Trade Policy Strikes Back, Pre-emptively Posted by Heather Hurlburt

*11.15 A couple of posters have asked why trade should be a priority concern for progressives, given the urgency of Iraq, global warming, etc. etc.  I'll give you two reasons, one for each side of the house.  First, the US needs to make sure the global economy continues to grow, and we continue to thrive in it, if we are to have the resources to address any other challenge, whether it is global warming, terrorism, AIDS, etc.  Trade deficits and budget deficits make the policy hole we are in on those vital issues even deeper.  Second, some big progressive constituencies think that issues around trade -- either the collapse in American employment in certain formerly well-paid manufacturing sectors, or the structural injustice the current trade regime does to poor commodity farmers in developing nations -- are fundamental.  If enough of your constituencies think something is fundamental, it's going to be on the agenda, whether you like it or not.

In case you were surprised that the (still GOP-controlled) House embarrassed the President by voting down his Vietnam trade pact yesterday, this analysis of the "globalization debate" gives you all the explanation you need.  Note the running tally of trade-affected Congressional races.  Note that both parties are affected.

The Post coverage gives more of the international labor/environment angle, but the first piece I linked to (USA Today) is much more evocative of how people outside the Beltway see it -- another piece of globalization mayhem coming at us out of our control.  To counter that, the pro-trade community is going to have to come up with some new ways to make sure workers and consumers think that their livelihoods and well-being are under their control. 

Trade policy is the next big bipartisan train wreck.  The "pro-trade" and "economic nationalist" certitudes of both sides are largely outdated platitudes, whether it's President Bush telling the newly-unemployed to take community college courses (so helpful for that job at McDonald's) or the just-say-no trade rejectionism that I see a lot of in the industrial Midwest where I live.  Progressives have less than a year, to my mind, to offer up new ways forward that avert that train wreck.  Interesting little things, from unions organizing overseas to proposals for changing how we do unemployment and health insurance, are bubbling all over -- but I'm not at all sure we'll pull them together in time.

Comments

[Don Bacon]

Who can possibly be against free trade? US companies selling stuff in Mexico, and Guatemalan companies selling their stuff here. What could make more sense than that? Bill Clinton said try it, you'll like it. Trust him.

But then with NAFTA US companies closed down factories and moved their operations to Mexico. Subsidized US corn moved down into Mexico, underselling Mexican farmers and driving campesinos off their farms and into the sweat-shop maquiladoras that replaced the closed US plants, and across the border into the US. A Canadian gold company came down into California with plans to tear up hundreds of thousands of acres of Indian sacred land for a few pounds of gold, and when faced with state environmental sanctions threatened to sue for their "NAFTA rights." And so on.

So "free trade" is a misnomer. It's really good old corporate welfare with a fancy Madision Avenue name. Nothing's free. Don't buy it. "Free trade" only allows corporations more power than they already have to impoverish people and ruin the environment.

[J.S.]

Most of what Don describes above is a myth- NAFTA had very little to do with the change in Mexico's corn production- this goes to show how pervasive are these untruths- that being said, I fully agree with the tone of the piece- this is the key challenge for domestic policy in the 21st century.

J.S.

[Don Bacon]

NAFTA Defenders' Myth: The flood of U.S. corn that has been dumped in Mexico during NAFTA has not harmed Mexico's farmers because the U.S. imports are yellow corn for animal feed while Mexican farmers grow white corn for human consumption.

REALITY: Since NAFTA came into effect on January 1, 1994, U.S. corn exports to Mexico have almost doubled to some 6 million metric tons in 2002. NAFTA eliminated quotas limiting corn imports (Mexico used to only import corn when its farmers' production fell short of domestic needs) but allowed U.S. subsidy programs to remain in place - promoting dumping of corn into Mexico by U.S. agribusiness at below the cost of production. While U.S. corn exports to Mexico were almost all yellow corn in the mid-1990s, some 20% are now white corn. Even before the U.S. white corn exports began to increase, the price paid to farmers in Mexico for corn fell by over 70% as huge amounts of U.S. yellow corn were dumped in the Mexican market. In 2001, Mexican farmers produced 18 million tons of corn - 3 million of which were left unused.

