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[Congressional Record: September 5, 2000 (Senate)]
[Page S7974-S7978]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr05se00-29]                         
 
 TO AUTHORIZE EXTENSION OF NONDISCRIMINATORY TREATMENT TO THE PEOPLE'S 
            REPUBLIC OF CHINA--MOTION TO PROCEED--Continued

  The PRESIDING OFFICER. Under the previous agreement, the Senator from 
New York is recognized for such time as he may consume.
  Mr. MOYNIHAN. Mr. President, I thank my revered chairman for this 
opportunity to discuss the most important issue we will deal with in 
this portion of this session of Congress.
  At the Finance Committee's final hearing on China this spring, on 
April 6, our last witness, Ira Shapiro, who was formerly the chief 
negotiator for Japan and Canada at the U.S. Trade Representative's 
office, closed his testimony with these words.

       . . . [this vote] is one of an historic handful of 
     Congressional votes since the end of World War II. Nothing 
     that Members of Congress do this year--or any other year--
     could be more important.

  I rise to suggest, sir, that he is not wrong, and to explain at some 
length, if I may be indulged, the reasons therefor.
  The United States has a long history of commercial ties with China, 
beginning at a time when we exported raw materials, medicinal herbs and 
such like products, in return for sophisticated manufactures.
  The first American ship to visit China, the Empress of China, cleared 
New York harbor more than 216 years ago on February 22, 1784. It 
carried a cargo of 300 tons of ginseng, a wild root found in the 
uplands of States such as New York, where it is gathered to this day 
and is known as shang. The cargo included wool, cloth, lead, cotton, 
and pepper--pepper, I take it, to be a transshipment of pepper received 
from South Asia. She reached Canton 7 months later, on August 23, 1784, 
and returned to New York the following May where the vessel created a 
sensation with its exotic cargo of manufactures: porcelain, umbrellas, 
fans, and then some tea and spices.
  By the 1830s American commercial interests in China had grown 
considerably despite China's restrictions on trade. But American 
traders lagged far behind their British counterparts--one might say the 
Portuguese, as well, who were the first in the Far East--and when the 
British secured additional trading rights by the Treaty of Nanjing, 
concluded in 1842 after the first Opium War, as it was known, the 
merchants of Boston became especially fearful that American traders 
would suffer discrimination.
  In the context of today's debate, it is worth recalling that the U.S. 
response a century and a half ago to the fears that we were being 
locked out of the China market was just what we are talking about 
today. We sent a special emissary to ask the Chinese to grant the 
United States what is in effect normal trade relations status. Congress 
voted $40,000--some Members thought it to be an exorbitant sum--for a 
special diplomatic mission to China. Congressman Caleb Cushing of 
Massachusetts was dispatched as minister plenipotentiary. His 
instructions stated that his primary object was to secure for the 
United States the same commercial privileges that had just been won by 
the British.
  On July 3, 1844, Cushing signed the United States' first treaty with 
China. It was called the Treaty of Wanghia, named after a village near 
Macao which was a Portuguese settlement. Its centerpiece was ``a most 
favored nation clause.'' That was the 17th century term used at the 
time. The meaning is that you will get the same treatment as that 
nation which has the most favored treatment, which in effect means 
equal treatment for all, or what we call normal trade relations. Just 
equal treatment for all, ensuring that the American merchants would 
have the same terms of trade and negotiation as did the French and the 
English traders.
  A century and a half later, we are still grappling with these very 
same concerns. Thus, we find ourselves on September 5, 2000, debating 
the merits of establishing permanent normal trade relations with China, 
that term, ``normal trade relations,'' having been changed, having been 
adopted in the Finance Committee. We are very proud of our chairman in 
this regard, to have succeeded in changing the 17th century term ``most 
favored nation,'' which gave altogether the wrong impression to any but 
skilled trade negotiators and merchants.
  Our purpose is to ensure that Americans are not disadvantaged in the 
Chinese market and the Chinese not disadvantaged in ours.
  We begin the debate on a high note and with great expectations. Just 
as we left for the August recess on July 27, an overwhelming majority 
of Senators voted, 86-12, in support of the motion to invoke cloture on 
the motion to proceed to this bill. That is what we are doing now. It 
was almost exactly proportionately divided: 45 Republicans and 41 
Democrats voted for cloture.
  The vote followed an unquestionably impressive and somewhat 
surprising

[[Page S7975]]

vote in the House of Representatives on May 24. A margin of three or 
four votes had been predicted, with a 10-vote margin the most 
optimistic projection.
  In the end, the measure passed decisively: 237 yeas to 197 noes. The 
Finance Committee also has wholeheartedly endorsed the bill, on a 
bipartisan basis. On May 17, the committee ordered reported a very 
simple two-page bill, S. 2277. It is not a complicated matter, two 
pages states it all, to extend permanent normal trade relations to 
China. The vote was near to unanimous, 19-1.
  I remind my fellow Senators on this side of the aisle that all 
Democratic members of the Finance Committee voted in support of the 
bill.
  The House saw fit to add several provisions designed to implement 
elements of the November 15, 1999, U.S.-China bilateral World Trade 
Organization agreement to address several other facets of U.S.-China 
relations. Thus, the House bill, H.R. 4444, includes an import surge 
mechanism which codifies a provision of the November agreement, 
negotiated by our Trade Representative, to deal with that possibility 
in trade. It creates a human rights commission loosely modeled upon the 
Commission on Security and Cooperation in Europe, the Helsinki 
Commission, and it authorizes appropriations for the Departments of 
Commerce, State, and Labor and the U.S. Trade Representative's office 
to monitor China's compliance with its World Trade Organization 
commitments--nothing major, nothing troubling.
  On June 17, the Finance Committee examined the House-passed bill in 
executive session. It was the near unanimous view of the committee that 
we simply ought to take up the House bill, pass it, and send it to the 
President, who has committed to signing it. It, after all, represents 
an enterprise that has been afoot through many administrations, and 
came to a successful conclusion in his when the World Trade 
Organization was created and the trade agreement was negotiated. And, 
so, the sooner the better.
  We all need some reminding of our history. China's accession to the 
World Trade Organization is consistent with longstanding U.S. trade 
policy and allows China to resume the role it played 50 years ago. 
There can be no doubt that passage of this legislation is in the 
interest of the United States. This is true whether we view the matter 
from the overarching perspective of our broad trade policy goals or 
look more narrowly at the benefits that China's accession to the World 
Trade Organization will bring to American farmers, industry, and 
workers.
  Let me make the case from both vantage points. In a very real sense, 
America's trade policy over the past 66 years--two-thirds of a century, 
ever since Cordell Hull created the Reciprocal Trade Agreements Program 
in 1934 in the depths of the Great Depression--ever since then we have 
pursued policies that have brought us to this moment of extraordinary 
completion. With its accession to the World Trade Organization, China 
merely resumes the role that it played half a century ago when it was 
instrumental in United States-led efforts to build a multilateral 
trading system from the economic rubble generated by us in the Smoot-
Hawley Tariff Act of 1930. If you were to make a short list of five 
events that led to the Second World War, sir, Smoot-Hawley would be one 
of them.
  Tariffs in that act of 1930 increased to unprecedented levels--on 
average 60 percent. As predicted, imports dropped by two-thirds in 
value terms. But what had not been predicted was that there was a 
corresponding and almost precisely equal drop of two-thirds in the 
value of exports which materialized when our trading partners responded 
in kind and hiked their tariffs just as the United States had done.
  The result was ruinous, not only for the United States but for our 
trading partners. The British abandoned free trade and adopted 
Commonwealth preferences. The Japanese began the Greater East Asian Co-
Prosperity Sphere. In 1933, with unemployment at 33 percent, Hitler was 
elected Chancellor of Germany.
  It took the Reciprocal Trade Agreements Act of 1934 to get the trade 
policy of the United States back on track. The impetus behind the 
Reciprocal Trade Agreements program was predicated on the view that the 
recovery of the U.S. economy depended on finding outlets for our 
production--that is, opening and developing export markets--and that 
the only way to accomplish this was to negotiate reciprocal reductions 
in tariffs.
  If I may be permitted a personal note, I was taught, after returning 
from the Navy in World War II--I was taught this subject by Harry 
Hawkins, a great State Department official who Cordell Hull, in his 
memoirs, observes handled reciprocal trade. This was not to them a mere 
economic issue--prices, trading and such like. This was an issue that 
had led the world to the brink of destruction in World War II. It was 
hoped that would never happen again.
  This is what we are talking about now, at a more attenuated level. 
But the belief that has driven American policy for two-thirds of a 
century is still alive and happily and importantly so.
  We did this initially on a country-by-country basis. From 1934 
through 1947, the United States negotiated separate agreements with 29 
countries. That is a large number. I believe the initial membership of 
the United Nations was in the neighborhood of 55 countries. So half the 
countries in the world had entered agreements by this time.

  With the conclusion of the Second World War, trade assumed an 
important role in postwar economic reconstruction plans, and the 
conviction emerged that multilateral trade agreements were more 
efficient and ultimately a more trade liberalizing means of spurring 
economic growth than a web of bilateral agreements, having all the 
countries involved reach the same agreement in the same setting.
  China played a central role in that thinking and planning from the 
beginning. China was one of the 44 participants in the Bretton Woods 
Conference of July 1 to 22, 1944. We saw the war coming to an end, and 
we were preparing for the aftermath. Bretton Woods established the 
International Monetary Fund down on Pennsylvania Avenue and the 
International Bank for Reconstruction and Development, which we know as 
the World Bank, again not 20 blocks away.
  A multilateral trade agreement was expected to complement these 
institutions. There were three in mind: the fund, the bank, and the 
trade organization. Postwar planners did not turn their attention to 
trade until 1946. That year, China was appointed to the preparatory 
committee of the United Nations Conference on Trade and Employment, 
which was charged with drafting the charter for the International Trade 
Organization, the ITO. Thus, it was that China became one of the 
original 23 contracting parties to the General Agreement on Tariffs and 
Trade which was but one of the chapters of the ITO charter. It came to 
be known by its initials, the GATT, and it was put into effect in 1948 
as an interim arrangement until the charter had been ratified. It was 
just a very small office in Geneva. A British Treasury official, Eric 
Wyndham White and three secretaries, as I recall from those days, in a 
small house above Geneva ran it all and ran it wonderfully waiting for 
the ITO.
  The ITO never came to pass or did not come to pass at that time. It 
died in the Senate Finance Committee. The GATT survived. China remained 
a part of the GATT until March 8, 1950, when the Republic of China, by 
now located on Taiwan, notified the GATT that China would withdraw.
  I note, and I do not want to insist as my history is not that clear, 
but it was the Government of China of Chiang Kai-shek on Taiwan that 
withdrew. I do not believe we have any record of the PRC, the People's 
Republic, as such having done it. It would not have mattered, but 
effectively China was out. It is to be noted--I am subject to 
correction--but it is to be noted.
  It was not until 1986 that the People's Republic of China became 
sufficiently interested in the subject of GATT to try to reclaim its 
seat, and the accession negotiations began. Indeed, China had hoped to 
become a founding member of the World Trade Organization which came 
into effect on January 1, 1995, only 5 years ago, and, in effect, 
incorporated the GATT and succeeded it, the GATT having been originally 
a part of the ITO.
  The negotiations with China proved too complex to meet that deadline, 
but

[[Page S7976]]

they continued. Today after 14 difficult years in negotiation with the 
whole international community--not with our Trade Representative--China 
is within striking distance of becoming the 138th member of the WTO. It 
seems elemental that China, the world's 9th largest merchandise 
exporting nation in 1999 and the 11th largest importer--these are WTO 
statistics--ought to be in the World Trade Organization, and this is 
universally agreed. Agreed elsewhere, not unanimously agreed in the 
United States, but here we are with an 86-12 vote saying, ``Let's do 
it.''
  It is equally obvious that it is in the United States' interest to 
have such a commanding player in a rules-based system that is largely 
the design and certainly is entirely the inspiration of the United 
States with the assent at that time of the United Kingdom and the 
participation of China and, I must grant, the U.S.S.R. and France.

