Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased to join today with Senator Chafee and a bipartisan group of our colleagues from the Finance Committee in introducing the Structured Settlement Protection Act. Companion legislation has been introduced in the House (H.R. 263) by Representatives Clay Shaw and Pete Stark. The House legislation is co- sponsored by a broad bipartisan group of Members of the House Ways and Means Committee. The Treasury Department supports this bipartisan legislation I speak today as the original Senate sponsor of the structured settlement tax rules that Congress enacted in 1982. I rise because of my very grave concern that the recent emergence of structured settlement factoring transactions--in which favoring companies buy up the structured settlement payments from injured victims in return for a deeply-discounted lump sum--complete undermines what Congress intended when we enacted these structured settlement tax rules. In introducing the original 1982 legislation, I pointed to the concern over the premature dissipation of lump sum recoveries by seriously-injured victims and their families: In the past, these awards have typically been paid by defendants to successful plaintiffs in the form of a single payment settlement. This approach has proven unsatisfactory, however, in many cases because it assumes that injured parties will wisely manage large sums of money so as to provide for their lifetime needs. In fact, many of these successful litigants, particularly minors, have dissipated their awards in a few years and are then without means of support. [Congressional Record (daily ed.) 12/10/81, at

Mr. BAUCUS

Mr. BAUCUS. Mr. President, might I inquire of the Senator how long he is going to proceed? We are going past 12:30. In great deference to the Presiding Officer, we were supposed to finish at 12 o'clock.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the Senator be able to continue his statement and that I be allowed to speak as in morning business at the conclusion of his statement.

Mr. BAUCUS. The Presiding Officer has let us proceed with great generosity.