U.S. corn is typically dumped in the Mexican market at up to 30% below the cost of production. In addition, corn buyers in Mexico are attracted to imported U.S. corn by the very favorable loan rates available to them through U.S. export agencies. In the years immediately following NAFTA's introduction for example, buyers that
contracted with U.S. exporters had access to loans through the U.S. Commodity Credit Corporation at 7% for 3 years. Interest rates from Mexican lenders ran between 25 and 30% at that time. The availability of large amounts of U.S. yellow corn, combined with the favorable credit terms, has given a small number of large corn purchasers in Mexico tremendous leverage over prices in their dealings with Mexican producers; if the Mexican farmers will not sell them corn at their demanded price, the large producers - including Mexican corn mills and other food processors now part-owned by U.S. agribusinesses - buy U.S. corn.

http://www.eco.utexas.edu/~archive/chiapas95/2004.04/msg00010.html

[Cal]

Former World Bank economist Joseph Stiglitz:

...If there ever was a free trade agreement that should have promoted growth, [NAFTA] was it, for it opened up for Mexico the largest market of the world. But growth in the decade since has been slower than in the decades before 1980, and the poorest in the country, the corn farmers, have been particularly hurt by subsidized American corn....

...we know which countries around the world have grown the fastest: they are the countries of East Asia, and their growth was based on export-driven trade. They did not pursue policies of unfettered liberalization. Indeed, they actively intervened in markets...

He goes on to talk about how corrupt the trade negotiations are. The way these deals are currently conducted, I'm not sure why anyone but a lobbyist would defend them, or why -- with all the important issues on our plate -- the Democrats need to make this a priority.

Global warming, Iraq, nuclear proliferation, and erosion of civil liberties seem like more pressing concerns right now.

[Don Bacon]

I went to a presentation on global warming last night by an expert in the field. Scary! World temperature is rising, ice is melting, water supplies will decrease as populations surge, storms are getting worse, the oceans are rising, mega drought in the West and goodbye Florida. Senator Inhofe, outgoing Energy Chairman, has ben saying that global warming is a hoax. Cal's right--make this #1 on a progressive program.

[Zathras]

Comments on this thread illustrate a fact of political life I suspect Heather Hurlburt understands but is reluctant to put into print: the "pro-trade" community includes a lot more Republicans than it does Democrats.

[flagrl118]

Trade agreements favor the Global North and are always self-serving to those with the wealth. The poor will suffer and continue to suffer until the playing field is made even. However, US will never give up intellectual property rights laws to pharmaceuticals or subsidies to US farmers. Those are some of the biggest donors for campaigns or at least individuals within these groups. Addressing global poverty needs more than trickle-down economics. It requires good governance, meaning active and in the interests of hte people not the elite, coupled with economic growth. Now economic growth can come from commerce, debt relief or even monetary grants from development agencies. Helping poor countries grow out of their predicament helps the global north by increasing the number of consumers in the world, it increases markets and it enables trade agreements to work better. It makes a more even playing field.

[kincaid]

Rep. Dana Rohrabacher
Thursday, April 26, 2001
This is the text of a speech on the House floor by U.S. Rep. Dana Rohrabacher, R-Calif.

Mr. Speaker, one month ago, the Communist regime that controls the mainland of China attacked an American surveillance aircraft while it was in international waters. After being knocked out of the sky, 24 American military personnel, the crew of the surveillance craft, were held hostage for nearly 2 weeks. The Communist Chinese blamed us and would not return the crew until the United States was humiliated before the world.

Wake up, America. What is going on here? Large financial interests in our country whose only goal is exploiting the cheap, near-slave labor of China have been leading our country down the path to catastrophe. How much more proof do we need that the so-called engagement theory is a total failure?

Our massive investment in China, pushed and promoted by American billionaires and multinational corporations, has created not a more peaceful, democratic China, but an aggressive nuclear-armed bully that now threatens the world with its hostile acts and proliferation. Do the Communist Chinese have to murder American personnel or attack the United States or our allies with their missiles before those who blithesomely pontificate about the civilizing benefits of building the Chinese economy will admit that China for a decade has been going in the opposite direction than predicted by the so-called ``free traders.''

'We Have Made a Monstrous Mistake'

We have made a monstrous mistake, and if we do not face reality and change our fundamental policies, instead of peace, there will be conflict. Instead of democratic reform, we will see a further retrenchment of a regime that is run by gangsters and thugs, the world's worst human rights abusers.

Let us go back to basics. The mainland of China is controlled by a rigid, Stalinistic Communist party. The regime is committing genocide in Tibet. It is holding as a captive the designated successor of the Dalai Lama, who is the spiritual leader of the Tibetan people. By the way, this person, the designated new leader, is a little boy. They are holding hostage a little boy in order to terrorize the Tibetan people. The regime is now, at this moment, arresting thousands of members of the Falun Gong, which is nothing more threatening than a meditation and yoga society. Christians of all denominations are being brutalized unless they register with the state and attend controlled churches. Just in the last few days, there has been a round-up of Catholics who were practicing their faith outside of state control. Now they are in a Chinese prison.

