TRANSCRIPT PROGRAM #211 ORIGINAL BROADCAST: JANUARY 20, 1983

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88-01070R000100620005-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 15
• Document Creation Date: December 20, 2016
• Document Release Date: May 21, 2007
• Sequence Number: 5
• Publication Date: March 20, 1983
• Content Type: OPEN SOURCE

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A M E R I C A N I N T E R E S T S
Produced by Jefferson Communications, Inc.
11730 Bowman Green Drive
Reston, Virginia 22090
T R A N S C R I P T
Program # 211
Original broadcast: January 20, 1983
Executive Producer: Neal B. Freeman
Copyright 1982 by Jefferson Communications, Inc.
Excerpts of fewer than 100 words may be quoted with credit to
AMERICAN INTERESTS, JEFFERSON COMMUNICATIONS, INC. Longer
excerpts may not be quoted without permission.
Contact: Beverly L. Dodd (703) 437-0500
AMERICAN INTERESTS is a production of
Jefferson Communications, Inc.
made possible by grants from
The Starr Foundation; the Landegger Program in
International Business Diplomacy; the Ohrstrom Foundation,
Inc.; and The Smith Richardson Foundation, Inc.
Transcripts prepared by T/R Services, 2000 Mercantile Bldg.
Baltimore, Md. 21201
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10:30 p.m.
THE ANNOUNCER: American Interests is made possible
by grants from the Starr Foundation; the Landegger Program in
International Business Diplomacy; the Ohrstrom
Foundation, Inc.; and the Smith Richardson Foundation, Inc.
(Signature music.)
REP. GLENN ENGLISH (D-OKLA.): The question that we
have before us is whether or not we're going to have free
trade. Free trade is the issue.
PETER F. KROGH: Since the ilifated protectionism of
the 30's, free trade has been an article of American faith.
Now that faith is being challenged, even in the halls of the
U.S. Congress.
(Signature music.)
PETER F. KROGH: The volume of world trade has
stopped growing. Why should we care?
First, because trade and economic growth go hand in
hand. Without healthy trade, there can be no recovery from
the current global recession.
And, second, because one in every five jobs in this
country depends on foreign trade. But foreign trade is never
popular when the national economy is ailing. In order to
protect domestic jobs and industries, imports are discouraged.
This is called protectionism. And protectionist sentiment is
growing rapidly around the world.
In the U.S. Congress, the strongest piece of
protectionist legislation since the 1930's was introduced last
December. Called the Domestic Content Bill, it was directed
at foreign automakers and required that at least part of each
imported car be made in the U.S.A. using American parts and
labor.
Supporters of the bill claimed it would shelter
American jobs and encourage fair trade practices.
Opponents argued it would provoke a global chain
reaction of protectionism, stifling world trade.
The Domestic Content Bill was passed by the House of
Representatives, but the Senate failed to act on it before the
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session ended. Protectionist sentiment continues to rise and
the guess on Capitol Hill is that the bill will be
reintroduced this year and the debate renewed.
REP. BILL ALEXANDER (D-ARK.): Mr. Chairman and
members of the committee, I rise in support of the Domestic
Content Bill which would impose trade restrictions on import
of.Japanese automobiles. This legislation has been called
protectionist over and over and over again. And I shall point
out that I am not a protectionist by nature, but let me be
quite frank. In endorsing this bill, I am not voting for
protection, I am voting for retaliation.
PETER F. KROGH: 215 members of the House voted for
the Domestic Content Bill, a clear majority in support of the
most protectionist piece of legislation in years. It isn't
hard to understand why. As sales of American-made cars fell
by another eight percent last year, and unemployment among
auto workers alone rose to nearly 270,000, pressure to stem
the flood of Japanese imports became irresistible.
In 1982, one out of every five new cars purchased by
Americans was made in Japan. Although intense pressure by the
Reagan Administration has forced Tokyo to scale down these
exports, the ceiling remains at a hefty one and a half million
cars and trucks a year. By-contrast, only about 5,000
American cars are sold in Japan each year. Japanese consumers
may want them, but Japanese trade barriers keep them out.
