New York Times | By ELIZABETH BECKER | March 10, 2004
WASHINGTON, March 9 - With trade looming as an important issue in the presidential campaign, the normally staid annual Senate hearing on trade policy became a political forum on Tuesday, with Democrats pushing issues supported by their presumptive nominee, Senator John Kerry of Massachusetts, and Republicans pleading for strong ammunition for their side.
But the biggest sign offered by the administration about getting tough on trade was the possibility of suing China at the World Trade Organization because of its tax on imported semiconductors - an issue that has not captured the political imagination.
Senator Bob Graham, Democrat of Florida, gave the federal government a grade of D, on average, for what he called its poor efforts to keep the United States competitive in the global economy.
Senator Blanche L. Lincoln, Democrat of Arkansas, who is normally worried about finding foreign markets for her state's rice and cotton crops, raised her party's standard complaint that the administration has to improve labor and environmental standards.
Senator Charles E. Grassley of Iowa, the Republican chairman of the Finance Committee, said that he was frustrated that Senator Kerry made "strong comments" about jobs lost to outsourcing overseas, and Mr. Grassley asked Robert B. Zoellick, the trade representative, to come up with good answers for a rebuttal.
"I don't have a single town meeting where something isn't brought up about outsourcing," Mr. Grassley said.
Mr. Zoellick ducked the question, proving he had learned a lesson from N. Gregory Mankiw, the chairman of the president's Council of Economic Advisers, who caused a firestorm last month by saying losing jobs to outsourcing would work out in the end.
Choosing his words carefully, Mr. Zoellick said trade "involves change, and that can mean difficulties for people."
Outsourcing was judged neither good nor bad.
"It's a question of dealing with families and anxiety," he said. "But I think the challenge is, How do you help people in a way that doesn't hurt or kill other jobs?"
Retraining programs, improved education and portable pensions were among Mr. Zoellick's proposed solutions.
It was in response to some of those ideas that Senator Graham gave the federal government, and the administration, the average grade of D, particularly, he said, for starving state governments of money they need to finance education.
In his prepared testimony, Mr. Zoellick made the familiar case that free trade benefits American workers.
"Americans can compete with anybody - and succeed - when we have a fair chance to compete," he said. "Our goal is to open new markets and enforce existing agreements so that businesses, workers and farmers can sell their goods and services around the world and consumers have good choices at lower prices."
But the Republican members of the panel asked Mr. Zoellick for specific proof that the administration could beat back Democrats on trade, picking some of the hottest issues: the trade deficit and China.
Senator Craig Thomas, Republican of Wyoming, asked whether the country's record-deep trade deficit would continue climbing.
Mr. Zoellick said there were other things to worry about and found a way to put the $489 billion trade deficit for 2003 in a positive light.
"If you go back and look at the '30s, at the time of the Great Depression, we had a trade surplus," Mr. Zoellick said. "So the surplus or deficit numbers, while they are indicators, I'm not sure should be the prime goal."
Senator Olympia J. Snowe, Republican of Maine, brought up China, a country she said was taking away jobs and companies from the United States in violation of international trading rules.
"At what point are we going to be aggressive?" she asked.
Mr. Zoellick's answer would not fit easily in a sound bite.
He said that the administration was considering bringing its first case against China at the World Trade Organization and it "could be soon."
But it would not center on forcing China to allow its currency to float. Ms. Snow and many other members of Congress think the country's fixed exchange rate is undercutting the American economy.
Rather than take on that issue, which has led to fiery debates on Capitol Hill, Mr. Zoellick said the United States would take China to the W.T.O. because of its tax on semiconductors, which is as much as 14 percent higher on imported computer chips than on those designed or manufactured in China, whether by domestic or foreign companies.New York Times:
