaps grave responsibility to assume leadership in international trade and finance, and in politics as well.
On the record, the United States has met that challenge beginning shortly after World War II.
The U.S. role in structuring the United Nations, the General Agreement on Tariffs and Trade (GATT), the International Monetary Fund, the Bretton Woods and Dumbarton Oaks Conferences on monetary policy, the World Bank and various Regional Development Banks, for example, is a record unparalleled in the history of mankind.
But in the Twenties and Thirties there was no acknowledged leader in international affairs. On the contrary, evidence abounds that most nations preferred the centuries-old patterns of international trade which emphasized pure competition free from interference by any effective international supervisory body such as GATT.
Even in the Eighties examples abound of trading nations succumbing to nationalistic tendencies and ignoring signed trade agreements. Yet the United States continues as the bulwark in trade liberalization proposals within the GATT. It does so not because it could not defend itself against any kind of retaliation in a worst case scenario but because no other nation is strong enough to support them successfully without the United States.
The basic rules of GATT are primarily for all those countries who can't protect themselves in the world of the Eighties and beyond without rule of conduct and discipline.
The attempt to assign responsibility to the U.S. in the Thirties for passing the Smoot/Hawley tariff act and thus set off a chain reaction of international depression and war is, on the basis of a preponderance of fact, a serious mis-reading of history, a repeal of the basic concept of cause and effect and a disregard for the principle of proportion of numbers.
It may constitute a fascinating theory for political mischief-making but it is a cruel hoax on all those responsible for developing new and imaginative measures designed to liberalize international trade.
Such constructive development and growth is severely impeded by perpetuating what is no more than a symbolic economic myth.
Nothing is less worthwhile than attempting to re-write history, not learning from it. Nothing is more worthwhile than making careful and perceptive and objective analysis in the hope that it may lead to an improved and liberalized international trading system.
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Mr. HOLLINGS. Senator Heinz, of course, emphasized the fact that the Depression and the crash of the stock market occurred fully 8 months before Smoot-Hawley.
It was October 29 and we all went broke. We had the crash on Wall Street. But it was not until June 30 that we passed Smoot-Hawley, and then trade actually increased. Trade increased under Smoot-Hawley.
But the bottom -line reality is that Smoot-Hawley could not have had too much of an effect at the time because, as Senator Heinz said:
The tariffs in question affected only $231 million worth of products in the second half of 1930, significantly less than 1 percent of world trade: in 1930 to 1932 duty-free imports into the United States dropped at virtually the same percentage rate as dutiable imports.
In other words, Smoot-Hawley only affected a fraction of the trade. The Crash and the Depression had already started. With Smoot-Hawley, we actually had an increase in trade.
When account is taken of the fact that only 33 percent of the $1.5 billion of U.S. imports was in the dutiable category, the entire impact of Smoot-Hawley has to be focused on the $1.5 billion number, which was barely 1.5 percent of U.S. GNP.
Then Senator Heinz noted:
1934 through 1939 U.S. foreign trade rolls in dollars grew by 30 percent compared to the worldwide growth of 15 percent. Imports grew by 68 percent and exports climbed by a stunning 93 percent. U.S. GNP by 1939 had developed to $91 billion, to within 88 percent of its 1929 level.
Smoot-Hawley was called the father of reciprocal free trade. But that is a confusing word to the pollster and they will never ask about that. Instead, it is a simplistic, are you for free trade or protectionism? Instead, it is this monkey see, monkey do, and jump-like-monkeys-on-a-string kind of politics that we have going on around here. There is no understanding, no debate, and then when you want to have debate, everybody is in a rush--fast track, fast track, fast track.
The fast track passed 4 years ago. Incidentally, Vice President Quayle voted against fast track. I have finally found authority. I have been looking for one. Yes, yes, we have Vice President Quayle on our side. He said this 4 years ago that we should not fast track, fast track, and he helped us. A little vanguard with our eyes open was trying to stop the steamroller, and Vice President Quayle was with us.
Well, what did renowned professor Paul Krugman say about all this alleged protectionsim? The professor of economics at MIT said, `The claim that protectionism caused the Depression is nonsense.'
I quote further: `The claim that future protectionism will lead to a repeat performance is equally nonsensical.'
Yet we have the spectacle of Mrs. Hills, our lawyer, coming into court, crying exports, exports, Smoot-Hawley. And then when given the conflicting studies, she goes into her cheerleader mode, and that is when I gave up on this administration, I can tell you that.
I said we are in deep trouble now because Ambassador Hills said, and I quote:
Today our manufacturing sector is stronger than at any time since World War II, and anyone who sells the United States short is making a very grave mistake.
You see, if you are talking facts, if you recognize the recession and almost depression, if you acknowledge that the country is broke, that industry is on its heels, then you are selling the United States short. We are all supposed to be cheerleaders here for free trade and against protection.
She says, `Today our manufacturing sector is stronger than at any time since World War II.' Who in the Lord's world believes that?
There are 8.6 percent unemployed Americans--I do not know how many more you want to get--to prove the fallacy of that nonsense.
I am not being negative. We must live in the real world. You can see that in the last 10 years under this same `Morning in America' cheerleader section, we have lost 2 million manufacturing jobs. Thank you for free trade and this wonderful internationalism we have.