Mr. BAUCUS

Mr. BAUCUS. I thank the Chair. Again, I thank my good friend from Minnesota, as well as the Presiding Officer from Wyoming, who was very generous in allowing us to proceed at this time. Mr. President, I rise today to introduce the Import Surge Relief Act of 1999, an important measure that will provide a new and improved way to deal expeditiously with import surges. A sudden increase in imports in any sector, especially when these imports are shipped to us at rock bottom prices, has done grave damage to American business and American agriculture. This has been true in the past. It is true today. And, given the increased volatility that we see in the global trading and financial system, import surges are likely to create even greater havoc in our economy in the future. The steel industry and its workers have been seriously injured, and we read about these stories almost daily. The agriculture industry and our farmers and ranchers face constant threats from surges in wheat, beef, lamb, pork and more. At a time when our rural and industrial communities are facing an all-time crisis, this damage goes to the very heart of our economy and our society. The Import Surge Relief Act makes several critical improvements in Section 201 of U.S. trade law. This is the so-called ``safeguard'' provision that is designed to prevent serious disruption of our domestic industry because of imports. The improvements I am proposing include the following: Easing the standard that must be met to demonstrate that there is a causal link between imports and injury to the U.S. industry, speeding up the process for addressing import surges, an absolutely critical need to prevent an industry from being devastated before action is taken, requiring that the President, in deciding whether to take action, focus more than he has in the past on the beneficial impact of a remedy, rather than on the negative impact on other industries, making provisional relief available on an urgent basis, and correcting the way in which imports are counted to prevent circumvention. In addition, the bill provides for a system that will give us an early warning about import surges. We simply cannot wait until we see that an America industry is devastated. We must be able to project ahead, understand the threats facing an industry, and then consider quickly what type of action to take, if any. Finally, the bill requires that there be an investigation about underlying problems in agricultural and steel trade. This investigation would focus on anti-competitive practices overseas, including cartel arrangements beyond the borders of the United States. Mr. President, the United States will remain the most open market in the world. I am committed to that. At the same time, we must do everything we can to open foreign markets that retain barriers to our manufactured goods, agricultural products, and services. And, we must be sure that our domestic industry is able to adjust and adapt to import surges without experiencing the devastation to our businesses, farms, and communities that we have seen far too often in the past. Let me discuss the Import Relief Act in more detail. The bill changes the causation standard that links imports and injury. Instead of the requirement that imports be a ``substantial cause of serious injury, or threat thereof'', this bill requires only that imports cause, or threaten to cause, serious injury. Imports would not have to be the leading, or most important, cause of injury. This change conforms to the WTO Agreement on Safeguards. The U.S. International Trade Commission practice has been to examine injury over a five year period. This practice ignores the problem of import surges where imports do not build up gradually over years but come into this country full blast in a precipitous way. This bill requires the ITC also to consider whether there has been a substantial increase in imports over a short time period. The President has discretion to deny relief after the ITC recommends such action, if he believes that the economic and social costs outweigh the benefits. This bill requires that the President grant the relief recommended by the ITC unless it would have an adverse impact on the United States substantially out of proportion to the benefits. This would increase the likelihood that the President will implement the remedy that the ITC recommends. The time period for provisional relief is reduced from ninety days to sixty days so that relief would come more quickly to the industry and workers. The bill adds to the factors that ITC must consider in determining whether serious injury is occurring. These new factors are just common sense, such as the level of sales, the level of production, productivity of the industry, capacity utilization, profit and loss, and employment levels. The ITC should focus on current conditions in the industry, not only historical factors. In addition, the bill requires the ITC to consider conditions in foreign industries that indicate further possible increases in exports to the U.S. in the future. Looking at factors such as foreign production capacity, inventories, and demand in third countries will allow ITC to understand the threat to the American industry and its imminence. Provisional relief is improved in several ways. The ITC must look at whether there is an import surge to determine if provisional relief should be provided. Also, USTR, the Senate Finance Committee, or the House Ways and Means Committee can request provisional relief when they have requested initiation of a Section 201 investigation. The bill applies to Section 201 those provisions already in U.S. antidumping and countervailing duty law that ensure that the ITC, in its injury analysis, not double-count production by the domestic industry when upstream and/or downstream products are the subject of an investigation. Domestic industries will be able to request that imports be monitored and data collected. The bill allows the Office of Management and Budget to release preliminary trade data when there is an import surge. This will improve the ability of the industry to detect a problem quickly. A new import monitoring and enforcement support program for steel and agricultural products will monitor illegal transshipments and other attempts to circumvent U.S. trade remedy laws. A suffix to the Harmonized Tariff Schedule for products subject to trade actions will help track imports of those products. The Commerce Department will continue its current steel import monitoring program. The ITC will conduct an investigation of anticompetitive activities in international agriculture and steel trade, focusing especially on cartels and other anticompetitive practices. The ITC will report to the Senate Finance and Agriculture Committees, the House Ways and Means and Agriculture Committees, and USTR and must propose steps to address those anticompetitive practices. I again repeat my praise to the Presiding Officer who has been excessively generous and gracious in the way he has conducted himself as the Presiding Officer allowing us to make these statements.