But it isn't a question only of the auto industry or
only of Japan that has so aroused Congress. If it were, the
Domestic Content Bill would have died quietly in committee.
Rather, it is the sense of a global assault on the
very foundation of America's economic status that has incited
the `,lawmakers.
REP. RICHARD OTTINGER (D-N.Y.): The war has already
been declared and indeed is being engaged against the United.
States by Japan and the European countries not only in
automobiles but in many other products.
PETER F. KROGH: Many of those other products come
from the farm. In the agricultural sector there is no such
thing as free .trade. All the developed nations, including the
U.S., protect their own farmers through a system of subsidies
and trade barriers. But in recent years, European governments
have been dumping their highly subsidized exports in world
markets at cutthroat prices, threatening to squeeze out the
American farmer.
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Washington has threatened to retaliate by stepping
.up its own subsidized exports. This dispute almost wrecked
the latest round of international trade negotiations in Geneva
last November where a full-blown trade war between the U.S.
and its allies was narrowly averted.
WILLIAM BROCK, U.S. TRADE REPRESENTATIVE: Success
was only partial. We have a piece of paper that provides a
picture of these four days of deliberations. Substantial
gains were made in a number of key areas, but we did not
achieve results on subsidies, for example. Overall, the
results might earna grade of C., It could stretch to a C-plus
but only time and future action will. tell.
PETER F. KROGH: The United States also faces trade
challenges from the developing nations, often in its most
progressive industries, such as textiles. America's textile
factories are modern, their productivity probably the highest
in the world. But despite this, the industry is running a
trade deficit because it can't compete with low labor costs in
-countries like China, America's fourth largest textile
supplier.
Earlier this month when trade negotiations with
Peking collapsed, the U.S. announced it would restrict
competitive Chinese imports. The Chinese charged
protectionism and threatened trade reprisals. The U.S.
government fears that without protection, textiles may share
the fate of some older industries which have gone into steep
decline when challenged by cheaper products from abroad.
For example, during the past 10 to 15 years
production in America's footwear industry has been cut in half
by imports. Robin Footwear of Pennsylvania once had two
factories employing 500 people. But no longer.
RALPH RUSSO, V.P., ROBIN FOOTWEAR: Before we shut
down here in October of this past year, we had about 200
people working here. The second factory in Portage was shut
down and liquidated about eight years ago. That basically is,
you know, the bear bones outline of the business. We got into
trouble mainly because of imports.
PETER F. KROGH: Robin Footwear paid its workers
about $5 an hour. But their Korean counterparts earn only 80
to 90 cents an hour, and in China, a mere 25 cents.
GEORGE LANGSTAFF, PRES., FOOTWEAR INDUSTRIES OF
AMERICA: I think we see in this situation the very real
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problem that this nation faces for the future. It's not faced
just by the footwear industry, but we see it all around us
.whether its the steel industry, the automotive industry,
radio electronics, whatever it is, we have a high labor cost
country and our big challenge is going to be finding ways to
keep the American worker employed at wages which he's
accustomed to receiving.
PETER F. KROGH: But is protectionism the answer?
The American steel industry has been one of the most protected
in history, yet now with 40 percent of its work force laid off
and its plants idling at 30 percent of capacity, it has become
a monument to the failure of protectionist policy.
Congressional supporters of free trade think the
entire economy will end up as depressed as the steel industry
if protectionism becomes national policy. Even most of those
who back the Domestic Content Bill seem to embrace it only out
of frustration and as a last resort.
REP. GLENN ENGLISH (D-OKLA.): I hope that the
Japanese government, the European governments, will get the
message that free trade is the policy of the United States.
We. extend that policy and hope that all other countries will
join with us. But if they refuse, the government and the
people of the United States refuse to be patsies. We're not
going to take it any longer. We can't afford it.
PETER F. KROGH: Congress is under assault from all
sides on the trade issue. Industry, consumer and labor groups,
even foreign trading partners, flock to Capitol Hill, each
lobbying for what it considers the ideal trade environment.
We have with us two members of Congress who are
deeply involved in sorting through these competing interests.
Senator John Heinz, Republican of Pennsylvania, who sits on
the Subcommittee on International Trade of the Senate Finance
Committee. His state is host to many of the industries now
suffering from the economic slump. Among them steel,
footwear and agricultural.
