Executive Session

Floor Speech

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Mr. McCAIN. Mr. President, as you noted, we will consider the nomination of Mr. Ron Kirk as the next U.S. Trade Representative.

With some reluctance, I will vote to confirm Mr. Kirk's nomination. I think it is pretty obvious Mr. Kirk has been less than forthcoming on a number of trade issues that affect this country, and some of the positions he has articulated are very dangerous for this Nation's future. I have come to this floor on numerous occasions and argued against the provisions that have
been signed into law in omnibus bills recently, one of them ``Buy American,'' the other, of course, the latest being the barring of Mexican trucks into the United States of America.

The signal that sends to the world is that the United States is on a path of protectionism. That shows at least a majority of Members of this body have ignored the lessons of history. That lesson, obviously, we learned in the Great Depression, when isolationism and protectionism turned our economy from a deep recession to the worst depression of modern times. That is what protectionism and isolationism does.

So we now have a predictable result of killing the program which would allow, in keeping with the North American Free Trade Agreement, a solemn treaty signed by then-President Clinton, that Mexican trucks would be allowed into the United States.

Before I go much further, though, I wished to comment on the issue that is consuming the American people and the Congress today; that is, the AIG bonuses paid to executives. The simple lesson is, if we had not bailed out AIG, we would not be worried about the bonuses. I spoke out against the bailout of AIG at the time when it was first proposed when AIG was in trouble.

I, along with every other American, share anger and obvious displeasure that these bonuses were given to executives who obviously did not deserve them. But we should not have bailed out AIG. We should have let them fail and reorganize.

I would also like to point out that another area of the bailout that Americans should be equally disturbed about is the $20 billion that went to foreign banks. American taxpayers are paying now $20 billion to bail out foreign banks. Have we not enough trouble here at home and enough areas of the country that need Government assistance than to send $20 billion to foreign banks?

There is an obvious need for increased transparency, increased oversight, and far more careful stewardship of American tax dollars. The numbers we are talking about are, indeed, staggering. I would point out, again, we are committing generational theft by these kinds of expenditures of American taxpayers' dollars and mortgaging our children and grandchildren's future.

The direction of our trade policy has hardly been more important in recent years, given the enormous economic challenges we are facing today, with unemployment rising, consumer confidence dropping, and our growth rate stagnating, at best.

American exports. American exports have been one of the few bright spots in a terrible economic situation. Until last quarter, the export sector of our economy grew at a faster rate than other sectors during the past several years. In the face of this fact, and mindful of history lessons, Congress and the administration should be working to break down remaining barriers to trade.

However, we are doing the opposite. Since the beginning of this year, Congress and the administration have taken several steps designed to choke off access to the U.S. market which invites retaliation from our foreign trading partners.

American business and workers will suffer as the result of these ill-considered moves. Last month, as I mentioned, Congress adopted and the President signed into law--again, one of the consequences of these omnibus bills that are thousands of pages, that nobody knows what is included, they are designed to be a ``stimulus'' or ``spending bill,'' and we stuff policy provisions in them, which people may not know about for weeks or even months.

We find out that these are egregious in the case of ``Buy American'' and in the case of the American trucks. Both of them send a signal to the world that America is going down the path of protectionism.

The results, as far as Mexico is concerned, are unfortunate, very unfortunate, but predictable. The reaction of our friends and allies throughout the world to the ``Buy American'' provisions is predictable. They are angry and they are upset. I cannot say I blame them.

Now, the ``Buy American'' provision required funds appropriated in that bill--this is a policy change, remember, adopted in a ``stimulus package,'' that we purchase only American-made steel, iron, and manufactured goods.

As we debated this provision, many of our closest partners expressed great concerns about the implications of this course of action. The Canadian Ambassador to the United States wrote:

If Buy America becomes part of the stimulus legislation, the United States will lose the moral authority to pressure others not to introduce protectionist policies. A rush of protectionist actions could create a downward spiral like the world experienced in the 1930's.

When then-Candidate Obama said he would ``unilaterally renegotiate'' the North American Free Trade Agreement, the Canadian response was: Yes, and if you do that, then we will sell our oil to China. Then, later, Candidate Obama changed his position to saying: Well, that wasn't exactly what he meant. Then, President Obama said: Now we are in favor of free trade. But yet President Obama did not veto either one of these bills, which sends a signal to the world that the United States has embarked on a protectionist path. He should have vetoed those bills, especially the one on Mexican trucks.