The fact is, in that 10 years, while the real wages in Germany went up some 14 percent, and 18 percent in Japan, United States wages went down to the 1973 level in the manufacturing sector in real terms. So we are headed pell-mell in the wrong direction, broke as we are.
The National Association of Purchasing Managers, they say that any time the index of industrial activity falls below 50 percent, you have a manufacturing recession. That index has been below 50 percent for 2 years. Yet we have a lawyer who is going to try our case with all of these nations, and she does not even understand we have a problem.
First quarter 1991 profits--let us come right up to the minute--are the worst in history for the automotive industry, which lost almost $5 billion; IMB, $1.7 billion loss; United Technologies, profits down 70 percent.
The manufacturing sector strong?
Look at how market share in the United States has been seized by foreigners. Import penetration figures of semiconductors, 40 percent. Apparel is now at 60 percent.
Our lawyer says, `It is morning in America. Do not sell America short. Speak up. Get positive.'
Look at foreign producers' market share in the United States.
Telephone equipment, 76 percent foreign penetration. Automobiles at 30 percent. Lee Iacocca says if it goes to 40 percent, he is gone. Then we will have only two automobile manufacturers. Well, for 1990, including the Japanese transplants right here in this country, penetration is 37.5. Lee better get himself a good bankruptcy lawyer. He is not coming up to me again. He came to me for that loan before and I got disillusioned when he put in the Korean engines and assembly plants down in Mexico. He followed the 2,000 blue-chip firms already there. But they will be cut off at the pass by this free trade agreement because the Japanese will come in and clean their clock.
Motorcycles, 86 percent foreign penetration of the U.S. market; black-and-white TV's, 100 percent; consumer radios, 100 percent; ferroalloys, 67 percent; toys and games, 72 percent; cameras, 90 percent; watches, 99 percent; VCR's 100 percent. And our Trade Ambassador has the unmitigated gall to say that U.S. manufacturing is stronger than at any time since World War II.
I am outraged by this head-in-the-sand attitude. If you do not realize the dilemma we are in, you are in bad shape. Ambassador Carla Hills is in terrible shape.
For the last 10 years, we have been investing in vacant office buildings, hotels, travel and entertainment, domestic services, while the Germans and the Japanese have been investing and capturing markets in manufactured goods. And there we are, reduced to
taking in each other's laundry.
There have been 7,896 corporations downgraded since the first of the year by Standard and Poor's.
Oh, I respect my labor friends, and they are worried about jobs and I am worried about jobs. But it is even worse than jobs, because it is not just the loss of a few jobs here and there; we are losing entire industries. And now, with the total influx of foreign capital into Mexico that is already started, as I have related, we will not be economically even in a position to play catchup ball.
When you raise these points to the administration, they react like an octopus and squirt the black ink about rules, rules, rules. I have talked to the Senators who rationalize by saying we are getting better rules, better trade rules.
I have heard that with respect to textiles. Ten years ago we had an import penetration or deficit in the balance of textile trade of $4.6 billion. The European Economic Community had a deficit of exactly $4.6 billion. In 10 years the European Economic Community, in a sober, measured fashion, enforced their rules and now it is less than a $500 million deficit in Europe's balance of textile trade.
In contrast, do you know where the United States is, Mr. President? We have a $26.5 billion deficit in the balance of textile trade alone. Over a quarter, 25 percent, of the U.S. deficit in trade is in one industry, textiles. And they dare to dismiss textiles as a special interest. I can tell you it is special to this Senator.
I go on Monday of this week to the research center in Spartanburg, SC, and I will recall all of these Senators talk about competition, competition, productivity, productivity, and I will look at a plant where last year they won the Baldrige Award for the most competitive and most productive corporation. You can see how upbeat they are.
But there is no chance to compete under this Congress. Like they told me years ago in the 1950's, when the brother of the distinguished colleague from Massachusetts and I were working on this issue--and I have his original letter--they said, `Senator, I can compete with any company in Japan. But I cannot compete with the country of Japan.' And that is the competition we face, contrary to these children running around hollering `Free trade, free trade, free trade, free trade.' There is your dilmma.
Rules, we have had rules. We have lost out on the rules. The administration does not enforce any rules. They tell us on the one hand we are protected, and we are supposed to be under the rules. Meanwhile foreign penetration in textile has gone from less than 10 percent in the 1950's, to over 60 percent today, and now it has reached the point where it does not pay to invest in ungrading, computerization, electronic controls, and so on.
So businesswise we are going to fulfill a morbid prediction of being unproductive, but textiles are productive now. So do not give me this cry of rules. There is no education in the second kick of a mule. I have heard this empty talk about rules for years.
Mr. President, do not tag me with a simplistic label of `protectionist.' We are all for truly free trade and we all practice protectionism.
Throughout Western history, all the great civilizations have been propelled forward by aggressive foreign trade. From ancient Mesopotamia and Egypt, to Greece and Rome, right through to Japan, Germany, and the United States in the post-World War II era, the common denominator of success has been foreign trade--robust, self-confident, expanding trade relations with the world. No one disputes this fact. It is obvious that you can't build a great civilization on autarky and isolation.