  This brings me to a second broad observation. The economic case for 
permanent normal trade relations is, I would think, unassailable. 
Ambassador Barshefsky negotiated an outstanding market access 
agreement. That much is not in dispute. It was China and not the United 
States that had to make significant and wide-ranging market access 
commitments.
  Take just a few of the products that are of great importance to my 
State of New York. In 1998, New York's direct exports to China totaled 
$596 million, $1 billion all told if shipments to Hong Kong are taken 
into account as now they ought to be. New York's exports are no longer 
principally ginseng, although I would note that in 1999, the United 
States exported just over 512 tons to China and Hong Kong.
  Almost 90 percent of New York's exports are manufactured goods. On 
average, tariffs on such products under the agreement before us will 
fall from 25 percent to 9 percent by the year 2005. We are a leading 
producer of information technology, paper, optical fibers, photographic 
equipment, and photocopier parts. China will eliminate its tariffs on 
information technology products and photocopier parts. It is not in 
their interest to charge themselves more for the products that they 
want.
  China has promised deeper cuts on other products. Of particular 
interest, the tariff on digital cameras will fall from 45 percent to 
zero. Tariffs on wood and paper fall not to zero but to very low rates, 
in the 5 to 7.5 percent range.
  The opportunities for New York's financial services industry are 
staggering. Take insurance. Currently, the Chinese insurance market is 
valued at $10 billion a year and is estimated to be growing 20 percent 
annually. Twenty percent annually doubles every 4 years. At present, 
per capita spending on insurance in China is under $8, compared to a 
world average of $431. The market is there.
  Under its WTO agreement, China will eliminate current requirements 
that restrict foreign insurance companies to a handful of cities. China 
would also allow insurers to offer different types of policies--health 
insurance, group insurance, and the like.

  Again, to keep in the Senate tradition of speaking first of my own 
State, while this is not well appreciated, New York is still a major 
agricultural State. We are the Nation's second largest producer of 
apples and third largest producer of dairy products, grapes, and wine. 
Our agricultural exports are well above a third of a billion dollars. 
This agreement reduces tariffs on apples and pears and cherries from 30 
percent to 10 percent, and on wine from 65 percent to 20 percent.
  I must not fail to mention that the Chinese will also cut their 
tariff on ginseng from 40 percent to 10 percent.
  New York is by no means the only State that will benefit. The 
distinguished chairman of the Finance Committee pointed out on July 27, 
just before we broke for the August recess, how China's accession to 
the WTO will benefit the State of Delaware, which is a major 
manufacturer, producing automobiles in abundance, chemicals beyond the 
imagination of most of us, and with a two-century tradition thereof. We 
grow ginseng; you produce chemicals--a pattern that I do not know if we 
want to maintain entirely, but there it is.
  California, which exported $2.5 billion in goods to China in 1998, 
will surely gain from China's commitments to eliminate tariffs on 
information technology products. What we think of in Silicon Valley, 
that is what we are talking about. There will be no tariffs on those 
products.
  Minnesota's exports to China more than doubled from 1993 to 1998--
doubled, sir--increasing from $119 million to $316 million. China will 
cut in half its tariff on scientific instruments--which Minnesota is 
probably internationally acclaimed for--cut them down to 6.1 percent, 
which is a derisory number, as any international trade expert will tell 
you.
  Minnesota's farmers will gain. China is already the world's largest 
growth market for soybeans and soybean products. I can remember as a 
boy in the 1930s reading--and for some reason I can remember--an 
article in the Reader's Digest telling us about the soybean, this 
amazing product that was grown in China that had such enormous 
potential for the rest of mankind. Indeed it did. Indeed it came here. 
And now we are sending it there.
  That is a pattern and point of fact that is well established in 
trade. We think of it mostly in terms of manufacturers. But it can 
obviously apply to agricultural products, too. Raymond Vernon, at 
Harvard, described this as the product cycle theory of international 
trade. A country begins to produce a certain product. It then begins to 
sell the product overseas. The product begins to be produced overseas. 
And then it begins to be sold back to the original nation, the nation 
where it was originally produced.
  We have seen this in automobiles, going from the United States to 
Asia, or Europe, and then coming back. I observe, sir, that we see it 
with soybeans. They came first from China. We consumed them, then 
produced them, and now we are sending them back to China. That is the 
felicity of trade and the importance of it.
  It can be said with certainty that every State in the Union will 
benefit from China's accession to the World Trade Organization.
  Permanent normal trade relations for China is necessary to realize 
the full benefits of China's accession to the WTO. Here is the rub: Our 
producers and workers and companies will not be guaranteed the full 
benefits of China's concessions until we grant China permanent normal 
trade relations status. The welfare of our workers, our manufacturers, 
our farmers, our lumbermen, our fishermen is at issue here.
  This is because the World Trade Organization requires that member 
states extend to each other unconditional normal trade relations. This 
principle is enshrined in the World Trade Organization--in the World 
Trade Organization's General Agreement on Tariffs and Trade of 1994, 
the General Agreement on Trade in Services, and the Agreement on Trade-
Related Aspects of Intellectual Property Rights--a matter of increasing 
importance to the United States. It is an absolute requirement, and 
should be.