A European Commission spokesman noted:

We are particularly concerned about the signal that these measures could send to the world at a time when all countries are facing difficulty. Where America leads, many others tend to follow.

Others lent their own voices to those cautioning against a terribly ill-timed protectionist act.

While some Senators may have taken comfort in last-minute language added to require that implementation of the ``Buy American'' provisions be consistent with our international obligations, I worry very much about the effect this and other steps will have on the global trading system. For decades the United States has led global efforts toward free and open trade and investment. We abandon this leadership at our peril.

The ``Buy American'' provision was not the only step in the protectionist direction. There have been other protectionist measures, and we are already seeing the fallout from such unwise decisions. Mr. Kirk agreed during his confirmation hearing:

[I]f the United States raises barriers in our own market, other countries are more likely to raise barriers against our products.

We have that evidence already. On Monday, the Mexican Government announced it will increase tariffs on 90 American agricultural and manufactured goods in direct retaliation for our recent decision to ban Mexican trucks from traveling beyond commercial zones. Although the Mexican Government is yet to specify the 90 different goods, it has announced that its decision would affect $2.4 billion worth of exports from 40 States. The Mexican Ambassador had an article in the Wall Street Journal this morning.

I ask unanimous consent that it be printed in the Record, along with an editorial from this morning from the Arizona Republic.

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

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Mr. McCAIN. The Mexican Ambassador says, in part of his article:

The U.S. Congress, which has now killed a modest and highly successful U.S.-Mexico trucking demonstration program, has sadly left my government no choice but to impose countermeasures after years of restraint and goodwill.

Then and now, this was never about the safety of American roads or drivers; it was and has been about protectionism, pure and simple.

He is right. It is also a testimony to the influence of the Teamsters Union. Elections have consequences.

He goes on to say:

It is worth noting that this takes place shortly after Mexico announced it would unilaterally reduce its industrial tariffs from an average of 10.4% in 2008 to 4.3% by 2013, and that it has underscored its commitment, along with its other G-20 partners, to push back on protectionist pressures.

What has been particularly frustrating in this long and uphill battle has been the fact that the Congress continues to move the goalposts.

Importantly, he concludes:

Mexico is the U.S.'s second largest buyer of exports. It remains a steadfast supporter of free and fair trade, and will continue to work actively and responsibly during the coming weeks and months with Congress and the administration to find a solution that will allow safe Mexican trucks onto U.S. roads under Nafta rules.

Again, NAFTA was signed by President Clinton 14 years ago. Part of that agreement was that Mexican trucks would be allowed into the United States. Study after study has concluded that Mexican trucks operate as safely as U.S. trucks do.

Today, on goods America buys coming from Mexico, the truck, after crossing the border, if it is Mexican, has to stop. The goods are offloaded onto another truck, moved to another truck that is American-owned and loaded onboard that truck. Meanwhile, there are CO2 emissions and the cost and expenses of the delay are passed on to the American consumer.

I repeat, Mexico is the third largest trading partner of the United States, behind Canada and China, and the United States ranks first among Mexico's trading partners. United States trade with Mexico totaled $368 billion in 2008. We have close and growing ties between our two Governments. Right now there is an existential threat to our southern neighbor from drug cartels. The violence on the border is at unprecedented levels. Acts of cruelty and murder are taking place beyond belief. People are being beheaded. There is the assassination of police chiefs and others. The corruption is very high. Why should we care? One reason we should care is because of violence spilling over from the Mexican border into ours.

The other reason is, there is between, according to estimates, $10 and $13 billion worth of revenue in receipts from the sale of drugs in the United States. It is the United States that is creating the market that is creating the drug cartels and violence on the border that has ensued. The Mexican Government is trying--maybe for the first time in as serious a way as they are now--to bring under control these cartels. The corruption reaches to the highest level. The violence is incredibly high. We need to do what we can to help the Mexican Government bring these cartels under control and try to eradicate them because they do pose an existential threat. We cannot afford to have a government that is full of corruption and controlled by drug cartels on our southern border, not to mention the impact it has on illegal immigration.

What did we do? We took steps in violation of our obligations under the North America Free Trade Agreement that will have precisely the opposite effect and have prompted retaliation that will only serve to harm American workers, consumers, and our Nation's relationship with Mexico.

During these difficult economic times for many American businesses, the ability to sell products on the world market is essential to our economic recovery. The Financial Times wrote in an editorial published yesterday:

The retaliatory duties are a legitimate response to a U.S. violation of a trade deal ..... but this does not bode well for bilateral relations just under two months into the Obama administration.