In the modern world, all of us are in favor of expanding trade, reducing trade barriers, opening new markets, and so on. Again, there is no dispute on this point.
So it is unfortunate that today's political debate is distorted by a false, trumped-up dichotomy between so-called free trade and so-called protectionism. In truth, we are all for free trade, so long as the term is realistically defined. And we are all for protectionism when it comes to defending critical national economic assets. Certainly, everyone of our major trading partners practices protectionism, whether they are protecting their rice farmers, their fledgling auto industries, their defense industries, you name it. And certainly, we practice protectionism: the Reagan and Bush administrations--despite all their inflated free trade rhetoric--have implemented buy-American weapons procurement policies, farm-price supports, commodity quotas, and a whole raft of voluntary restraints extracted from our trading partners. So let's get beyond these juvenile labels of `free trade' and `protectionism.' We are all freetraders, and we are all protectionists. The real question is this: What is the optimum mix of free trade incentives and protectionist safeguards necessary in order to maximize America's economic success and security?
In the decades since World War II, the United States has had the luxury of not asking that question. To rebuild Europe and Japan after the war--and later to sustain the worldwide economic boom we simply opened the vast U.S. consumer market to commerical onslaughts from around the world. Even in the face of blatant protectionist and mercantilist policies on the part of our trading partners, we essentially kept our market wide open to all comers. We could afford this literally self-sacrificing policy right through the 1970's. But, today, in the face of monstrous trade deficits and with vital domestic U.S. industries on the ropes, we no longer have the luxury of continuing the promiscuous trade
policies of the postwar past. Today, with the fall of the Wall and the collapse of the Soviet threat, we are obliged, at long last, to pose the critical question: what is the optimum mix of free trade incentives and protectionist safeguards necessary in order to maximize America's economic success and security?
But we have refused to pose this question in a realistic, hardnosed manner, because--alone among the great nations of the world--we have clung self-righteously and self-destructively to an ideology called free trade. As I pointed out, we hypocritically violate that free trade dogma time and again. Yet the persistence and resilience of our free trade orthodoxy has become a clear and present danger to America's economic security. It has become a fatal blind spot in our national political life--a blind spot which has prevented us from pursuing a mature trade policy that demands true, reciprocal free trade, and that dares to punish nations which refuse to play fairly.
Regrettably, our country has a long history of strategic blind spots. Time and again, we have been struck blind by old thinking or simply wrong thinking on issues vital to our national security.
Prior to the Second World War we suffered from multiple blind spots. In the 1930's, we pooh-poohed the rearmament of Germany, and the aggressive actions of Japan and Italy. We refused to see those dictatorships as a threat to the United States. Even when we broke the Japanese code and got advance word of the impending attack on Pearl Harbor, we refused to believe that Japan would attack us, and we took no defensive action.
More recently, in Operation Desert Shield leading up to the war against Iraq, we were deluded by huge and obvious blind spots. The whole premise of the massive troop buildup was that we could intimidate the Iraqis and back them down. We persuaded ourselves that we were smarter and stronger than Saddam Hussein. Now, after the fact, we recognize our blindness. We couldn't bluff or intimidate Saddam into abandoning Kuwait. And as to who is smarter and stronger--suffice it to say that, 3 months after the war, Saddam still sits entrenched in Baghdad, the Emir of Kuwait is reasserting his dictatorship, and the United States is struggling to extricate itself from the Persian Gulf quagmire.
I am tired of being blindsided by national blind spots. Just this once, let us open our eyes to the hard realities of the real world. The truth is that we are in the thick of a trade war--a no-holds-barred struggle among nations for market share, standard of living, and national security.
To date, we have grossly underestimated the ruthlessness and intensity of this trade war. Heretofore, we have tried to set an example of high-minded free trade openness, and we have gotten mugged. We have tried jawboning, and we have been ignored. If we would only remove the blinders, we'd see that our rivals will deal fairly only when we make it in their raw economic interest to do so.
Certainly, earlier generations of Americans had no blind spot with regard to trade and the national interest. Hamilton, WA, and Madison led the first Congress 202 years ago in erecting a palisade of tariffs--as high as 50 percent on some 30 commodities--so that American industries would not be strangled in their cradles by British exporters.
Similarly, it was FDR who made it his first order of business to protect and expand the American economy. To save the banks, he first closed the banks. To save the farmer, he first ordered the crops plowed under. To save the free market system, he reigned it in and disciplined it.
Today, on trade matters, it is time to take off the blinders and face facts. In the great American tradition of creative, activist government, our challenge in the international marketplace is to selectively raise barriers in order to remove barriers. In order to persuade the Asians and Europeans to remove their own trade obstacles, we must first erect our own, and then negotiate the removal of both ours and theirs in tandem.
I have spoken of our national blind spots and the damage they have caused over the last 50 years. Another word for `blind spot' is simply `'conventional wisdom.' Our poll-driven society is infested with conventional wisdoms--so much so that Newsweek magazine even has a weekly conventional wisdom watch column. Of course, conventional wisdom is nothing but highly distilled, highly condensed ignorance and nonsense.