There are no opposition parties in China. There is no free press in China. China is not a free society under anyone's definition. More importantly, it is not a society that is evolving toward freedom.

President Richard Nixon first established our ties with the Communist Chinese in 1972 at the height of the Cold War. That was a brilliant move. At that particular moment, it was a brilliant move. It enabled us to play the power of one dictatorship off the power of another dictatorship. We played one against the other at a time when we had been weakened by the Vietnam War and at a time when Soviet Russia was on the offensive.

During the Reagan years, we dramatically expanded our ties to China, but do not miss the essential fact that justified that relationship and made it different than what has been going on these last 10 years. China was at that time, during the Reagan administration, evolving toward a freer, more open society, a growing democratic movement was evident, and the United States, our government and our people, fostered this movement. Under President Reagan, we brought tens of thousands of students here, and we sent teams from our National Endowment for Democracy there. We were working with them to build a more democratic society, and it looked like that was what was going to happen. All of this ended, of course, in Tiananmen Square over 10 years ago.

'Tanks to Wipe Out the Opposition'

Thousands of Chinese gathered there in Tiananmen Square in Beijing to demand a more open and democratic government. For a moment, it appeared like there had been an historic breakthrough. Then, from out of the darkness came battle-hardened troops and tanks to wipe out the opposition. The people who ordered that attack are still holding the reins of power in China today and, like all other criminals who get away with scurrilous deeds, they have become emboldened and arrogant.

My only lament is that had Ronald Reagan been president during that time of Tiananmen Square, things, I think, would have been different; but he was not. Since that turn of events about 12 years ago, things have been progressively worse. The repression is more evident than ever. The belligerence and hostility of Beijing is even more open. Underscoring the insanity of it all, the Communist Chinese have been using their huge trade surplus with the United States to upgrade their military and expand its warfighting capabilities.

Communist China's arsenal of jets, its ballistic missiles, its naval forces have all been modernized and reinforced. In the last 2 years, they have purchased destroyers from the former Soviet Union. These destroyers are armed with Sunburn missiles. These were systems that were designed during the Cold War by the Russians to destroy American aircraft carriers.

Yes, the Communist Chinese are arming themselves to sink American aircraft carriers, to kill thousands upon thousands of American sailors. Make no mistake about it, China's military might now threatens America and world peace. If there is a crisis in that part of the world again, which there will be, we can predict that some day, unlike the last crisis when American aircraft carriers were able to become a peaceful element to bring moderation of judgment among the players who were in conflict, instead, American aircraft carriers will find themselves vulnerable, and an American President will have to face the choice of risking the lives of all of those sailors on those aircraft carriers.

Mr. Speaker, how is it, then, that a relatively poor country can afford to enlarge its military in such a way, to the point that it can threaten a superpower such as the United States of America?

Even as China's slide into tyranny and militarism continued in these last 12 years, the United States government has permitted a totally indefensible economic rules of engagement to guide our commercial ties with the mainland of China.

While China was going in the right direction, permitting that country to have a large trade advantage and thus providing a large reserve of hard currency may or may not have made sense, as long as China was going in the right direction and going towards democracy. Maybe we would like to build up a freer China that way.

It 'Makes No Sense' to Help Arm China

But it made no sense, and it still makes no sense, for the United States to permit a country that is sinking even deeper into tyranny and into anti-Western hostility to have a huge trade surplus as a resource to call upon to meet their military needs.

In effect, the Communist Chinese have been using the tens of billions of dollars of trade surplus with the United States each year to build their military power and military might so some day the Communist Chinese might be able to kill millions of our people, or at least to threaten us to do that in order to back us down into defeat without ever coming to a fight.

We have essentially been arming and equipping our worst potential enemy and financing our own destruction. How could we let such a crime against the security of our country happen? Well, it was argued by some very sincere people that free trade would bring positive change to China, and that engagement would civilize the Communist regime.

Even as evidence stacked upon more evidence indicated that China was not liberalizing, that just the opposite was happening, the barkers for open markets kept singing their song: ``Most-favored-nation status, just give us this and things will get better.'' It was nonsense then and it is nonsense today. But after all that has happened, one would think that the shame factor would silence these eternal optimists.

Perhaps I am a bit sensitive because, first and foremost, let me state unequivocally that I consider myself a free trader. Yes, I believe in free trade between free people. What we should strive for is to have more and more open trade with all free and democratic countries, or countries that are heading in the right direction.

I am thus positively inclined towards President Bush's efforts to establish a free trade zone among the democratic countries in this hemisphere. I will read the fine print, but my inclination is to facilitate trade between democracies.

