Senate Democrats

Senate Democratic Leader Harry Reid Blasts Bush for Failed Trade Policy

Bush Has No Policy on China, No Policy on the Trade Deficit, No Policy to Keep America Competitive

Washington, D.C. – Senate Democratic Leader Harry Reid blasted the Bush Administration for having a failed trade policy today as the Senate considered the CAFTA agreement. In his floor speech, Senator Reid noted that although America is on pace to have a $700 billion trade deficit this year and the emergence of China is the biggest issue of concern to the American people, yet the Bush Administration has no policy for dealing with the trade deficit, no policy for dealing with China, and no policy for keeping America competitive in a changing global economy.

“I am not sure if this Administration has a trade policy other than CAFTA. Except for an occasional rhetorical oar splashing around, the Administration’s trade policy toward China is completely rudderless.”

The full statement is attached.

Mr. President, of all the trade agreements this body has considered since I have been here, I would most like to be able to support this one. I think it is remarkable how the CAFTA countries have turned from pasts of violence and instability to hopeful democracies. The initial economic and political reforms made by these countries are an important sign of progress.

Unfortunately, this trade agreement is seriously flawed. And, more importantly, it is symptomatic of the Bush Administration¹s rudderless trade and economic policy.

The CAFTA countries account for less than 1.5% of total U.S. trade. The combined economic size of the CAFTA countries is smaller than each of the top 25 metropolitan areas in America. Yet, the Bush Administration has made CAFTA its number one trade priority this year. I don¹t know if the President even has any trade policies other than CAFTA.

Misplaced Priorities: No Strategy for Dealing with Record Trade Deficit
I know that President Bush has no policy for dealing with the U.S. trade deficit, which set a record last year of over $600 billion and is on pace to surpass $700 billion this year.

Economists have warned that our trade deficit is unsustainable and could threaten the U.S. and global economies. If anyone tells you that CAFTA will help reduce the deficit, they are confused or are being misleading. The CAFTA countries account for just 0.3% of the U.S. trade deficit. They are barely a molecule of water in the proverbial drop in the bucket. Instead of coming up with a policy for addressing the deficit, the Administration sits in denial. The Treasury Secretary even likes to say our enormous trade deficit is a sign of U.S. economic strength.

In order to fund the enormous U.S. deficit, the nation has to borrow from foreign governments. The Bush Administration has managed to accumulate more foreign-owned debt in four years — $921 trillion — than the U.S. accumulated in the first 220 years of its existence.

I don’t consider that a sign of strength; I consider it a cause for concern. If the Bush Administration doesn’t acknowledge something is a problem, how can you come up with a policy to fix it?

Misplaced Priorities: No Strategy for Dealing with China
The Bush Administration at least concedes that China is a problem. The U.S. trade deficit with China was over $160 billion last year — more than ten times the size of total U.S. exports to the CAFTA countries. We had a $36 billion trade deficit with China just in Advanced Technology Products ­ more than twice total U.S. exports to CAFTA.

Yet the Bush Administration’s only policy seems to be empty rhetoric. It has no strategy to ensure that China ends its currency manipulation. It has no strategy to reduce China’s 90% piracy rates. It has no strategy for ensuring China complies with all its WTO obligations. It has no strategy for responding to China’s industrial policies in areas critical to the U.S. economy like high-tech goods, automobiles, software, and energy.

Except for an occasional rhetorical oar splashing around the water, U.S. trade policy toward China is totally adrift.

Misplaced Priorities: No Strategy for Opening Meaningful U.S. Markets.
The Administration likes to note that the U.S. exports more to the CAFTA countries than to Russia, India, and Indonesia combined, as if that is a great selling point for CAFTA.

But, that statistic is really an indictment of the Administration’s trade policy. The economies of those three countries are more than 25 times the size of the CAFTA countries. Why do we export so little to those three countries?

If the U.S. exported as much to Russia, India, and Indonesia as it does to the CAFTA countries (relative to the size of their GDPs), the U.S. would gain about $360 billion in exports ­ 120 times the benefit touted for CAFTA.

Why are we focusing on CAFTA and not focusing on opening these and other markets that would make a much bigger difference for the U.S. economy?

The Bush Administration likes to negotiate new trade agreements, but it never gets around to enforcing the ones we already have. President Clinton brought an average of 11 cases in the WTO each year to open foreign markets. The Bush Administration brought 12 WTO cases total in four years.

Once again, this Administration has no policy for doing the things that really matter for the U.S. economy. But it has given us CAFTA and all its flaws.

CAFTA Is Flawed: Step Back from U.S. Commitment to Help Workers.
There are always winners and losers in trade agreements. The rich few in these countries will be the winners, while the poor majority will be the losers. The CAFTA countries already have some of the highest levels of income inequality in the world. The CAFTA agreement will exacerbate these problems rather than help them.

Democrats called for rules to help out the “little guy” in the CAFTA countries ­ stronger labor provisions and significant investments ­ but the Bush Administration rejected them. The CAFTA countries have serious worker rights abuses. The U.S. Department of State, the International Labor Organization, and numerous independent human rights groups have all catalogued these abuses extensively. El Salvador’s independent government-appointed Human Rights Ombudsman put it well. As reported by the Washington Post last year, she said both government and industry have “an explicit intent to destroy unions.” (Washington Post, 12/2/04).

CAFTA does not require that these countries labor laws meet basic internationally accepted standards. The CAFTA countries may weaken their labor laws at will. If one of the CAFTA countries allowed child labor, blacklisting, or intimidation of workers, it would all be OK under CAFTA.

Anyone who buys Bush Administration claims that it sincerely wants to try to improve worker rights in the region, I’ve got some ocean front property in my home state to sell you. The Bush Administration has consistently sought major cuts in U.S. funds to the programs that improve worker rights overseas. This Administration simply does not care about the issue.

CAFTA Is Flawed: No Help for U.S. Workers Hurt By Trade.
As I said, it is inevitable that trade has winners and losers. The Bush Administration has ignored those who are hurt by expanded trade here at home, however.

Democrats succeeded in getting an amendment added to CAFTA to provide training and assistance for more U.S. workers injured by trade. The Bush Administration stripped this provision out of the legislation.

Leading Latinos Opposed; Bishops Have Serious Concerns.
Because of CAFTA’s flaws, leading groups of Latinos have announced their opposition or raised serious concerns about it ­ including the Congressional Hispanic Caucus and Central American bishops. These groups worry that CAFTA will hurt poor Latinos in Central America and here at home.

This Administration’s trade policy ­ when it has one — is the wrong policy for America. We should demand that the Administration re-negotiate CAFTA and come back with a better agreement that makes sense for America and the region. More importantly, we should demand that the Administration develop a comprehensive trade policy that addresses the critical issues, including the trade deficit, the emergence of China, and tough enforcement of U.S. rights under trade agreements, that reflect the priorities of the American people.