According to the conventional wisdom, the civil rights bill is a quota bill. This assertion is made by people who haven't got the foggiest idea what's in the bill. But, that's alright. The conventional wisdom says it's a quota bill, and that's good enough. We Americans love conventional wisdoms because they tell us what to think, they eliminate the need for analysis or debate. Dissenting views are hushed up. The politician's rule is this: simply parrot the conventional wisdom and you're on safe ground.
Likewise, the conventional wisdom is that deficits don't matter, that we don't need new taxes, and that there is indeed, a free lunch. Entire presidencies have been premised on this single foolish conventional wisdom. And woe to any politician who dares to buck it by saying that deficits are crippling our Nation.
Of course, the conventional wisdom is too often simply the convenient wisdom, and it fits in nicely with our penchant for feel-good politics and our refusal to face up to unpleasant realities.
Call it conventional wisdom. Call it a national blind spot. The bottom line is that we need to open up our eyes to the realities of the international trading system. As Lincoln said about slavery, the great national blind spot of his own day: `Let us think anew, and act anew.' It is time for America to take off the blinders and look at the world as it really is.
They are even talking now about putting in a sense of the Senate resolution. They are beginning to feel, that hot flame on their backs of common sense from the people out there who are realizing that they have been sold a bill of goods. So they want to give the President, the administration, this free-trade gun-at-your-head fast-track nonsense. And then they want to salve their conscience with a mitigating sense of the Senate resolution. That is Mr. Gephardt's approach. He switched around; he is playing to the pollster nonsense now.
I hope they do not come forward with that sense of the Senate now, so we will do one thing and then say we did the other, and you cannot catch us. Good God, let us do something for the troops at home.
Heavens above. American first, we all believe in protectionism. We all believe in free trade. The fact of the matter is that we have been victimized by a national blind spot on this particular score.
That free trade notion started with Ricardo, who was not an economist, incidentally, in England, and Alexander Hamilton understood it well. Thomas Jefferson supported the first bill that passed the U.S. Congress on July 4, 1789, for protectionism, a 50-percent tariff on 30 articles, beginning with iron and going right on down the list.
What happened? The fact is that the cry of free trade is the cry from the developed country to the undeveloped--the developed with the industry looking for markets, to the undeveloped with only raw materials.
That is exactly what the British said to America 200-and-some years ago. They said: Now, you come in here with your fledgling United States of America. What you Americans need to understand is that we ought to have free trade. Under the doctrine of comparative advantage, you ship to us what you produce best. There will be no tariff barriers; we will have free trade. We will ship back to you what we produce best. There will be no tariffs; there will be no barrier.
Our friend, Hamilton, wrote a little book in reply. There is one copy left over in the Library of Congress. It is entitled, `Reports on Manufacturers.' We will not take time to read the booklet here this morning, but in a nutshell, what Hamilton said was, `Bug off.' He said, `We are not going to remain Britain's colony.' That was the first bill passed in the National Congress, a tariff bill, protectionism.
Abraham Lincoln, with the transcontinental railroad. Some advised that he purchase the iron cheaply abroad. Lincoln said, no, we will build the iron plants here, and then we will have both the railroad and the iron-production capacity.
Roosevelt put protected quotas for agriculture; Eisenhower, for oil imports. We have built this economic giant, this industrial powerhouse, the United States of America, with protectionism. But the tables turned after World War II. We were developed, and the rest of the world was undeveloped.
So we went to Europe and the Pacific Rim with our Marshall plan. Industrial policy. Can you imagine that? The Marshall plan was not on fast tract, Senator; not on fast track at all. It dealt with all the countries and all of those complex issues.
Well, the Marshall plan passed in this Senate when we had Vandenberg and other Senators talking sense, and not nonsense and pollster politics. So we passed the Marshall plan. And we favored free trade. That is the desirable. But the Japanese built back with MITI and the Keiretsu.
And incidentally, do not bash Japan. It works. If you were the Emperor in the next 10 minutes, yu would do the same thing. It is working, is it not? They are taking over the world.
But there has to be some modicum of common sense about competition, some understanding of what opposition is. We sold Fords and Chevrolets in downtown Tokyo long before World War II. But after World War II, they licensed Toyota and Nissan. You cannot get the others licensed there today, after 45 years of the freedom that we gave them.
Economically, we built them, with the technology we gave them and through their own financial manipulation and protrust policies.
In America we have antitrust. We have the Federal Trade Commission. You cannot have price fixing. But Japan has it; protrust. That Toyota that sells for $16,300 in the District of Columbia sells for $23,00 in downtown Tokyo today. I can go down the list of goods, showing the disparity of the fixed price and the fixed profits used to target our markets while Japan's market is totally protected with their inspection and nontariff barriers.
And, of course, the world, is taking it on. If you think it is difficult getting a Ford inspected over there on the docks in Tokyo, about 4 months, you cannot buy a 1991 Toyota in downtown Paris, not until January 1, 1992. It takes the French a year to inspect it.
The truth is that the Europeans and '92 are not orchestrating for free trade. They are orchestrating for the trade battle, the trade war.
We have now a battle in this trade war, and we have a fifth column, that everybody understands, particularly the chairman of our Competitiveness Committee.