It goes on:

We hope cooler heads prevail and prevent any deterioration of the bilateral relationship. Both nations have too much at stake--and trade as well as security issues.

I could not agree more.

The Arizona Republic published an editorial that reads:

With the economy in tatters, it's no time to mince words: The United States is in the wrong. Under NAFTA, we agreed to give Mexican trucks access beginning in 1995, increasing efficiency and lowering costs for consumers.

The editorial continues:

Around the world, countries are considering trade barriers that could have disastrous consequences for the world economy. The United States must put the brakes on trade restrictions, not fuel them.

I am aware there is a sizable block of public opinion that believes we should close our borders to everybody and everything, that somehow Mexican trucks are unacceptable, that legal immigration is something we ought to do away with. I understand all those arguments. But I also urge those who say that trade with Mexico is not important to understand the facts: They are our third largest trading partner; we have a trade surplus; it is important to have our relationship good as we help them battle the drug cartels; and, most importantly, protectionism and high tariffs led to the Great Depression.

Congress passed NAFTA in 1993 and President Clinton signed it into law in 1994, which mandated the opening of our southern border to Mexican trucking operations to allow the free flow of goods and services between the two countries. Last year, language was slipped into a fiscal year 2008 spending bill that sought to strip funding for a pilot program with Mexico that would allow a limited number of Mexican trucks to enter the United States. Now the administration says it will try to create ``a new trucking project that will meet the legitimate concerns'' of Congress. I don't understand how the administration can create a new trucking project to comply with NAFTA, when Congress explicitly barred any money from being spent toward such activities. The President should not seek to create a new project to circumvent the terms of the legislative language. Rather, he should have vetoed it in the first place.

The administration's eliminating the Mexican cross-border trucking program will harm millions of American consumers who could benefit from lower prices on many goods manufactured in Mexico and then distributed in the United States.

According to the U.S. Department of Transportation, refusing entry into our country of Mexican trucks carrying Mexican-made goods adds $400 million to the price of Mexican imports which is, of course, passed on to the American consumer. Mr. Kirk has made some statements broadly supportive of international trade, but he has also made comments suggesting protectionism might not be so bad after all. During his confirmation hearing, Mr. Kirk stated:

Not all Americans are winning from [trade] and our trading partners are not always playing by the rules.

He suggested the administration may abandon the free-trade agreement we have concluded with South Korea, one projected to increase the United States GDP by $10 to $12 billion. He said the pact ``simply isn't fair.'' He emphasized he does not have ``deal fever'' when it comes to trade agreements. Again, it is up in the air as to what the fate of the Colombia Free Trade Agreement would be, sending a clear signal that we would be punishing the Colombian Government for their assistance in trying to combat drug cartels.

Our trading partners, including Canada and Mexico, don't seem interested in strengthening agreements that have served them and us well for years. Rather, they would like to see the United States fulfill its own trade obligations and look for further ways to open markets to the free flow of commerce. The free flow of commerce has been a founding principle of U.S. economic policy for many decades and a key factor in our rise to prosperity and greatness. It is for this reason I hope Mr. Kirk and his colleagues in the administration will reconsider their stance and help build, not damage, the consensus behind free trade. After all, we have seen a terribly destructive pattern unfold before.

In 1930, as the United States and the world were entering what would be known in history as the Great Depression, two men, Mr. Smoot and Mr. Hawley, led the effort to enact protectionist legislation in the face of economic crisis. Their bill, the Smoot-Hawley Tariff Act, raised duties on thousands of imported goods in a futile attempt to keep jobs at home. In the face of this legislation, 1,028 economists issued a statement to President Herbert Hoover, wherein they wrote:

America is now facing the problem of unemployment.

The proponents of higher tariffs would claim that an increase in rates will give work to the idle. This is not true. We cannot increase employment by restricting trade.

Mr. Smoot, Mr. Hawley, and their colleagues paid no attention to this wise admonishment, and the Congress went ahead with protectionist legislation. In doing so, they sparked an international trade war as countries around the world retaliated, raising their own duties and restricting trade, and they helped turn a severe recession into the greatest depression in modern history.

I do not intend to oppose the President's nominee for U.S. Trade Representative. I remain very concerned about the direction of our trade policies at a time of economic peril. I urge my colleagues and the administration to heed the lessons of economics and heed the lessons of history.

Mr. President, I yield the floor.

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