December 11, 2008 CONGRESSIONAL RECORD — SENATE S10935 

was 1 of 10 Republicans who did this 

evening. They were Senators BOND, 

BROWNBACK, COLLINS, DOLE, DOMENICI, 

LUGAR, SNOWE, SPECTER, VOINOVICH, 

and WARNER. The motion required 60 

votes. It had 53. It was seven votes 

short. The Senator from Pennsylvania 

took exception to my characterization 

earlier that the Republicans could have 

done more and helped us pass that. I 

want the RECORD to reflect that on the 

final vote, before Senator REID changed 

his vote for procedural reasons, 43 of 

the 46 Democrats voted in favor of the 

motion. Ten Republicans voted in 

favor. 

It is clear we could have had more, 

certainly, but it would not have been 

enough to make up the seven-vote deficit. When less than a third of the Republicans voted in favor of it, it is pretty clear that most of those on the 

other side of the aisle did not support 

that motion, despite the heroic vote by 

the Senator from Pennsylvania. 

f 

(At the request of Mr. REID, the following statement was ordered to be 

printed in the RECORD.) 

VOTE EXPLANATION 

∑ Mr. KERRY. Madam President, I am 

necessarily absent for the cloture vote 

today on the AMT bill which is the vehicle for the auto stabilization legislation. If I were able to attend today’s 

session, I would have supported cloture 

on the bill.∑ 

f 

U.S. TRADE AND MANUFACTURING 

POLICY 

Mr. REID. Madam President, my 

good friend Senator Ernest Hollings 

contacted me and asked if I could have 

printed in the RECORD a statement he 

has written about U.S. trade and manufacturing policy. It is my pleasure to 

do so. 

Senator Hollings was a longtime 

chair of the Senate Commerce Committee and a champion of American 

manufacturing. His statement contains 

some insightful and provocative 

thoughts of his and I encourage all of 

my colleagues to read it. 

Madam President. I ask unanimous 

ocnsent to have printed in the RECORD

Senator Hollings’ statement. 

There being no objection, the material was ordered to be printed in the 

RECORD, as follows: 

ECONOMISTS AND FREE TRADE

(By former Senator Ernest F. Hollings (D– 

SC)) 

The trouble with the economy is too often 

the economists who advise, oversee and, in 

some cases, even manipulate it. 

This is the crowd that advised on and overly embraced sub-prime mortgages, derivatives and credit default swaps. The crowd 

that advised on deregulating the financial 

industry. And the crowd that, after over 

stimulating the economy for the past eight 

years to the tune of $5 trillion of deficit 

spending, is now calling for, you guessed it, 

even more financial stimulus! 

According to the Congressional Budget Office, last year’s deficit or financial stimulus 

was $1.035 trillion. And as the economists try 

to decide on the amount of stimulus sufficient to jolt our clearly broken economy, we 

have already spent $691 [12/5/08] billion on additional financial stimulus just since October 1st—and it is not working. 

To really prime the pump of the economy, 

it should be ‘‘billions for immediate infrastructure—and not much more for financial 

stimulus.’’ 

The need now is to create jobs and to stop 

increasing the interest costs on the federal 

debt, costs that already exceeds $500 billion a 

year—$500 billion which we should be spending on universal health care and not on economic steroids. More of the wrong kind of 

stimulus will only serve to stimulate more 

production in China, at the expense of more 

jobs being lost here at home. 

Of course, the economists for the global financial institutions and the big multinational corporations know this, but because 

their loyalties are more to their institutions 

and less to our nation, they continue their 

calls for ever more ‘‘free trade’’ and for continuing U.S. trade and current account deficits. 

The irony is that economists learn in their 

very first class in school that it was a trade 

war which brought us our initial freedom as 

a country, and that semi-protectionism later 

helped build the United States. England 

started a ‘‘trade war’’ with the Colonies by 

adopting the Navigation Act of 1651 that required all trade be carried in British vessels. 

Manufacturing was forbidden in the Colonies, even the printing of the Bible, and then 

the Townsend Acts drafted by Adam Smith 

placed heavy import duties on a wide range 

of items. All of this precipitated the Boston 

Tea Party that started the Revolution. 

While we obtained our freedom in 1776, it 

wasn’t until 1787 that we empowered Congress, in Article I, Section 8, of the Constitution, to regulate commerce, both domestic 

and foreign. President George Washington’s 

first message to the first Congress in 1789 

warned that, ‘‘A free people should promote 

manufactories to render them independent of 

essential, particularly military, supplies.’’ 