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to introduce the Promoting Health in Rural Areas Act of 1999. All Americans deserve access to quality health care. But in rural America health care delivery is often difficult, given the great distances and extreme weather conditions that typically prevail. That's why Senator Daschle and I, along with bipartisan group of Senators, are introducing this important legislation. Its provisions are many, but it purpose is singular: to correct the federal government's tendency to view all areas--urban and rural--with a one-size-fits all lens. Before I begin explaining what this bill does, I want to recognize the tremendous contributions of some of the cosponsors' staff who have worked on the bill. The Minority Leader is known in the Senate not only for this tremendous leadership, but for the quality of his staff. Elizabeth Hargrave is no exception. On loan from the Department of Health and Human Services, she has worked tirelessly to see this bill through to introduction. With her expertise and attention to the intricate details of health policy, we have come up with a solid, comprehensive bill, much improved from that which was introduced last year. Tom Walsh on the Senate Aging Committee has also done tremendous work. His knowledge of Medicare law is vast, and his parent demeanor has done wonders toward making negotiations on this bill amicable and fruitful. Heidi Cashman with Senator Roberts, Neleen Eisinger with Senator Conrad, Diane Major and Stephanie Sword with Senator Thomas, Sabrina and Bryan with Senator Harkin, The list goes on. The Promoting Health in Rural Areas Act is the product of many long meetings, extensive research, and a great deal of cooperation. Would that we could all work so well together. So why is this bill important? As you know, Mr. President, a couple of years ago Congress passed the Balanced Budget Act. In it we extended the life of Medicare for several years and passed some important rural health provisions, including Medicare reimbursement for telemedicine and the Medicare Rural Hospital Flexibility Program to establish Critical Access Hospitals (CAHs). Under the new CAH law, rural hospitals can convert to limited-service hospital status and received flexibility with Medicare regulations designed for full-size, full-service facilities. They are reimbursed by Medicare based on actual costs, not fixed or limited payments; in exchange, CAHs agree to a limit of 15 hospitals beds and patients stays of limited duration. The model for the new program was based largely on Montana's Medical Assistance Facility Program. CAHs show well the progress we can make if rural areas are afforded the flexibility to develop solutions to the problems they know best. They also illustrate a creative means by which we can use the Medicare program to keep rural hospitals open--and rural communities alive. But not all of the Balanced Budget Act was positive for rural areas. Far from it. Montana health care facilities, including hospitals, home health agencies and nursing homes, are suffering. In 1997, even before the BBA cuts, small rural hospitals in Montana lost 6.5% treating Medicare patients. And although we do not yet have complete data on the impact of the BBA changes, anecdotal evidence tells me that the situation in rural Montana has gotten even worse. In rural areas where many, usually most, patients are of Medicare age, we cannot expect these facilities to stay open without paying them enough to break even. We must do something to ensure the integrity of our rural health care systems. This bill is a good first step. Among other things, the bill provides rural communities with assistance in recruiting health care providers; expands the range of services that can be provided with telemedicine; increases payments to hospitals in rural areas; expands access to mental health services in rural areas; changes the formula by which managed care payments are calculated to attract more managed care health plans to rural areas; and increase rural representation on the Medicare Payment Advisory Commission. As Dennis Farney, a reporter from Kansas once wrote: ``A prairie is not any old piece of flat land in the Midwest. No a prairie is wine- colored grass, dancing in the wind. A prairie is a sun-splashed hillside, bright with wild flowers. A prairie is a fleeting cloud shadow, the song of the meadowlark. It is the wild land that has never felt the slash of the plow.'' For me, this conjures up images of an idyllic rural setting, far removed from the commotion of city life. And certainly that is in the minds of many who live in these sparsely- populated areas--that they are inhabiting a part of the world that is in many ways pristine and untouched. Of course there is a price to pay for that. Rural folks should not expect to have all the amenities of city life: opera houses and professional sports teams are just a couple of things that rural areas must simply do without. Rural Montanans can't expect to have a subway system--or even a Subway sandwich shop for that matter--because economies of scale dictate as much. And even in the area of health care, rural Americans realize they give up something. Full-service hospitals and dental clinics are the stuff of populated areas, and will probably remain so. But although you won't find a full-service acute-care hospital in Choteau, Montana, you can find a CAH. And though you don't find a full-service dental clinic in Eureka, you can find a rural health clinic. Rural residents cannot expect to have the most extensive health care facilities or access to the array of specialists typical of urban settings, but they should expect a minimum standard of quality care. This bill is a step in the right direction towards raising that standard. Whether it's helping rural areas with highway dollars, preventing small post offices from moving to towns' outskirts, or keeping hospitals open, I think most of us agree that saving rural areas is something that ought to be done. Regardless of how hard we try, however, we cannot do so without ensuring the integrity of these communities' health care systems. I urge my colleagues to join the Minority Leader and I in doing just that.