I am tired of this crowd over there hollering special interest. The Senator from Texas says that fast track is a victory over the general interest over the special interest. Prune juice. Look here. The multinationals went abroad and said this is terrific. There, they do not have any Congress, any OSHA, any Social Security, any environmental controls, any minimum wage. Congress invades the free market when we pass the minimum wage. We say the heck with market forces, a worker is worth so much an hour. I agee with that. Republicans and Democrats agree. But then we turn around and babble free trade. But there is no free trade or free market.
So the multinationals say, we can make out like gangbusters so long as we can keep open for dumping the largest, richest market in the world, the United States of America. The bankers who financed them, Chase Manhattan, Citicorp, organized ECAT, the Emergency Committee Against Tariff. The bankers said, this is terrific; you are going to make your payments to us, we will organize ECAT, and we will organize a trilateral commission and march these young fledgling politicians up and let them say grace and give their support for free trade, free trade, free trade.
And so they started spewing out the free-trade, special-interest editorials to all the newspapers. Why did the newspapers run the free-trade editorials? Because 80 percent of their revenue comes from retail advertising, and the retailers are for cheap imports. But you have heard our presentation on the textile bill. We have lady's blouses from Bloomingdale's, one made in New Jersey and one in Taiwan, same price, $32.50. We get a catcher's mitt from Herman's, one made in Michigan and one made in Korea, same price. Sometimes I have found imported articles even at a higher price than domestic. So the consumer is not getting a bargin with imported articles, but the retailers make a killing.
The retailers are stronger than my textile people, I can tell you. My distinguised senior Senator and I lost 400,000 jobs in the last 10 years in textiles. Under this particular advise and consent, we are going to lose, by the end of this decade, 1,450,000 jobs. That is why we are so desperate to move on this particular score.
In any event, the special interest multinationals, look at the list of exporters in the United States. I ask unanimous consent, Mr. President, to have printed in the Record a list of America's 50 biggest exporters.
There being no objection, the material was order to be printed in the Record, as follows:
AMERICA'S 50 BIGGEST EXPORTERS
[Dollar amounts in millions]
| Rank and company | Products | Export sales | Total sales | Exports as percent of sales | ||||
|---|---|---|---|---|---|---|---|---|
| Amounts | Percent change 1989-90 | Amounts | Fortune 500 Rank | Percent | Rank | |||
| 1. Boeing Seattle | Commercial and military aircraft | $16,093.0 | 46.0 | $27,595.0 | 13 | 58.3 | 1 | |
| 2. General Motors Detroit | Motor vehicles and parts | 10,315.9 | 1.3 | 126,017.0 | 1 | 8.2 | 40 | |
| 4. General Electric Fairfield, CT | Jet engines, turbines, medical systems | 7,128.0 | (1.9) | 58,414.0 | 6 | 12.2 | 27 | |
| 3. Ford Motor Dearborn, MI | Motor vehicles and parts | 7,098.0 | 14.0 | 98,274.7 | 3 | 7.2 | 41 | |
| 5. Int'l Business Machines Armonk, NY | Computers and related equipment | 6,195.0 | 13.1 | 69,018.0 | 4 | 9.0 | 37 | |
| 7. Chrysler Highland Park, MI | Motor vehicles and parts | 5,004.0 | (7.1) | 30,868.0 | 11 | 16.2 | 16 | |
| 6. E.I. Du Pont De Nemours Wilmington, DE | Specialty chemicals | 4,352.0 | (10.2) | 39,839.0 | 9 | 10.9 | 29 | |
| 8. United Technologies Hartford | Jet engines, helicopters, cooling equipment | 3,606.0 | 9.0 | 21,783.2 | 17 | 16.6 | 15 | |
| 10. McDonnell Douglas St. Louis | Aerospace prod., missiles, electronic sys | 3,538.0 | 22.2 | 16,351.0 | 24 | 21.6 | 10 | |
| 9. Caterpillar Peoria, IL | Heavy machinery, engines, turbines | 3,435.0 | 4.4 | 11,540.0 | 39 | 29.8 | 4 | |
| 11. Eastman Kodak Rochester, NY | Imaging, information, and health products | 2,957.0 | 2.9 | 19,075.0 | 20 | 15.5 | 18 | |
| 15. Philip Morris New York | Tobacco, beverage, food products | 2,928.0 | 28.0 | 44,323.0 | 7 | 6.6 | 45 | |
| 12. Hewlett-Packard Palo Alto, CA | Computers, electronics | 2,816.0 | 6.9 | 13,233.0 | 29 | 21.3 | 11 | |
| 14. Motorola Schaumburg, IL | Communications equipment, semiconductors | 2,801.0 | 20.8 | 10,885.0 | 42 | 25.7 | 6 | |
| 13. Unisys Blue Bell, PA | Computers and related equipment | 2,203.7 | (8.2) | 10,111.3 | 49 | 21.8 | 9 | |
| 17. Occidental Petroleum Los Angeles | Agriculture products, coal | 2,077.0 | 4.1 | 21,947.0 | 16 | 9.5 | 34 | |
| 16. Digital Equipment Maynard, MA | Computers and related equipment | 1,902.3 | (8.7) | 13,084.5 | 30 | 14.7 | 22 | |
| 18. Allied-Signal Morristown, NJ | Aircraft and automotive parts, chemicals | 1,838.0 | 8.6 | 12,396.0 | 36 | 14.8 | 20 | |
| 21. General Dynamics St. Louis | Tanks, aircraft, missiles, gun systems | 1,624.0 | 6.7 | 10,182.0 | 48 | 15.9 | 17 | |
| 19. Weyerhaeuser Tacoma | Pulp, paper, logs, lumber | 1,560.0 | (0.9) | 9,024.3 | 54 | 17.3 | 13 | |
| 22. Raytheon Lexington, MA | Electronic systems, aircraft | 1,435.0 | 7.1 | 9,362.3 | 52 | 15.3 | 19 | |
| 25. Dow Chemical Midland, MI | Chemicals, plastics, consumer products | 1,344.0 | 16.2 | 20,005.0 | 18 | 6.7 | 43 | |
| 20. Union Carbide Danbury, CT | Chemicals, plastics | 1,280.0 | (18.0) | 7,621.0 | 65 | 16.8 | 14 | |
| 33. Intel Santa Clara, CA | Microcomputer components and systems | 1,202.3 | 20.5 | 4,124.6 | 119 | 29.1 | 5 | |
| 31. Minnesota Mining & Mfg. St. Paul | Industrial, electronic, and health products | 1,199.0 | 17.7 | 13,021.0 | 31 | 9.2 | 36 | |
| 26. Westinghouse Electric Pittsburgh | Electrical products and electronic systems | 1,195.0 | 5.7 | 12,915.0 | 33 | 9.3 | 35 | |
| 24. Archer-Daniels-Midland Decatur, IL | Protein meals, vegetable oils, flour | 1,162.7 | (3.79) | 7,925.3 | 60 | 14.7 | 23 | |
| 30. Merck Rahway, NJ | Health products, specialty chemicals | 1,156.3 | 11.3 | 7,824.1 | 63 | 14.8 | 21 | |
| 35. Compaq Computer Houston | Computers and related equipment | 1,121.4 | 25.1 | 3,625.7 | 136 | 30.9 | 3 | |
| 40. Sun Microsystems Mountain View, CA | Computers and related equipment | 1,117.3 | 48.7 | 2,480.7 | 181 | 45.0 | 2 | |
| 23. Textron Province | Aerospace and consumer products | 1,103.0 | (8.8) | 7,917.6 | 61 | 13.9 | 25 | |
| 32. Exxon Irving, TX | Petroleum, chemicals | 1,101.0 | 8.0 | 105,885.0 | 2 | 1.0 | 50 | |
| 27. International Paper Purchase, NY | Pulp, paperboard, wood products | 1,100.0 | 0 | 12,960.0 | 32 | 8.5 | 39 | |
| 29. Hoechst Celanese Bridgewater, NJ | Chemicals, plastics, fibers, pharmaceuticals | 1,085.0 | 4.4 | 5,881.0 | 90 | 18.4 | 12 | |
| 28. Monsanto St. Louis | Herbicides, chemicals, pharmaceuticals | 1,079.0 | .8 | 9,047.0 | 53 | 11.9 | 28 | |
| 34. Aluminum Co. of America Pittsburgh | Aluminum products | 926.0 | (1.0) | 10,865.1 | 43 | 8.5 | 38 | |
| 37. Xerox Stamford, CT | Copiers, printers | 900.0 | 16.9 | 18,382.0. | 22 | 4.9 | 47 | |
| 38. Bayer USA Pittsburgh | Chemicals, health and imaging products | 865.0 | 13.9 | 5,903.7 | 89 | 14.7 | 24 | |
| 48. FMC Chicago | Armored military vehicles, chemicals | 848.0 | 18.4 | 3,754.8 | 131 | 22.6 | 8 | |
| 36. Rockwell Int'l El Segundo, CA | Electronics, automotive parts | 835.0 | 4.4 | 12,442.5 | 35 | 6.7 | 44 | |
| 44. Abbott Laboratories Abbott Park, IL | Drugs, diagnostic equipment | 814.5 | 18.9 | 6,210.3 | 82 | 13.1 | 26 | |
| 41. Deere Moline, IL | Farm and industrial equipment | 758.0 | 2.2 | 7,881.0 | 62 | 9.6 | 33 | |
| 42. Honeywell Minneapolis | Building, industry, and aviation control sys | 750.0 | 4.5 | 6,985.2 | 69 | 10.7 | 30 | |
| 45. Amoco Chicago | Chemicals | 743.0 | 11.2 | 28,277.0 | 12 | 2.6 | 49 | |
| 47. Bristol-Myers Squibb NY | Drugs, medical devices, consumer products | 741.0 | 16.1 | 10,509.0 | 46 | 7.1 | 42 | |
| 46. Tenneco Houston | Farm, construction, and auto equipment | 711.0 | 10.4 | 14,893.0 | 26 | 4.8 | 48 | |
| 50. Cooper Industries Houston | Petroleum & indus. equipment; elec. products | 662.7 | 16.0 | 6,222.2 | 81 | 10.7 | 31 | |
| [End insert]Reynolds Metals Richmond | Aluminum, plastic and paper products | 639.0 | 13.5 | 6,075.7 | 88 | 10.5 | 32 | |
| 49. Ethyl Richmond | Specialty and petroleum chemicals | 592.7 | 0 | 2,513.8 | 178 | 23.6 | 7 | |
| 39. Lockheed Calabasas, CA | Aerospace products, electronics, missile sys | 588.0 | (22.0) | 9,977.0 | 50 | 5.9 | 46 | |
| Total | 118,544.8 | . | 1,045,448.6 | . | . | . | ||
[Page: S6785]
They are all the mutinationals, 90 percent of them. We are going to identify the special interests around here, how we are recovering and doing fine with the special interests. What happens right here in Congress is that these special interests come along with the retailers, the banks, the newspapers, and then they retain hoards of Washington lawyers. If you want to talk about a fifth column, read Pat Choate's book, 100 law firms in Washington, DC were paid over $113 million by the Japanese, and they are chock full of former special trade representatives and top USTR staff. Suppose you picked up the paper this morning and the headline said, `Schwarzkopf now military adviser to Saddam Hussein'? Why, it shocks me to even think or say it. But in the trade war we have the `generals'--our special trade representatives--all getting fees and so forth from the Japanese. Look at the book, and you will see that they have gone over to the other side, and they have the audacity to come on the floor of this Senate with this garbage about special interest, that the general interest is going to prevail. The general interest is suffering here.