Thereafter, the United States was financed 

and built for 100 years with semi-protectionism, and we didn’t even pass the income 

tax until 1913. At the advent of the Transcontinental Railroad, it was suggested that 

the needed steel be obtained from England— 

but President Abraham Lincoln strongly objected and required the steel to be produced 

in the United States. And Edmund Morris, 

describes how the U.S. won the trade war 

with England in his remarkable book ‘‘Theodore Rex’’ about President Teddy Roosevelt. 

President Roosevelt exclaimed at the time, 

‘‘Thank God I am not a free trader.’’ 

Under the new phenomenon called 

‘‘globalization’’, the so-called ‘‘comparative 

advantage’’ which underpinned the early 

centuries is no longer God-given or determined by the weather, as was the case, two 

centuries ago, with David Ricardo’s English 

woolens and Portuguese wine. Now commercial success is largely created, or not, by 

government policies, and the United States 

government refuses to compete for such success, even though, as The Economist magazine reported recently, ‘‘Business these days 

is all about competing with everyone from 

everywhere for everything.’’ 

Right after World War II, Japan started its 

trade war by competing in international 

trade for market share rather than profit. 

Japan closed its domestic market and sold 

its exports at cost, making up the profit in 

its closed market. It subsidized production 

and targeted certain items in trade—first 

textiles, then electronics, machine tools, robots and, finally, automobiles. As a consequence, Toyota is today #1 as General Motors, Chrysler and Ford struggle just to survive. 

China’s post-WWII trade war began when it 

closed its domestic market to articles domestically produced, but opened it to foreign 

production in exchange for research and 

technology. General Motors, Intel and Microsoft, among others, have established major 

research facilities in China, and the U.S. is 

now running well more than a $1 billion per 

month trade deficit with China in just advanced technology products. China has accumulated dollar reserves in excess of $1.3 trillion, and it is now far and away the world’s 

superpower in trade. 

These behaviors by Japan, China, India and 

others are manifest in almost all of America’s imports, but they are most manifest in 

automobiles, where the focus and the consequences are crystal clear. 

The United States Congress looks at the 

BMW plant in South Carolina, my home 

State, and the Nissan plant in Mississippi as 

examples of relative success and wonders 

what’s the matter with Detroit? 

Yet BMW received a tax deferral benefit of 

$100 million to locate in South Carolina and 

Nissan received over $300 million to locate in 

Mississippi. And all Detroit got—Ford, GM 

and Chrysler alike—was tax incentives to 

leave the United States and offshore its jobs 

and production. 

The supervisory personnel from Germany 

and Japan who run BMW’s and Nissan’s 

plants have health care and retirement benefits paid for by Germany and Japan. Detroit 

has to pay for the health care and retirement 

benefits of its supervisory personnel. 

BMW and Nissan have deductible health 

care for its employees. Detroit has to pay 

full health costs on its employees. 

BMW and Nissan hire forty-five year olds 

and under in order to minimize health costs. 

Detroit has a lot of senior people and legacy 

costs. 

The major parts that BMW and Nissan use 

to assemble cars in the United States are 

produced 19% cheaper in Germany and 5% 

cheaper in Japan because BMW’s and Nissan’s VAT taxes are rebated when parts are 

shipped for assembly in the United States. 

Detroit pays all local, state and federal taxes 

on its parts. 

Nissan, with a largely closed domestic 

market, does not have to make a profit, and 

thus located in the United States for market 

share. Detroit needs to make profits. 

BMW and Nissan high-ball the costs of 

their imported parts so as to minimize profits and taxes to the United States. Detroit 

has to pay taxes on its profits. 

And now, no surprise, the U.S. has a net 

deficit of $10 billion a month in foreign car 

imports, or more than $1 trillion in the last 

eight years, all because of highly and in 

some cases illegally subsidized competition 

with Detroit. 

And yet some influential economists still 

call this ‘‘free trade’’. 

Senate Majority Leader Harry Reid 

charged Ford, General Motors and Chrysler 

‘‘to get their act together [and] to come up 

with something.’’ But Detroit can’t do it 

alone. The new President and Congress must 

come up with something at the same time 

for Detroit to recover long-range. Using his 

authority to protect our national security, 

President John F. Kennedy instituted his 

seven-point policy of protection for textiles 

in 1961. Under Section 201 of the Trade Act, 

President Ronald Reagan threatened quotas 

on automobile imports in order to get Voluntary Restraint Agreements from Japan. 

So clearly the authority is there for President-elect Obama and Congress to impose 

quotas on imported cars so that Detroit can 

recover long-term long-range. 

S10936 CONGRESSIONAL RECORD — SENATE December 11, 2008 

Of course, it is not just jobs and production 

we are offshoring, but also research and development, high-end services and critical 

military materials. 