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to introduce the Promoting Health in Rural Areas Act of 1999. All Americans deserve access to quality health care. But in rural America health care delivery is often difficult, given the great distances and extreme weather conditions that typically prevail. That's why Senator Daschle and I, along with bipartisan group of Senators, are introducing this important legislation. Its provisions are many, but it purpose is singular: to correct the federal government's tendency to view all areas--urban and rural--with a one-size-fits all lens. Before I begin explaining what this bill does, I want to recognize the tremendous contributions of some of the cosponsors' staff who have worked on the bill. The Minority Leader is known in the Senate not only for this tremendous leadership, but for the quality of his staff. Elizabeth Hargrave is no exception. On loan from the Department of Health and Human Services, she has worked tirelessly to see this bill through to introduction. With her expertise and attention to the intricate details of health policy, we have come up with a solid, comprehensive bill, much improved from that which was introduced last year. Tom Walsh on the Senate Aging Committee has also done tremendous work. His knowledge of Medicare law is vast, and his parent demeanor has done wonders toward making negotiations on this bill amicable and fruitful. Heidi Cashman with Senator Roberts, Neleen Eisinger with Senator Conrad, Diane Major and Stephanie Sword with Senator Thomas, Sabrina and Bryan with Senator Harkin, The list goes on. The Promoting Health in Rural Areas Act is the product of many long meetings, extensive research, and a great deal of cooperation. Would that we could all work so well together. So why is this bill important? As you know, Mr. President, a couple of years ago Congress passed the Balanced Budget Act. In it we extended the life of Medicare for several years and passed some important rural health provisions, including Medicare reimbursement for telemedicine and the Medicare Rural Hospital Flexibility Program to establish Critical Access Hospitals (CAHs). Under the new CAH law, rural hospitals can convert to limited-service hospital status and received flexibility with Medicare regulations designed for full-size, full-service facilities. They are reimbursed by Medicare based on actual costs, not fixed or limited payments; in exchange, CAHs agree to a limit of 15 hospitals beds and patients stays of limited duration. The model for the new program was based largely on Montana's Medical Assistance Facility Program. CAHs show well the progress we can make if rural areas are afforded the flexibility to develop solutions to the problems they know best. They also illustrate a creative means by which we can use the Medicare program to keep rural hospitals open--and rural communities alive. But not all of the Balanced Budget Act was positive for rural areas. Far from it. Montana health care facilities, including hospitals, home health agencies and nursing homes, are suffering. In 1997, even before the BBA cuts, small rural hospitals in Montana lost 6.5% treating Medicare patients. And although we do not yet have complete data on the impact of the BBA changes, anecdotal evidence tells me that the situation in rural Montana has gotten even worse. In rural areas where many, usually most, patients are of Medicare age, we cannot expect these facilities to stay open without paying them enough to break even. We must do something to ensure the integrity of our rural health care systems. This bill is a good first step. Among other things, the bill provides rural communities with assistance in recruiting health care providers; expands the range of services that can be provided with telemedicine; increases payments to hospitals in rural areas; expands access to mental health services in rural areas; changes the formula by which managed care payments are calculated to attract more managed care health plans to rural areas; and increase rural representation on the Medicare Payment Advisory Commission. As Dennis Farney, a reporter from Kansas once wrote: ``A prairie is not any old piece of flat land in the Midwest. No a prairie is wine- colored grass, dancing in the wind. A prairie is a sun-splashed hillside, bright with wild flowers. A prairie is a fleeting cloud shadow, the song of the meadowlark. It is the wild land that has never felt the slash of the plow.'' For me, this conjures up images of an idyllic rural setting, far removed from the commotion of city life. And certainly that is in the minds of many who live in these sparsely- populated areas--that they are inhabiting a part of the world that is in many ways pristine and untouched. Of course there is a price to pay for that. Rural folks should not expect to have all the amenities of city life: opera houses and professional sports teams are just a couple of things that rural areas must simply do without. Rural Montanans can't expect to have a subway system--or even a Subway sandwich shop for that matter--because economies of scale dictate as much. And even in the area of health care, rural Americans realize they give up something. Full-service hospitals and dental clinics are the stuff of populated areas, and will probably remain so. But although you won't find a full-service acute-care hospital in Choteau, Montana, you can find a CAH. And though you don't find a full-service dental clinic in Eureka, you can find a rural health clinic. Rural residents cannot expect to have the most extensive health care facilities or access to the array of specialists typical of urban settings, but they should expect a minimum standard of quality care. This bill is a step in the right direction towards raising that standard. Whether it's helping rural areas with highway dollars, preventing small post offices from moving to towns' outskirts, or keeping hospitals open, I think most of us agree that saving rural areas is something that ought to be done. Regardless of how hard we try, however, we cannot do so without ensuring the integrity of these communities' health care systems. I urge my colleagues to join the Minority Leader and I in doing just that.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I appreciate the inquiry of the Senator from North Dakota. I would, but I want to accommodate the manager of the bill, too. I would like, at some time in the next hour or two, to speak for 15 minutes. Mr. GRAMM addressed the Chair.