I ask unanimous consent to have printed this Wall Street Journal article entitled `U.S.-Mexico Trade Pact Is Pitting Vast Armies of Capitol Hill Lobbyists Against Each Other.' Here is the Mexico Trade Lineup.
There being no objection, the article was ordered to be printed in the Record, as follows:
[Page: S6786]
Washington: The war brewing in Congress over the U.S.-Mexico free trade agreement has spiced up life for this city's lobbyists.
`We've never had a trade issue that has been this hot,' says Harry Freeman. `It's quite a donnybrook.' Mr. Freeman, a former American Express Co. executive, has been lobbying furiously on behalf of a big business coalition that's pushing for the trade agreement and for congressional extension of the president's trade-negotiating authority.
The trade battle has snapped the Washington lobbying community out of the postwar doldrums and blues over a general downturn in legislative activity. But the burst of lobbying has some lawmarkers complaining of overkill.
`They've reached the point of saturation.' says democrat Marcy Kaptur of Ohio, who has criticized Mexico for its labor and environmental standards. and sides with a coalition of labor unions and environmental groups that oppose extension of President Bush's trade-negotiating authority.
Mexico, which hadn't previously employed Washington lobbyists, has suddenly upstaged Japan as the foreign government with the most visible lobbying muscle. Beginning in January, the Mexican government began hiring an A-team of lobbyists and lawyers, including such GOP heavy-hitters as Charls Walker, and such politically connected Democrats as Joseph O'Neill, a former top aide to Senate Finance Committee Chairman Lloyd Bentsen, and Robert Keefe, a former strategist for the late Sen. Henry Jackson.
Virtually every major business organization in the U.S. is also combing Capitol Hill, from the Business Roundtable to the U.S. Chamber of Commerce to the National Association of Manufacturers. `It's a panbusiness effort,' says Calman Cohen, a former government trade official with the Emergency Committee for American Trade. `I've never seen a larger grouping from the private sector.' Mr. Cohen coordinates weekly strategy sessions of an ad hoc lobby called the Coalition for Trade Expansion, which includes more than 500 corporate chieftains, association heads and lobbyists.
The most intense lobbying activity now isn't even focused on the U.S.-Mexico treaty itself, which has yet to be negotiated or written, but on countering efforts by the labor-environmental alliance, which is lobbying Congress to block the administration's request for a two-year extension of its so-called fast-track authority.
The existing fast-track authority was approved by Congress in the Reagan administration and allows the president to negotiate international trade treaties and submit them to Congress for approval without amendments. A congressional refusal to extend fast-track authority could doom both the U.S.-Mexico agreement, which would effectively erase the trade borders between the two nations, as well as the Uruguay Round of trade talks. If Congress doesn't act before June 1, the fast-track authority will be automatically extended for two years.
Lobbyists have been working hardest on members of the Senate Finance and House Ways and Means committees, which have jurisdiction over the issue. Democrats are having the toughest time choosing sides. Although union officials deny making a litmus test out of the vote to disapprove fast-track authority, some lawmakers fear that unions will withdraw their support and contributions from Democrats who vote the wrong way.
Labor began its lobbying campaign against fast-track extension last fall and quickly gained congressional converts. The labor-environmental lobby put together a broad, coalition of organizations, from Ralph Nader's Public Citizen to farm groups. Last week, the AFL-CIO sent every member of Congress a video showing poverty-infested Mexican villages and ravines carrying raw sewage. Opponents argue that the U.S.-Mexico trade agreement will bring massive job losses as businesses head south in search of a cheaper work force and looser environmental laws.