When I say, ``I will read the fine print,'' I will be especially concerned with a free trade agreement, and I will be looking to that free trade agreement to make sure that we have protection that our sensitive technologies, which can be used for military purposes, will not be transferred from the countries in our hemisphere, democratic countries in our hemisphere, to China or to any other countries that are potential enemies of the United States. This will have to be in that free trade agreement.

There will have to be protections against the transfer of our technology to our enemies. This is more of a concern following new science and technology agreements that were signed by China and countries like Brazil and Venezuela recently. Dictatorships are always going to try to gain in any agreement that they have with us, and they are always going to try to manipulate other agreements and the rules of the game so they can stay in power.

When one applies the rules of free trade to a controlled society, as we have been told over and over again, more trade, and let us have free trade with China, that is going to make them more dependent on us and they will be freer and more prosperous, more likely to be peaceful people, well, if we apply the rules of free trade to a dictatorship, ultimately what happens is that it is only free trade in one direction.

On one end we have free people, a democratic people who are not controlled by their government, and thus are basically unregulated and are moving forward for their own benefit. But on the other end, the trade will be controlled and manipulated to ensure that the current establishment of that country stays in power.

Never has that been more evident than in America's dealing with Communist China. In this case, it is so very blatant.

Those advocating most-favored-nation status, or as it is called now, normal trade relations, have always based their case on the boon to our country represented by the sale of American goods to ``the world's largest market.'' That is their argument. Here on this floor over and over and over again we heard people say, ``We have to have these normal trade relations because we have to sell our products, the products made by the American people, to the world's largest market.''

This Is Free Trade?

That is a great pitch. The only problem is, it is not true. The sale of U.S.-produced vacuum cleaners, refrigerators, autos, you name the commercial item, are almost a non-factor in the trade relationship between our countries. They are a minuscule amount of what is considered the trade analysis of these two countries.

During these many years that we have given China most-favored-nation status or normal trade relations, the power elite there never lowered China's tariffs, and in fact increased the tariffs in some areas, and erected barriers to prevent the sale of all but a few U.S.-made products.

So while we had low tariffs, and intentionally brought our tariffs down by most-favored-nation, for over a decade, even as China was slipping more into tyranny, they were permitted to have high tariffs and block our goods from coming in.

Beijing would not permit its own people to buy American-made consumer items. They were not looking for a trade relationship with the United States for their people to be able to buy American products. That is not what they were looking for. That is not what it was all about. They knew it, but yet our people were told over and over and over and over and over again, ``Oh, we have to have most-favored-nation status and normal trade relations in order to sell American products to the world's largest market.''

That is not what was going on. It is not what the reality was. Instead, the Communist Chinese were out to get American money, lots of it, and American money to build factories, and they wanted the Americans to build the factories with our technology and our money in their country.

By the way, many of the factories that were built there were not built in order to sell products to the Chinese people. Those factories were built to export products to the United States.

The system that developed with the acquiescence of our government, and this is no secret, what I am talking about tonight is no secret to anyone except to the American people, our government acquiesced to this for years, this policy put the American people, the American working people, on the losing end of the transformational action in the long run and sometimes even in the medium run.

The Chinese, because of our low tariffs, flooded our market with their products, and blocked our goods from entering China, and all the while we were hearing over and over again, ``We must have most-favored-nation status in order to sell American products in the world's largest market.''

They droned on year after year that most-favored-nation status was so important to selling our products in the world's largest market. I will just repeat that four or five times, because we must have heard it a thousand times on this floor, and every time said, I am sure, in complete sincerity by the people who were expressing it, but were totally wrong. A very quick look into the statistics could have indicated that.

Taiwan a Better Customer

By the way, just to let members know, the people of Taiwan, numbering 22 million people, buy more from us annually than the 1.2 Chinese on the mainland. The Taiwanese, with 22 million people, buy more consumer products from us than do 1.2 billion Chinese in the mainland.

What has happened? What has happened as a result of these nonsensical counterproductive policies, anti-American policies to some degree, even though our own government has acquiesced in them? It has resulted in a decline in domestic manufacturing facilities in the United States. In other words, we have been closing down our factories and putting our people out of work.

By the way, that does not mean the company is put out of business. Those factories spring up someplace else. There is this flood of Chinese products, the factory closes down, and guess where it reopens? It reopens, yes, in Communist China, using our modern technology and our capital, which is what the Chinese want to have invested in their country.

Taxing Americans to Help Communism

Adding insult to injury, our working people, some of them, whose jobs are being threatened by imports, our working people are being taxed in order to provide taxpayer-subsidized loans and loan guarantees for those corporate leaders wishing to close down their operations in the United States and set up on the mainland of China.