  That is what we had in mind at Bretton Woods in 1944, what we put in 
place, as we hoped, in 1946 with the International Trade Organization, 
which never came into being--or did not come into being until now. Sir, 
it is the very same principle that the United States sought to 
establish in our first trade treaty with China in 1844.
  We do not meet this requirement today since the U.S. law requires 
that China's trade status must be renewed annually, based on a review 
of China's immigration policies, to which I will address myself in a 
moment.
  But, sir, as we well know, this legislation was created during the 
cold war, was directed against the Soviet Union and the satellite 
states, and had nothing whatever to do with China. H.R. 4444--that is 
the bill before us--will put us into compliance with our WTO 
obligations with respect to China and allow us to gain--in full--the 
considerable benefits that Ambassador Barshefsky negotiated in the 
November 1999 agreement.
  There are those who argue that granting permanent normal trade 
relations is not necessary and that we will still reap at least some of 
these hard-fought gains by virtue of our previous trade agreements. I 
beseech the Senate, do not be lulled by this argument.
  First, it is contradicted by nearly all experts who have examined it 
in detail--the administration, the General Accounting Office, the 
Congressional Research Service, and others.

[[Page S7977]]

  Second, our competitors will not be similarly hamstrung. They will 
benefit from all of the concessions that China made without restriction 
or question. They will prefer this situation from which we are 
excluded, and they will necessarily and legitimately seek to maintain 
it. We will have done ourselves the injury. No others can be blamed.
  More important--much more important, sir--China will view failure to 
enact this legislation as an unfriendly act, at the very least. The 
consequences could be severe, and they could endure. I would expect 
that they will because, sir, we have a long and troubling history of 
antipathy toward the Chinese. It is a strong term. I use it on this 
floor because it has been stated on this floor for a century and 
more; it is time to reverse it.

  Opposition to this measure--permanent normal trade relations--will be 
puzzling to many. But, sir, there is a long and rueful history in the 
United States of our racial antagonism toward Chinese emigration to 
this country, which now appears as an antagonism to the arrival of 
Chinese goods.
  It is not a pleasant history and it is painful to recount it. But it 
is necessary. It begins in California--which is understandable--where 
the movement to put an end to Chinese immigration into this country 
began in the late 1850s.
  By way of background, the Immigration and Naturalization Service 
reports that only 46 Chinese emigrated to the United States in the 
three decades between 1820 and 1850. The Chinese immigration explosion 
began in the 1850s, fueled by the California gold rush and the 
construction of the Transcontinental Railroad. From 1851 to 1880, 
228,899 Chinese emigrated to the United States. By 1880, Chinese 
immigrants in California alone numbered 75,000, more or less--about 9 
percent of the State's total population.
  Such was the demand for Chinese labor that the United States 
reinforced its ``open door'' policy by treaty: The Burlingame Treaty of 
1868 guaranteed to the Chinese Government the unrestricted immigration 
of its citizens to the United States. The State of California applauded 
the arrangement at the time.
  But there was an almost immediate backlash from workers in California 
who had organized themselves into so-called ``anti-coolie'' 
associations beginning in the mid-1850s.
  In the 1870s, the anti-Chinese movement gained momentum in the face 
of an economic downturn and the near completion of the Transcontinental 
Railroad. In 1876, a special committee of the California State Senate 
examined the problem and issued a report to the U.S. Congress entitled 
``An Address to the People of the United States upon the Evils of 
Chinese Immigration.''
  And in July 1876, the United States Congress established a Joint 
Special Committee to Investigate Chinese Immigration, chaired by 
Senator Oliver Morton of Indiana. The joint committee held 18 days of 
hearings in San Francisco in October and November 1876, and issued its 
final report in February 1877. A statement presented to the joint 
committee on October 26, 1876, on behalf of the ``Labor Union of San 
Jose, CA,'' was typical:

       Do they [the Chinese] prevent white immigration? We know 
     that most assuredly they do, as of our personal knowledge we 
     know numbers of laboring men during the past year that have 
     come to the coast, and have had to leave the coast for lack 
     of employment, in consequence of their inability to compete 
     with Mongolians, and thus sustain a loss, through their 
     influence, when they return to their old homes, not yet 
     cursed by the presence of the Chinese.

  This will be found in the report of the Special Committee to 
Investigate Chinese Immigration in Senate Report Number 689, 44th 
Congress, second session, page 1172, in the year 1877.
  Please note that this was written years before the establishment of 
the American Federation of Labor, which has had no such views; to the 
contrary. Still it was heard.
  The joint committee's final report makes painful reading, and I 
quote, Mr. President:

       To anyone reading the testimony which we lay before the two 
     Houses it will become painfully evident that the Pacific 
     coast must in time become either American or Mongolian. There 
     is a vast hive from which Chinese immigrants may swarm, and 
     circumstances may send them in enormous numbers to this 
     country. These two forces, Mongolian and American, are 
     already in active opposition. . . . The American race is 
     progressive and in favor of a responsible representative 
     government. The Mongolian race seems to have no desire for 
     progress, and to have no conception of representative and 
     free institutions. . . .
       It further appears from the evidence--and I continue to 
     read from the report of the Joint Committee of Congress--that 
     the Chinese do not desire to become citizens of this country, 
     and have no knowledge of or appreciation for our 
     institutions. Very few of them learn to speak our 
     language. . . . To admit these vast numbers of aliens to 
     citizenship and the ballot would practically destroy 
     republican institutions on the Pacific coast, for the 
     Chinese have no comprehension of any form of government 
     but despotism, and have not the words in their own 
     language to describe intelligibly the principles of our 
     representative system.