Preoccupied by the war and other issues, U.S. corporations were slower to start their lobbying effort for fast-track extension and the trade agreement, which they say will be a boon to the U.S. economy. Last month, Rep. Dan Rostenkowski, chairman of the House Ways and Means Committee, helped jump-start big business's lobbying campaign when he bluntly warned a group of 20 business leaders that they could lose the fast-track fight. According to Mr. Freeman, who attended the meeting, the Illinois Democrat told the group, `If you want to win this thing, move your ass.'
Heeding the chairman's words, corporate America assembled a virtual lobbying Who's Who, including corporate chiefs from American Express Co., Eastman Kodak Co., Procter & Gamble Co. and many other blue-chip concerns. The business forces have now regained strong footing and have set up a practically nonstop schedule of meetings with lawmakers. In a show of bipartisan might, a business delegation led by two former U.S. trade representatives, Democrat Robert Strauss and Republican William Brock, met with President Bush on the issue last week. The current U.S. trade representative, Carla Hills, who is herself strenuously lobbying members of Congress, huddled recently with a group of well-known lobbyists to talk over prospects for winning fast-track extension.
These off-the-record sessions between top government officials and business lobbyists irk labor. `There's no reason for a cloak-and-dagger operation,' says Robert McGlotten, the AFL-CIO's legislative director. `There ought to be open debate.'
Mrs. Hill's office responds that she has an `open door' policy and has met several times with labor representatives, too.
The Mexicans, meanwhile, are getting a crash course in lobbying U.S.-style. The Mexican embassy has been careful to cover both Democratic and GOP flanks with a fleet of lobbyists and lawyers who are regaling lawmakers with Mexico's efforts to modernize its working conditions. Mexican business interests, meanwhile, have formed their own version of the Business Roundtable and have the Washington law firm of Steptoe & Johnson `When in Rome do as the Romans do.' says one Mexican government official `When in Washington, do as people inside the beltway do.'
Burson-Marsteller.
Gold & Liebengood.
Robert Keefe.
Manchester Trade.
O'Melveny & Myers.
Joseph O'Neil.
Sherman & Sterling.
Steptoe & Johnson.
Charis Walker.
The Coalition for Trade Expansion is a lobbying umbrella that includes more than 500 corporations and lobbyists from five key business trade associations:
The Business Roundtable.
U.S. Chamber of Commerce.
Emergency Committee for American Trade.
National Association of Manufacturers.
National Foreign Trade Council.
Coalition covers more than 50 organizations, including.
AFL-CIO.
American Agriculture Movement.
Child Labor Coalition.
Consumer Federation of America.
Environmental Action.
Greenpeace.
Public Citizen.
Mr. HOLLINGS. The list includes the Mexican team. It has the U.S. corporate team and the labor and environmental team. It has them all. You will see who is the most powerful. No wonder they got the two-thirds vote. Nonetheless, you and I still have our foot in the door. We will not win this one, but I think we will oblige the Senate to stop, look, and listen, and the people of America will realize that what we have done has been victimized once again in our history to an inflicted blind spot.
We have inflicted on ourselves a blind spot with regard to the most important issue confronting the American people: Their economic sustenance, their economic security, and of course, the security of these United States. That is what is really at issue.
We are trying to wake America up and correct the record. We have previously passed all kinds of free trade agreements without fast track. We particularly wanted to make sure that we answered the argument to the effect that if you do not have fast track you could not negotiate. S. 636 was introduced the same time as Senate Resolution 78, back in March, to authorize the President to negotiate the Uruguay round and to negotiate an agreement with the Governments of Canada and Mexico. We are not bullheaded or blind to the idea of expanding and trying to see if what worked with Canada can be extended to the rest of the hemisphere.
But we are opening our borders at a very, very precarious time, and no one is looking and no one is understanding. The Trade Ambassador, our lawyer, says today our manufacturing sector is stronger than at any time since World War II.
We need a new lawyer. We are in the hands of the Philistines and somebody, somewhere, sometime, has to wake this crowd up and make them understand.
We already have fast track on deficits. I do not know where the Grace Commission went, but I can tell you about the biggest waste, the biggest fraud, the biggest abuse, and that is increased spending for interest costs on the national debt.
In Times Square they have a little odometer that is spining around, clocking the rise of the national debt. They tell us in the President's talk that we are headed in the right direction, that we are going to really reduce deficits $500 billion, when the truth, if you look in part 2, page 294 of the President's budget, is that we are increasing the national debt from $3.1 trillion to $4.1 trillion by early 1993, after the election. So we are increasing the debt over a trillion bucks.
We Democrats say we need leadership. We have leadership, but it is headed in the wrong direction. I cannot compete with the bully pulpit of the White House. But we better get off this fast track of fanciful issues, get down to the nub and really get a trade policy that is simple and tough-minded.
Get a lawyer who understands the dilemma America finds itself in, and give the Congress of the United States a chance to perform its constitutional duty.
Back in the founding days, article 1, section 8 of the Constitution says the Congress shall regulate commerce. If you had mentioned fast track to the Founding Fathers, they would have choked. They would have said we have had enough of British kings and fast-track parliaments. We must have a people's government. That is what we need here and that is what this vote will be about. We will lose it, but I think we have made a wake-up call and we will come back to it again and again until people understand that we need a trade policy in this country. We don't need fast track. We need a new track, a new realism about the trade war that is raging while this Senate sleepwalks.