Even if China was a free country, that would not be a good idea. I do not believe we should be doing that even for democratic countries. But for us to do that to a Communist dictatorship or any kind of dictatorship, to have the American taxpayer subsidize these investments, taking the risks on the shoulders of the American taxpayer in order to build the economy of a vicious dictatorship, this is insane. This is an insane policy. This is not free trade between free people. It has nothing to do with free trade. It is subsidized trade with subjugated people.

Companies that were permitted to sell their product to the Chinese in these last 10 years, and there have been a few, companies like Boeing who have attempted to sell airplanes to China, have found themselves in a very bad predicament. As part of the deal enabling them to sell planes now to Communist China, they have had to set up manufacturing facilities in China to build the parts, or at least some of the parts for the airplane.

Thus, over a period of time, what the Chinese have managed to do is to have the United States just build factories and pay for them. Or, as part of an agreement to sell the airplane, we have set up an aerospace industry in China that will compete with our own aerospace industry.

I come from California. I come from a district in which aerospace is a mighty important part of our economy. I just want to thank all the people who have permitted this policy, this blackmail of American companies, to go on under the name, under the guise of free trade. It is going to sell out our own national interest 10 years down the road when these people will have a modern aerospace industry building weapons and being able to undercut our own people. Gee, thanks.

Making matters worse, many of the so-called companies in China that are partnering with American industrialists, and American industrialists, when they are going to build in China, are often required to have a Chinese company as their partner as a prerequisite to them investing in China, in short order these so-called partners end up taking over the company. So many of American companies have been there and have been burned.

Guess what, we look at these private Chinese companies that were partners with our American firms, we look at them, and what do we find out? They are not private companies at all. Many of them are subsidiaries of the People's Liberation Army. That is right, the Communist Chinese army owns these companies. These are nothing more than military people in civilian clothing. Their profits end up paying for weapons targeting America, and we are paying them to build the companies that make those profits.

'Alarming Betrayal of American Security'

Perhaps the most alarming betrayal of American national security interests surfaced about 5 years ago when some of America's biggest aerospace firms went into China hoping to use Chinese rockets to launch American satellites. They were trying to make a fast buck. It did not cost them a lot more to launch satellites here.

Yes, the Chinese were insisting that any satellites we put up for them be put up on their rockets. I personally thought that, as long as we made sure there was no technology transfer, that was an okay policy. As long as we just launched our American satellite which helped them set up a telephone system or something in China, that is fine if they never got ahold of it, and that would be okay.

I was guaranteed, along with the other Members of this body, there would be incredible safeguards. The last administration briefed us on the safeguards. Then as soon as we approved of letting these satellite deals go through and our satellites be launched on Chinese rockets, the administration trash canned all of the safeguards. I do not understand it. I do not understand why people did this.

But when all was said and done, the Communist Chinese rocket arsenal was filled with more reliable and more capable rockets, thanks to Loral, Hughes and other aerospace firms. Communist Chinese rockets, which were a joke 10 years ago, when Bill Clinton became President of the United States, they were a joke, one out of 10 failed, exploded before they could get into space. Today they are dramatically more likely to hit their targets, and they even carry multiple warheads. Where before they had one warhead and nine out of 10 would explode, now about 9 out of 10 get to their target, and some of them are carrying multiple warheads.

The Cox Report

The Cox report detailed this travesty. We should not forget the Cox report. Unfortunately, there has been innuendo after innuendo as if the Cox report has in some way been proven wrong. There are no reports that indicate that what the gentleman from California (Mr. COX) and his task force proved has in some way been discredited. In fact, there was a transfer of technology to the Communist Chinese that did great damage to our national security and put millions of American lives at risk that did not have to be put at risk.

Yet, even with all this staring Congress in the face, we have continued to give Most Favored Nations status to China and even now vote to make them part of the World Trade Organization. Why? One explanation, well just bad theory. Expanding trade, of course, they believe will make things better. But expanding trade did not make things better. Expanding trade with a dictatorship, as I have mentioned, just expands the power base and solidifies the bad guys in power.

Of course the other explanation of why all this is going on, why we end up seeing our national security trashed is pure greed on some individuals' parts.

Our businessmen have been blinded, not by the dream of selling U.S.-made products to China as they would have you believe in the debates here on the floor of the House, but rather blinded by the vision of using virtually slave labor for quick profits on the mainland of China.

With little or no competition, no negotiators, no lawyers, no environmental restrictions, no unions, no public consent, it sounds like a businessman's dream to me. Yes, it is a businessman's dream if you just blot out the picture of a grinding tyranny and the human rights abuses that are going on and the horrible threat to the United States of America that is emerging because of the things that are going on and the things that are being done.