Thus, Congress must also vigorously 

(re)assume its responsibility under Article I, 

Section 8, of the Constitution for regulating 

trade in general. It must protect our important production and standard of living. And 

it must make it profitable to invest and 

produce in the United States. 

A value added tax is in order, and long 

overdue in fact. Every industrialized country 

except the United States has a value added 

tax, which is levied on all imports and rebated to manufacturers whenever they export. Today, however, imports into the 

United States come without any taxes being 

imposed on them, and U.S. manufacturers 

not only must pay all corporate taxes but 

the VAT on their exports. 

A U.S. VAT would immediately remove a 

tremendous disadvantage to production in 

the United States and begin to deter 

outsourcing, and the revenues from it would 

help eliminate both our massive fiscal and 

trade deficits. Since it would take a year for 

business and the Internal Revenue Service to 

gear up for a VAT, in the meantime, we 

should institute a 10% surcharge on imports 

as President Nixon did so successfully in 

1971. 

We must also activate the Commerce Secretary’s list of materials critical to our national security. By placing tariffs or quotas 

on items necessary to our national security 

and producing them in-country, we will not 

only be better prepared to defend ourselves 

but we can put American workers back to 

work. In 1991, Admiral William Crowe, who 

was then Chairman of the Joint Chiefs of 

Staff, warned against the outsourcing of 

military supplies. In Desert Storm we had to 

await Japanese flat-panel displays before invading Kuwait. We had to await Swiss crystals before invading Iraq. Now we can’t 

produce planes unless we get certain parts 

from India, and helicopters unless we get 

parts from Turkey. This nonsense has got to 

stop. 

Of course for years economists have told us 

not to worry about the loss of manufacturing 

jobs, because the United States would simply 

and easily become a high-end service economy. But as Robyn Meredith writes in her 

wonderful book ‘‘The Elephant and the Dragon’’: ‘‘As China has famously become the factory to the world, India is becoming the 

world’s back office . . . As many as 300,000 

American jobs each year will move overseas 

[to India] for the next thirty years—nine 

million jobs in all.’’ 

So then the economists told us to ‘‘educate.’’ But if they are referring to skills, 

South Carolina instituted a skilled training 

program forty-seven years ago, and BMW in 

Spartanburg, S.C. is now producing a better 

quality car than BMW produces in Munich, 

Germany. And South Carolina’s technical 

training program is now being mimicked by 

Intel in Ireland. But no State and not the 

United States can educate their way out of 

unfair competition. 

Then there was NAFTA. I voted for 

NAFTA with Canada because Canada has a 

free market. A country must have a free 

market to have free trade. Mexico doesn’t 

have a free market. I counseled the trade 

policy of the European Union. The EU requires that, before being admitted to the European Union, a country must have developed the entities of a free market like property rights, labor rights, a minimum wage, 

anti-trust provisions, an independent judiciary, etc. Countries of the European Union 

taxed themselves $5 billion for five years to 

develop a free market in Greece and Portugal before admitting them to the EU. Mexico still doesn’t have labor rights. U.S. corporations are known to sign up for a union 

before locating in Mexico, but only pro 

forma—no business agent at the Mexican facility, and the Mexican workers never hear 

of having a union. Under Mexican law, if one 

tries to organize a plant that already has a 

union, you’re fired. On a visit to Tijuana I 

met with 12 workers who were fired because 

they tried to organize a union not knowing 

the plant had one. NAFTA superimposed 

U.S. subsidized corn on two million small 

scale Mexican corn farmers putting them out 

of business. The Mexican farmers headed for 

the border for work. NAFTA not only exacerbated immigration, but the United States 

lost jobs and Mexico’s workers are paid less 

today than before NAFTA. We still ought to 

try the European Union approach in Mexico. 

With the money we spend on fences, Border 

Patrol, immigration, prosecutors, courts, 

jails, deportation, etc., a mini Marshall Plan 

for Mexico could clean up the corruption and 

drug problem and develop a free market in 

Mexico. This will help solve our immigration 

problem. 

As a last stand, the economists raise the 

specter of Smoot-Hawley. The late Senator 

John Heinz of Pennsylvania ‘‘belled that buzzard’’, passing a protectionist trade bill in 

the United States Senate twenty years ago. 

Smoot-Hawley restricting imports did not 

cause the depression. It was enacted eight 

months after the crash. At the time, 1930, 

international trade amounted to only 1.3% of 

our economy. Cordell Hull had us back with 

a plus balance of trade in 1933 with his famous reciprocal free trade policy. The economists’ free trade policy (without reciprocity) 

has caused a hemorrhaging of American jobs, 

production, research, technology, investment and development to China and India. 