And Congressman Barber Conable, a New York
Republican, who is the ranking member of the House Ways.and
Means Committee.
Senator Heinz, you are on the record, I think, as
saying that if the Domestic Content Bill had come your way on
the floor of the Senate, you would have supported it. What
lies behind that position?
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SEN. JOHN HEINZ (R-PA.): Well, the bill clearly has
a lot of shortcomings to it. It's not my first choice as a
means of dealing with our international trade problems. But
as I think was pointed out earlier, it is about one of the
last remaining ways, given current law, that we have of
expressing our frustration, particularly toward the Japanese
who would be the most hurt by that legislation.
And the reason that the Japanese have been singled
out is that they continue to enjoy, under most favored nation
status in this country, a virtual free access to all our
markets for their semi-conductors, for their automobiles, for
their television sets.
PETER F. KROGH: For their services as well.
SEN. JOHN HEINZ (R-PA.): For everything. For
everything. And any American trying to do business in Japan
as an importer, exporting from this country, somebody who
wants to make a direct investment, achieve an ownership
position, is time after time locked out and frozen out. So
the Japanese economic system, which is deeply ingrained with
their social system, gains a series of rather unfair
advantages which they, Over time, accumulate and can turn
around to great advantage to penetrate our markets.
PETER F. KROGH: So is this bill, as you see it,
essentially a retaliatory measure against the Japanese?
SEN. JOHN HEINZ (R-PA.): It's a retaliatory measure."
I'll tell you what it represents. It represents a failure of
this country to recognize in time that the world is changing
much more rapidly than we realized it would, that the period
of the 70's saw not only a diminution of the economic power of
the United States, a diminution that was in many respects
inevitable, but that other countries' governments would become
much more activist in supporting their economies.
What we have failed to do is to develop more
responsible legislative approaches to dealing with the
problems of industries that are going through a process of
adjustment.
PETER F. KROGH: Well, let's come back to some more
promising legislative approaches in a moment. But,
Congressman'Conable, you did have a chance to vote on this
bill and you voted against it.
REP. BARBER CONABLE (R-N.Y.): Yes, I did.
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PETER F. KROGH: What were your reasons?
REP. BARBER CONABLE (R-N.Y.): I think it would be
counterproductive. The Domestic Contents Bill is an effort to
deal with the problem legislatively. That's not the way to
handle international trade. Legislation of this sort would
exclude within three years all foreign cars, for all practical
purposes. It would be a violation of treaties that we have
solemnly entered into. It would result in additional
retaliation against us in other areas through the rate of
compensation which is permitted, and it would deny the
American consumer to buy the type of car he or she wishes to
buy.
It is much better in dealing with the problems of
distortion and maladjustment that result from a surge into our
market of an attractive product, the Japanese car, through
negotiation, through the sort of thing that we have been doing
now for two years. We have had voluntary agreements on the
part of the Japanese that they would not send more than a
certain number of units into this market.
PETER F. KROGH: Congressman Conable, we'have had
negotiation now throughout the post-war period and we find
ourselves in a situation where we have a $20 billion balance
of payments deficit with Japan, we have these trade practices
of theirs which do constitute barriers, as Senator Heinz
pointed out. What has negotiation really achieved for us?
REP. BARBER CONABLE (R-N.Y.): Well, negotiation has
achieved for us a rather healthy trade generally within the
world.
If you're going to pick out Japan individually, yes,
we have a big deficit, a big trade deficit with Japan. But
with the world as a whole, if you were to drop out the roughly
$73 billion worth of oil that we import, we would have a big
trade surplus.
American goods are competing. If you leave out a
few troubled industries, they are competing very well in the
rest of the world. And for us to cut ourselves out of markets
that are expanding much faster than our own market generally
through this type of legislation would be a serious mistake.
The negotiation that we have had has insured that
the Japanese penetration of our market will not go beyond what 11
it has. If we get an upswing in sales of automobiles, and
there are many problems in the automobile industry besides
imports, that American industry will have the opportunity to
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 participate in that if they have a good product. We ought to
encourage our industry to put out a good product and not hide
behind a barrier that will permit them to sell whatever they
make, whether it's a good product or not. The American people
deserve better than that.
PETER F. KROGH: Senator Heinz, do you believe that
the American interest, particularly the American international
-economic interest, is fundamentally advanced by conducting our
trade within a regime of international regulations,
internationally negotiated, or by unilateral legislation by
each country in defense of its own economic position? Isn't
that basically the bottom line question for our interests at
this point?
SEN. JOHN HEINZ (R-PA.): It is -- the two questions,
strangely enough, are not mutually exclusive. Now, personally
I believe that we should have international codes of behavior
flowing from the GAT, and indeed in the Tokyo round in 1978-79
we negotiated a subsidies code, an anti-dumping code, an
unfair practices code because countries were subsidizing steel
exports, the Europeans have been found guilty of that. Other
countries have been dumping other products in this'country,
and we have had findings of dumping on them. Other countries
have been accused, we haven't had final findings, in shoes,
for example, have been accused of unfair trading practices by
virtue of all other countries having quotas against the
importation of Korean shoes to Taiwan. You won't find a
single Korean shoe in Japan or Taiwan or many other countries.
They just won't let them in. So where do they come? They-
come here to the United States.
We have a structure that we're trying to build under
the GAT, but as yet, frankly, there have been -- there's been
very little in the way of compliance with that structure. And
every time we have reduced our tariffs in order to get these
codes, what has happened is nontariff barriers have been built
up in response to the reduction of tariff barriers.
PETER F. KROGH: Won't legislation of the Domestic
Content Bill kind bring this international structure right
down around our shoulders?
SEN. JOHN HEINZ (R-PA.) It is.not the best way to
proceed. Unfortunately, it's the only game in town.
The better way to proceed, in my judgment, would be
to enact reciprocity legislation which the Senate nearly got
to the floor, the House never quite got reciprocity
legislation, the principle being that you would require
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reciprocal market access on some reasonable basis to deal with
the problems that the Japanese, for example, inflict on us.
A still more important approach is to find a method
of taking both troubled industries and industries that we're
going to be counting on in the future, to give them -- either
shelter it from unfair trade practices such as the Japanese
are engaging in in high tech industries, or in the case of
industries like steels and auto, an opportunity to adjust in a
meaningful way where they would get protection for a limited
period, which is GAT-consistent under the concept of the
escape clause, but really make some changes.
The problem with our adjustment legislation today is
it doesn't require anybody to do anything. You just get a
little protection and so much for that.
PETER F. KROGH: Before we get there, Senator, we
might have a bill passed that amounts to domestic content
legislation, including domestic content on the construction of
the roads on the bill that was passed with the gas tax.
SEN. JOHN HEINZ (R-PA.): We have already done that.
PETER F. KROGH:
wha`t's going to happen --
We have already done that. Now,
REP. BARBER CONABLE (R-N.Y.)
Let's not --
PETER F. KROGH: -- if this unilateral legislation
continues, Congressman Conable? Have we got an international
trade war on our hands, do you believe?
REP. BARBER CONABLE (R-N.Y.): I think to some
degree we do right now. At a time of worldwide depression,
and `that's pretty much what we have got now, there's an
upswing in economic nationalism. The United States should
continue to take the lead, and not the lead toward hiding
behind barriers.
I`want to repeat: American goods are competing very
well. And I want to repeat also that we are not without our
remedies. The trade reform act of 1974 does provide all kinds
of remedies,for unfair trade practices, and they are being
brought, and vigorously brought, by this Administration. They
result generally in negotiated settlements of one sort or
another, but that's far preferable because it stops short of
the type of rigidity that brings about retaliation.
And I do believe that we must dig out of this
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worldwide depression by mutual help with our trading partners
rather than shutting ourselves off. We cannot start with the
idea that somehow we can crouch behind our barriers and still
be self sufficient.
How, for instance, do we generate the credits to buy
the $73 billion worth of oil that we're importing if we don't
ship goods abroad, if we don't try to continue to repeat?
How do we sell our farm products if we're caught up
in a world that's totally protectionist in its nature?
And how do we sell our manufactured goods and our
capital goods which are in surplus now in the trade picture if
we have built these walls?
SEN. JOHN HEINZ (R-PA.): May I --
PETER F. KROGH: Please, Senator.
SEN. JOHN HEINZ (R-PA.) : -- respond to my friend
Barber Conable. He's quite right in posing those questions,
but they are also partly rhetorical rather than substantive
because, in my view, the United States, which has been,
properly, an advocate of free trade forever, ever since
Briitton Woods and certainly since Smoot Oley has done an
important and effective job leading the world toward a freer
trading system.
But what has happened and what we fail to recognize,
and what many people, I think, fail to recognize is that that
expansion of trade and the reduction of trade barriers is now
only unilateral on our part and other countries are closing
their markets and what we have to do, if we're really
interested in free trade, is find a way that is not counter
productive that will keep those barriers from closing, and
indeed will knock them down, and it is on the issue of how we
deal with that that there's enormous disagreement.
Now, my experience with the Japanese is that they
negotiate, they talk, at the same time they keep shipping
their merchandise.
REP. BARBER CONABLE (R-N.Y.): Oh, yes. Absolutely.
And we haveto deal with them vigorously. There's no doubt
about that.' I'm not advocating being supine in front of
subterfuge on the part of the Japanese.
I will say we have a very vigorous trade with Japan
even though we have a deficit. They are our third largest
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a domestic contents example to emulate, and that could easily --~
customer. And what I'm afraid of is if we go the domestic
contents route we'll find some of the countries that do
purchase our goods in greater degree immitating that
immediately. For instance, the French would just love to have
SEN. JOHN HEINZ (R-PA.): They do -- they do --
REP. BARBER CONABLE (R-N.Y.): -- create very
serious problems for us.
SEN. JOHN HEINZ (R-PA.): As you know, they do
emulate it, without legislation.
PETER F. KROGH: Isn't this a good example. The
French, I think, have their imports of Japanese cars limited
to three percent of their domestic market. It's up to 20
percent in our own.
SEN. JOHN HEINZ (R-PA.): And the Italians when the
five thousandth Japanese car comes off the boat, just tell the
boat to go to New York.
REP. BARBER CONABLE (R-N.Y.):- It's all over the map
in Europe. You can always find bad examples to prove your
point. You can find good examples as well, however. And I
must say that unless America takes the leadership with our
market, it isn't going to happen.
PETER F. KROGH: How should we take this leadership?
Senator Heinz has proposed --
REP. BARBER CONABLE (R-N.Y.): By continuing
negotiation, and not by imposing rigid restr.ict.ions., shutting
out all goods and establishing aErecord of exclusion --
PETER F. KROGH: Continuing --
REP. BARBER CONABLE (R-N.Y.): -- rather than
outrage.
PETER F. KROGH: Continuing negotiations on what
basis? Senator Heinz has suggested this reciprocity
legislation that some people.I think feel is a bit of a cover
for protectionism.
REP. BARBER CONABLE (R-N.Y.): Yes. Reciprocity --
it depends on your -- you can use reciprocity either to close
the American market or to force open other markets. A lot
depends on the motivation of those who are using it.
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SEN. JOHN HEINZ (R-PA.): That's correct.
REP. BARBER CONABLE (R-N.Y.): And there are two
versions, and Senator Heinz has one that I think would have
the effect of shutting the American market and not forcing
other markets open.
I must say that we have got -- it's a difficult
issue, but it's one in which the American people have a major
stake. There are simply tremendous and usually very highly
paid -- a tremendous number, and usually very highly paid jobs
involved in the export trade. We tend to ignore that because
labor-intensive industries are threatened by imports.
But in economic terms the export jobs are terribly
important to this country.
PETER F. KROGH: Where is the pressure for
protectionism coming from? Is protectionism what labor wants?
REP. BARBER CONABLE (R-N.Y.): Yes.
PETER F. KROGH: Is that basically it, Senator Heinz?
SEN. JOHN HEINZ (R-PA.): Protectionism is not
merely what labor wants. It is a spirit that's frankly abroad
in the country not just because jobs are being lost in a time
of great economic difficulty, but also people feel that Uncle
Sam has become Uncle Sucker and that we are not sticking up
for our international rights worldwide. And the fact of the
matter is that the trade barriers that have grown up are just
legion and there are -- there is a school of thought that says
that's all right, don't deal with it, we'll just be nice to
those people and --
REP..BARBER CONABLE (R-N.Y.): I'm not advocating
that, John.
SEN. JOHN HEINZ (R-PA.): I didn't say you were.
REP. BARBER CONABLE (R-N.Y.): And you --
SEN. JOHN HEINZ (R-PA.): And the school -- I didn't
say you were. And the school of thought is just keep talking
and they'll all go away.
Now, we have been in negotiations with the Japanese
for a long time and, frankly, I've come to the conclusion that
the only way we're going to get them to act is if we take an
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action that they have to respond to. Now, I don't think that
if you handle it right, for example through responsible
reciprocity legislation --
REP. BARBER CONABLE (R-N.Y.): We're,negotiating
right this week.
SEN. JOHN HEINZ (R-PA.): -- that that means you
start -- that that means you start a trade war. I don't want
to start a trade war. I don't want to do something that's
illegal under the GAT. I want to strength then the GAT but I
also don't want to be sitting here 10 years from now seeing
all our industries --
REP. BARBER CONABLE (R-N.Y.): You don't want to do
something that's illegal to the GAT but you are saying you
will vote for a bill that is illegal under the GAT.
PETER F. KROGH: Congressman Conable, how do we keep
car wars from becoming kind of star wars; that is, escalating
to the point of a breakdown of the international system and an
outright trade war? What should we do., taking account of the
domestic sentiment which Senator Heinz has described, which I
think is very real --
REP. BARBER CONABLE (R-N.Y.): And our auto industry
is very important to us, and that's why we have had to take
some measures by forcing the Japanese to agree to voluntary
restraint on imports into this country, because otherwise the }
dislocation resulting from unemployment in the auto industry
would feed through the economy, has fed through the economy in
ways that have been quite damaging.
Now, we shouldn't be surprised that we,:are in
trouble with automobiles. To begin with, we have not
accommodated to the mileage problems that go with high
gasoline prices. We have been protecting steel now for a
number of years and people wonder well, why are we importing
our steel now in the shape of automobiles? Because you can
buy steel cheaper to build automobiles abroad than you can in
this country. That's why. It's a primrose path we're
starting down.
SEN. JOHN HEINZ (R-PA.): I have to correct you on
something. There have been, on basic steel, absolutely no
protections whatsoever until the recent dumping suits were
filed. There have been no quotas, no tariffs.
REP. BARBER CONABLE (R-N.Y.): What about the
trigger price index?
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SEN. JOHN HEINZ (R-PA.): I will grant you -- I'm
sorry. I will grant you trigger prices. But that did not
protect us, as you know, against Japanese competition.
PETER F. KROGH: Senator, I --
REP. BARBER CONABLE (R-N.Y.): Japanese competition
was still --
SEN. JOHN HEINZ (R-PA.): -- what it did, what it
REP. BARBER CONABLE (R-N.Y.): -- effective.
SEN. JOHN HEINZ (R-PA.): No. The price was set at
that of the most efficient Japanese producer. What it did was
to legalize --
PETER F. KROGH: Do we perhaps have our eye on the
wrong targets here? That is, should we be talking about how
we can increase our exports instead of how we can limit our
exports? Is that where the emphasis of national policy should
be? And we just have a,few seconds. Would you say so,
Senator Heinz?
SEN. JOHN HEINZ (R-PA.) I think we should do a lot
more to emphasize exports. That was the reason we all worked
so hard to pass the export trading company legislation.
REP. BARBER CONABLE (R-N.Y.) John, I'm delighted
that we can agree on that. It seems to me that that's
terribly important. The rest of the world has markets that
are-expanding faster than ours. Ours are already quite
saturated. American goods can compete here at home and abroad
if we concentrate on being competitive and not crouching
behind trade barriers.
PETER F. KROGH: Thank you very much, Congressman,
Conable, Senator Heinz. I'm Peter Krogh, for American
Interests.
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