Because you are a businessman, because you are engaged in making a profit as we are free to do in the United States does not exempt you from being a patriot or being loyal to the security interests of the United States of America.

Today's American overseas businessman quite often is a far cry from the Yankee clipper captains of days gone by. In those days, our Yankee clipper ships sailed the ocean, cut through those seas, the Seven Seas. They were full going over, and they were full coming back. They waived our flag. Our flag was flying from those clipper ships, and our flag stood for freedom and justice. Those Yankee clipper captains and those business entrepreneurs were proud to be Americans.

Today, America's tycoons often see nationalism, read that loyalty to the United States, as an antiquated notion. They are players in the global economy now, they feel. Patriotism they believe is old think.

Well, we cannot rely on the decisions of people like this to determine what the interests of the United States of America is to be. Yet, the influence of these billionaires and these tycoons, these people who would be willing to invest in a dictatorship or a democracy, they could care less which one, they do not care if there is blood dripping off the hand that hands them the dollar bills, those individuals influence our government. Their influence on this elected body is monumental, if not insurmountable at times.

'People Must Be Free'

I believe in capitalism. I am a capitalist. I am someone who believes in the free enterprise system, make no mistake about it. But free is the ultimate word. People must be free to be involved in enterprise. We must respect the basic tenets of liberty and justice that have provided us a country in which people are free to uplift themselves through hard work and through enterprise.

Today, more often than not, we are talking about how people are trying to find out ways of manipulating government on how to make a profit, not how to build a better product that will enrich everyone's life and make a profit by doing that, which is the essence of the free enterprise system.

More and more people are not even looking again to this great country and considering this great country for the role that it is playing in this world and how important it is and how we should never sacrifice the security of this country. Because if this country falls, the hope for freedom and justice everywhere in the world falls. No, instead they have put their baskets, not in the United States of America, put their eggs in the basket of globalism. Well, globalism will not work without democratic reform.

China will corrupt the WTO, the World Trade Organization, just as it has corrupted the election processes in the United States of America. You can see it now 20 years from now, maybe 10 years from now, the panels of the WTO, you know, made up of countries from all over the world, Latin America, Africa, Middle East. There are members of those panels making these decisions, they will not have ever been elected by anybody, much less the people of the United States of America, yet we will be expected to follow their dictates. Communist China, they will pay those people off in a heartbeat. Why not? They did it to our people.

The Clinton-Gore Scandals

Remember the campaign contributions given to Vice President Gore at the Buddhist Temple? Remember the money delivered to the Clinton's by Johnny Chung? Where did that money come from? We are talking about hundreds of thousands of dollars. Where did it come from? It originated with Chinese military officers.

These military officers were wearing civilian clothes. They were top officers in that part of the People's Liberation Army that produces missiles. That is where the money came from, all this while our most deadly missile technology was being transferred to Communist China. One wonders why the Communist Chinese leaders are arrogant and think that American leaders are cowards and corrupt when we let this happen.

Our country has, in short, had a disastrously counterproductive policy. We have, over the last 10 years, built our worst potential enemy from a weak, introverted power into a powerful economic military force, a force that is looking to dominate all of Asia. When I say worst potential enemy, that is not just my assessment. That is what the Communist Chinese leaders themselves believe and are planning for.

Why do you think Communist Chinese boss Jiang Zemin recently visited Cuba? He was in Cuba with Fidel Castro who hates our guts when he released the hostages, the American military personnel that he was holding hostage. What do you think that was all about? He was telling the whole world we are standing up to the United States of America, and they are our enemy. He was involved with an activity that was declaring to the world his hostility towards the United States.

Why, when you have a country like this who are professing hostility to the United States and doing such as this, why are we permitting them to buy up ports that will effectively give them control of the Panama Canal, which is what they did a year and a half ago.

Giving China the Panama Canal

The Panama Canal, the last administration let the Chinese, the Communist Chinese, through bribery, tremendously expand its power in Panama and, through bribery, let it get control of the port facilities at both ends of the Panama Canal. Why would we let such a thing happen?

In many ways, we are repeating history. In the 1920s, Japanese militarists wiped out Japan's fledgling democratic movement. That it did. In doing so, it set a course for Japan. Japan then was a racist power which believed it, too, had a right to dominate Asia. Japanese militarists also knew that only the United States of America stood in their way. This is deja vu all over again as Yogi Berra once said.

The Communist Chinese, too, are militarists who seek to dominate Asia. They think they are racially superior to everyone. They are unlike their Japanese predecessors, however, willing to go slow, and they have been going slow. But make no mistake about it, they intend to dominate Asia, all of it. And even know, their maps claim Siberia, Mongolia and huge chunks of the South China Sea.

The confrontation with our surveillance plane must be reviewed in this perspective if the damage to the United States and the imprudence and arrogance on the part of the communist Chinese are to be understood.

China's claim on the South China Sea includes the Spratley Islands. I have a map of the South China Sea with me tonight. Hainan Island. Our airplane was intercepted, knocked out of the sky somewhere in here. But what we are not told about and what the media is not focusing on and no one has been talking about is this plane was precisely in the waters between Hainan Island and the Spratley Islands.

For those who do not know what the Spratley Islands are, they are just a series of reefs that are under water at high tide and at low tide above water. They are just a short distance, as you can see, this is here, this is the Philippines; and right about 100 miles offshore, the Spratley Islands. Yet they are several hundred miles from China. Yet the Chinese are trying to claim these islands. That is what this was all about. Not only are these islands, the Spratley Islands, the home of natural gas and oil deposits, but they are also in a strategic location. The Spratly Islands, having them in China's power, having them being recognized as part of China, would, of course, be a disaster to the Philippines whose oil and gas that belongs to, but also it would give the Communist Chinese sovereignty rights which would permit them to bracket the South China Sea. China, Hainan Island, the Spratlys would bracket the South China Sea, from this land point to this land point. Thus, we have a situation where when China claims, which it does, a 200-mile zone, that would leave China with a stranglehold on the South China Sea which is one of the most important commercial areas on this planet. It would have a stranglehold on Japan and Korea.

What do you think our friends in the Persian Gulf, for example, would think about it if they understood that this was a power play, that what we had with the surveillance aircraft was a power play? The reason why the Communist Chinese were demanding an apology then, they were demanding an apology because supposedly we were in their airspace. If we apologized, that was a recognition of their sovereignty in bracketing with the Spratly Islands on one side and Hainan Island on the other side, bracketing the South China Sea. If we ended up apologizing to the Communist regime, it would have been taken as a legal recognition, a small one, of their sovereignty and their 200-mile limit. That is what this was all about. That is why they were playing hardball with us.

The American people and our allies are not being told that that is what the stakes were. This is a long-term effort on the part of the Communist Chinese to dominate the South China Sea and expand their power so they could call it maybe the Communist China Sea rather than the South China Sea. It behooves us to face these facts. That is what it was all about. That is why they wanted an apology and that is why they should not have gotten an apology.

I applaud this administration for wording its letter in a way that was not and could not in any way be interpreted as a recognition of the Chinese sovereignty over that airspace. An accommodationist policy toward Communist China, ignoring this type of aggression, ignoring human rights and democracy concerns while stressing expanded trade, and even through all this you have a bunch of people saying, ``Oh, isn't it lucky we have trade relations or we would really be in trouble with the Communist Chinese.'' Give me a break. But ignoring those other elements and just stressing trade as part of a so-called engagement theory has not worked.

The regime in China is more powerful, more belligerent to the United States and more repressive than ever before. President Bush's decision in the wake of this incident at Hainan Island to sell an arms package to Taiwan including destroyers, submarines and an antiaircraft upgrade was good. At least it shows more moxie than what the last administration did.

I would have preferred to see the Aegis system be provided to our Taiwanese friends. But at least we have gone forward with a respectable arms deal that will help Taiwan defend itself and thus deter military action in that area.

Cancel 'All U.S. Military Exchanges' With China

But after the Hainan Island incident, the very least we should be doing is canceling all U.S. military exchanges with Communist China. I mean, I do not know if they are still delivering us those berets or not, but that is just ridiculous to think that we are getting our military berets from Communist China. We should cancel all military exchanges.

The American people should be put on alert that they are in danger if they travel to the mainland of China. And we should quit using our tax dollars through the Export-Import Bank, the IMF and the World Bank to subsidize big business when they want to build a factory in China or in any other dictatorship.

Why are we helping Vietnam and China? Why are we helping those dictatorships when nearby people, the people of the Philippines, whom I just mentioned, who are on the front line against this Communist aggression, who China is trying to flood drugs into their country. The Chinese army itself is involved in the drug trade going into the Philippines.

The Philippines are struggling to have a democracy. They have just had to remove a president who is being bribed. Bribed by whom? Bribed by organized crime figures from the mainland of China. When those people in the Philippines are struggling, why are we not trying to help them?

Let us not encourage American businesses to go to Vietnam or to Communist China, when you have got people right close by who are struggling to have a democratic government and love the United States of America. The people of the Philippines are strong and they love their freedom and their liberty, but they feel like they have been abandoned by the United States. And when we help factories to be set up in China rather than sending work to the Philippines, and they do not even have the money to buy the weapons to defend themselves in the Philippines. That is why it is important for us to stand tall, so they know they can count on us. But they can only count on us if we do what is right and have the courage to stand up.

The same with China and India. India is not my favorite country in the world, but I will tell you this much, the Indians are struggling to have a free and democratic society. They have democratic institutions, and it is a struggle because they have so many varied people that live in India. But they are struggling to make their country better and to have a democratic system and to have rights and have a court system that functions, to have opposition newspapers. They do not have any of that in China. Yet instead of helping the Indian people, we are helping the Communist Chinese people? This is misplaced priorities at best.

Finally, in this atmosphere of turmoil and confrontation, let us never forget who are our greatest allies, and that is the Chinese people themselves. Let no mistake in the wording that I have used tonight indicate that I hold the Chinese people accountable or synonymous with the Chinese government or with Beijing or with the Communist Party in China. The people of China are as freedom-loving and as pro-American as any people of the world.

The people of China are not separated from the rest of humanity. They too want freedom and honest government. They want to improve their lives. They do not want a corrupt dictatorship over them. And any struggle for peace and prosperity, any plan for our country to try to bring peace to the world and to bring a better life and to support the cause of freedom must include the people of China.

We do not want war. We want the people of China to be free. Then we could have free and open trade because it would be a free country and it would be free trade between free people instead of this travesty that we have today, which is a trade policy that strengthens the dictatorship.

When the young people of China rose up and gathered together at Tiananmen Square, they used our Statue of Liberty as a model for their own goddess of liberty. That was the statue that they held forth. That was their dream. They dreamed that her torch, the goddess of liberty, would enlighten all China and they dreamed of a China democratic, prosperous and free. Our shortsighted policy of subsidized one-way trade crushes that goddess of liberty every bit as much as those Red Army tanks did 12 years ago.

'Re-examine Our Souls'

Let us re-examine our souls. Let us re-examine our policies. Let us reach out to the people of China and claim together that we are all people of this planet, as our forefathers said, we are the ones, we are the people who have been given by God the rights of life, liberty and the pursuit of happiness. That is not just for Americans. That is for all the people of the world.

And when we recognize that and reach out with honesty and not for a quick buck, not just to make a quick buck and then get out, but instead to reach over to those people and help them build their country, then we will have a future of peace and prosperity.

It will not happen if we sell out our own national security interests. It will not happen if we are only siding with the ruling elite in China. We want to share a world with the people of China. We are on their side.

Let me say this. That includes those soldiers in the People's Liberation Army. The people in the People's Liberation Army come from the population of China. They and those other forces at work in China should rise up and join with all the other people in the world, especially the American people, who believe in justice and truth; and we will wipe away those people at the negotiating table today that represent both sides of this negotiation, and we will sit face-to-face with all the people in the world who love justice and freedom and democracy, just as our forefathers thought was America's rightful role, and we will build a better world that way.

We will not do it through a World Trade Organization. We will do it by respecting our own rights and respecting the rights of every other country and every other people on this planet.

I hope that tonight the American people have heard these words. The course is not unalterable. This is a new administration. And in this new administration, I would hope that we reverse these horrible mistakes that have compromised our national security and undermined the cause of liberty and justice.

I look forward to working with this administration to doing what is right for our country and right for the cause of peace and freedom.

http://novus-ordo-seclorum.us

[Don Bacon]

kincaid,

You might be under the impression that we have the time and inclination to read ten screen-feet of five-year-old anti-China rantings by a Jack-Abramoff-financed Reagan idealogue from Orange County California, but you would be mistaken.

[Cal]

First, the US needs to make sure the global economy continues to grow, and we continue to thrive in it, if we are to have the resources to address any other challenge, whether it is global warming, terrorism, AIDS, etc. Trade deficits and budget deficits make the policy hole we are in on those vital issues even deeper. -- Heather

Right now our trade deficit is over $700 billion. This is after a generation of free trade agreements and the Washington Consensus. How can you honestly argue that our trade deficit is a problem but that more free trade agreements will solve it?

As for trade becoming an issue because it's being driven by our voters, I have every confidence that minor economic reforms will keep the peasants from the castle -- barring a depression.

I'm only half joking. Yes trade is important, but right now it's a wedge issue for us and I don't see why we should hammer it into our party in the next 2 years. Right now it's probably better to stick with raising the minimum wage, improving health and education etc. We have enough critical issues on our plate.