Henry Ford not only developed mass production of automobiles, but he also greatly 

contributed to the development of the middle class in America, which is the strength of 

our democracy. Ford doubled the minimum 

wage and provided health care and retirement benefits for labor. He strengthened 

communities with the Ford Foundation, and 

business was diligent to keep America’s 

economy strong. And we in Congress got in 

the habit of following business’s lead on the 

economy, adopting Corporate America’s suggestions for production, marketing and competition. 

But in globalization, Corporate America’s 

leadership for trade and a strong economy 

has been ‘‘outsourced.’’ The industrial icon, 

Jack Welch, once announced at GE’s annual 

meeting that GE suppliers had to move to 

Mexico to produce a less-costly product or no 

longer be considered a GE supplier. 

Well, I worked with Corporate America to 

protect America’s investment and production. 

When I was in the Senate, I worked with 

Corporate America to keep our textile industry strong by passing a protectionist trade 

bill in 1968. President Lyndon Johnson, however, had Wilbur Mills, the powerful Chairman of the House Ways & Means Committee, 

block the measure. Again with the assistance of Corporate America, I helped pass 

four protectionist trade bills through both 

Houses of Congress only to see each of them 

vetoed—one by President Jimmy Carter, two 

by President Ronald Reagan, and one by 

President George H. W. Bush. 

Presidents back then were anxious that 

capitalism defeat communism in the Cold 

War and weren’t worried about our economy. 

Denied protection by Democratic and Republican administrations, Corporate America 

began outsourcing and offshoring. Now Corporate America opposes our government 

competing in globalization with chants of 

‘‘free trade,’’ ‘‘protectionism,’’ ‘‘don’t start a 

trade war.’’ Now, our nation’s business leaders and their economists, use every trick in 

the book to mislead on ‘‘protectionism.’’ 

They form organizations like The Trilateral 

Commission and The Business Roundtable, 

they promote books like ‘‘The World is Flat’’ 

to warn against protectionism, and even the 

U.S. Chamber of Commerce is more interested in commerce on Main Street, Shanghai 

than on Main Street, Spartanburg. The truth 

is globalization has become nothing more 

than a trade war, with the U.S. AWOL. And 

all the while, some major economists oppose 

any measure to protect our domestic production and economy, and they have become a 

‘‘fifth column’’ in the trade war. 

As Sir James Goldsmith testified before 

the Committee of Commerce in the United 

States Senate in 1994: ‘‘It must surely be a 

mistake to adopt an economic policy which 

makes you rich if you eliminate your national workforce and transfer your production abroad, and which bankrupts you if you 

continue to employ your own people.’’ 

But sadly, that’s our policy today. Only 

the President and Congress can change it! 

As President Lincoln said: ‘‘As our case is 

new, we must think anew and act anew. We 

must disenthrall ourselves [from free trade 

economists] and then we shall save our country.’’ 

f 

WILLIAM WILBERFORCE TRAFFICKING VICTIMS PROTECTION 

REAUTHORIZATION ACT 

Mr. DURBIN. Madam President, yesterday, on the 60th anniversary of the 

Universal Declaration of Human 

Rights, the Senate and House passed an 

important and comprehensive human 

rights bill: the William Wilberforce 

Trafficking Victims Protection Reauthorization Act of 2008. I was a cosponsor of this bill in the Senate and celebrate its passage. I commend the leadership of Senators BIDEN and 

BROWNBACK, Representatives HOWARD

BERMAN and CHRIS SMITH, and their 

staffs, for working with Federal agencies and service providers to craft a 

consensus, bipartisan bill that will enhance our national and global fight 

against the scourge of human trafficking. The TVPRA will strengthen 

the Federal Government’s ability to 

prosecute traffickers, protect trafficking victims, and prevent future 

crimes. 

It is impossible to discuss Congress’s 

efforts to address the issue of human 

trafficking without acknowledging the 

invaluable contributions made by the 

late Paul Wellstone and the late Tom 

Lantos. Senator Wellstone was the 

moral conscience of the Senate, and he 

was the driving force behind the initial 

antitrafficking legislation passed by 

Congress in 2000 and signed into law by 

President Clinton. 

Representative Lantos, who introduced the first version of the TVPRA 

in 2007, passed away earlier this year 

after nearly three decades of distinguished service in the House of Representatives. He was the only Holocaust survivor ever to serve in Congress, and this experience as a victim 

of the 20th century’s gravest human 

rights atrocity made him one of the 

leading voices in our time on human 

rights.