  That is in the report of the Joint Special Committee to Investigate 
Chinese Immigration, to be found in Senate Report 689, 44th Congress, 
second session at pages Roman V to Roman VII.
  The joint committee's report paved the way for the Chinese Exclusion 
Act of 1882, which suspended immigration by Chinese laborers for 10 
years. The scope of the act was expanded in 1888, and renewed for 
another 10 years in 1892. And then, in 1902--the century we are still 
in if we count the numbers--Congress indefinitely renewed the Chinese 
Exclusion Acts.
  We handled these things somewhat more diplomatically with Japan. When 
the San Francisco Board of Education passed an order requiring all 
Oriental pupils--there were 93 at the time--to attend a public school 
specially set aside for them, President Theodore Roosevelt averted a 
foreign policy crisis by persuading the Board to rescind its order in 
exchange for his commitment to negotiate a ``gentlemen's agreement'' 
with Japan. The agreement of 1907-1908 was actually a series of 
diplomatic notes in which the Government of Japan voluntarily pledged 
to issue no more passports to coolies going to the mainland of the 
United States--coolies being the term for common laborers.
  The Chinese Exclusion Acts were not repealed until 1943.
  It was not until 1943 when Chinese immigrants were, for the first 
time, allowed to become naturalized American citizens. No other group 
on Earth has faced this discrimination. In the middle of the Second 
World War, we were allies. We were one year from the Bretton Woods 
agreement where China would sit with us and plan the postwar 
institutions of the world. Only then did we repeal that exclusion--not 
just in country but from the right of citizenship.
  Pay heed: This animus continued for the longest while, and sometimes 
from the most unexpected places. The term ``coolie labor'' became a 
term of opprobrium and hostility extending the globe over.
  Thus, in this past Sunday's New York Times book review came the 
review of the book, It Didn't Happen Here: Why Socialism Failed in the 
United States, by our preeminent political sociologist Seymour Martin 
Lipset and Gary Marks, describing how one of the great socialist 
leaders of the early 20th century, a man esteemed in our history and a 
Member of the House of Representatives, had this to say on the floor of 
the House. I quote the review by David Glenn.

       Milwaukee's best-known Socialist leader, Victor Berger 
     (himself an Austrian Jewish immigrant), delivered a racist 
     harangue on the floor of Congress in 1911 against the 
     immigration of ``modern white coolies . . . Slavians [sic], 
     Italians, Greeks, Russians and Armenians.''

--this from a man who inspired the brotherhood of workers the world 
over.
  Allow me to quote Representative Berger's statement more fully, as 
reported in the Congressional Record of June 14, 1911.

       While the products of our factories are highly protected, 
     sometimes as highly as 200 percent, the producers of these 
     products are not protected at all. On the contrary, during 
     the last 20 years Slavonians, Italians, Greeks, Russians, and 
     Armenians have been brought into this country by the million. 
     Simply because they have a lower standard of living they have 
     crowded out the Americans, Germans, Englishmen, and Irishmen 
     from the workshops, factories, and mines of our highly 
     protected industries.

  He goes on to compare the wage rates that he believed to have fallen 
in the aftermath of white immigration. As I have said, one of the most 
enlightened

[[Page S7978]]

men of that age used the term ``modern white coolies.'' That is a part 
of our history. It is time we moved on. I will move on in conclusion to 
two points.
  First, the macroeconomic implications of our trade policy.
  Discussions of trade policy would be incomplete without mention of 
the macroeconomic implications of trade policy and the Nation's 
persistent balance of payments deficit--an issue addressed by Wynne 
Godley in ``Drowning In Debt'' a Policy Note recently published by the 
Jerome Levy Institute. The issue is somewhat complicated and centers 
around some complex economic interactions. But certain simple 
propositions warrant revisiting.
  First, the large and persistent balance of payments deficit reflects 
an imbalance between domestic saving and domestic investment. Simply 
put our Nation is not saving enough. The improvement in government 
finances--moving from deficits of more than 4 percent of GNP to 
surpluses of more than 2 percent of GNP--have been partially offset by 
a decline in private savings. At the same time, an investment boom has 
required even more saving. In the short-run, this is not a problem, 
particularly since the investment boom will yield some dividends in the 
form of higher economic growth.
  Second, in the long-run, this imbalance cannot continue, particularly 
as we approach the retirement of the baby boom generation. Indeed, it 
would be more prudent to now run balance of payment surpluses, 
reflecting an abundance of domestic savings, which so to speak can be 
cashed in when the baby boom generation retires.
  Third, trade policies, such as approving PNTR for China will increase 
economic efficiency, but may or may not reduce the balance of payments 
deficit. Only sound domestic policies can do that, for example a 
responsible fiscal policy that encourages domestic saving including 
budget surpluses, can reduce the balance of payments deficits.
  Allow me to close on a personal note. In January 1975, returning from 
a posting at U.S. Ambassador to India, I had the great pleasure of 
visiting Peking--as it then was--as a guest of George and Barbara Bush, 
who then represented the United States at the capital in a less than 
ambassadorial capacity. We had not yet exchanged ambassadors with the 
Communist regime. I was struck by a number of seeming contradictions. 
The great Tiananmen Square was dominated by two vast flag poles. At the 
top of the first were two massive portraits of 19th century hirsute 
Victorian gentlemen, Marx and Engels. The other had portraits of a 
somewhat mongol looking Stalin and, finally, Mao Zedong, who died in 
1976. The Great Hall of the People, as I wrote later, maintained 
throughout my visit ``the inert external manner of a post office on 
Sunday morning.'' In fact that very week, some 2,864 delegates had 
assembled there for the Fourth Party Congress. A new Constitution was 
adopted, Zhou Enlai was confirmed as Premier. And he declared that 
world war was inevitable.
  But that was not the impression one carried away. I have some 
confidence in what I say as two weeks later I wrote a long ``Letter 
from Peking'' for the New Yorker magazine. China, I wrote, ``is a huge 
industrializing nation.'' Its products were not at that point 
overwhelmingly impressive: ``In sum, Stalinist art and Meiji 
manufacture.'' Even so, Premier Zhou had predicted that by 1980 China 
would have a ``relatively comprehensive industrial and economic 
system,'' and that by the end of the century this, combined with 
science and technology, would put her ``in the front ranks of the 
world.'' Here we are at the end of that century.
  I came away from Peking convinced that the regime had broken its ties 
with Moscow. No one with an elementary sense of Eurasian history could 
believe they would last much longer. None you might say other than our 
intelligence agencies. Now the cult of Mao has receded. Some years ago 
I was back in what was now Beijing on a CODEL headed by much-loved 
Republican leader Bob Dole. The portraits atop the flag poles had 
vanished. Mao was consigned to a smallish portrait above an entrance to 
the Forbidden City on one side of the square. Industry and business 
moving forward regardless of ideology. At Shanghai the old European 
banks on the Bund were nominally empty--no exterior signs of any 
activity within--but were in fact bustling within, banking, as they had 
been 60 years earlier.
  No one should think of the People's Republic as a ``normal'' nation. 
It has a century of revolutionary past to accommodate to a more settled 
future. The potential for estrangement and worse is still there. To the 
extent that trade moderates international tensions, surely we will do 
so; indeed, insist on doing so. Too much is at stake not to do.
  I yield the floor.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Massachusetts is recognized for 30 minutes.
  Mr. KENNEDY. Mr. President, I see my colleagues on the floor. I note 
that my colleague from New Mexico was here waiting before I came to the 
floor and before my friend from Iowa arrived. I know he has an 
important short subject matter. He has not been recognized in the 
consent agreement, and I want to accommodate all.
  I believe I am entitled to 30 minutes; I expect to be able to 
complete my remarks in a shorter period. I want to accommodate the 
Senator from New Mexico. I will speak 20 minutes, and then yield to the 
Senator from Iowa. I ask unanimous consent to follow that outline, if 
it is agreeable to the Members.
  The PRESIDING OFFICER (Mr. Roberts). Without objection, it is so 
ordered.
  The Senator from New Mexico is recognized.
  Mr. BINGAMAN. Mr. President, I thank my colleague from Massachusetts, 
Senator Kennedy, for his courtesy in allowing me to speak at this 
point. I speak not on the issue that is pending before the Senate but 
in morning business. I ask I be permitted to speak for up to 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Bingaman pertaining to the introduction of S. 
3002 are located in today's Record under ``Statements on Introduced 
Bills and Joint Resolutions.'')
  The PRESIDING OFFICER. The distinguished Senator from Massachusetts 
is recognized for 20 minutes.
  Mr. KENNEDY. Mr. President, I ask to be able to proceed as in morning 
business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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