Mr. BAUCUS. Mr. President, I thank very much not only my good friend from North Dakota but my good friend from Texas, Senator Gramm, and my good friend from Maryland, Senator Sarbanes.

Mr. BAUCUS. Mr. President, I ask unanimous consent to speak in morning business.

Mr. BAUCUS. Thank you very much.

Mr. BAUCUS. If I might try once more for 15.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise this morning to offer some thoughts on the negotiations towards China's WTO accession, in the aftermath of Premier Zhu Rongji's visit to the United States. This, I submit, is a question of fundamental importance to America's trade interests. China is now our fourth largest trading partner--after Canada, Japan, and Mexico--a major market, and the source of our most unbalanced trade relationship in the world. And it is perhaps still more important to America's strategic interests in Asia. Today, I would like to review the progress thus far and its implications for these interests. Let me begin, however, with some context about WTO accessions and the commitments they require. The WTO really began with the creation of the General Agreement on Tariffs and Trade, otherwise known as the GATT, in 1948. At that time, 23 nations were members. Each of them agreed to a set of tariff cuts and agreed to apply the new tariffs to all other GATT members. This is the famous, or infamous, principle of ``MFN,'' or ``Most Favored Nation.'' Since then, since 1948, 111 other economies--membership is no longer restricted to countries, as Hong Kong and the European Union are now members--have joined to make up today's 134-member WTO. The original tariff agreements are also joined by agreements on sanitary and phytosanitary standards--that is, health standards-- intellectual property, technical barriers to trade, and other issues. And 30 more economies have applied to join, the largest being China. As these economies join, they must also lower their trade barriers, live up to WTO's intellectual property and agricultural inspection commitments, and so forth. For existing members, however, the only requirement is the one they adopted back in 1948: that we apply MFN--or today normal trade relations--tariffs to the new members. That is the only commitment that current members have to make. So as we consider the commitments China has and will make to be a WTO member, we must also remember that these are fundamentally one-way concessions. Let me repeat, to enter the WTO, China has committed to a set of one-way concessions. Nothing in any WTO accession will mean American concessions on market access; the use of our trade laws to address dumping, subsidies, or import surges; or controls on American technology exports. Likewise, if we should choose to tighten export controls at some point in the future, nothing in the WTO accession would prevent us from doing so. Let me now turn to the commitments China has made and to the issues which remain. To enter the WTO, China and the existing members must do two things: draft a ``Protocol'' covering a set of fair trade policies, and agree on a set of market access concessions. These are the issues which the American negotiating team addressed in the months and weeks before Premier Zhu's visit. And the results are striking. China has made a significant set of concessions in both areas. The work is not done, but let me review for the Senate some of the major elements. Under the protocol, China has made the following commitments: It will end the practice of requiring technology transfer as a condition for investment. That is very big. This includes refusing to enforce tech transfer provisions of existing contracts. The United States is guaranteed the right to continue using nonmarket economy methods for fighting dumping and unfair subsidies. China will end investment practices intended to take jobs from other countries, for example, local content requirements which stop auto plants from importing U.S. parts; export performance clauses requiring production to be exported rather than sold on the Chinese market, and so on. And China has agreed to a product-specific safeguard which will strengthen our ability to fight sudden import surges. It is important in the weeks and months ahead to ensure that these provisions have acceptable duration. But it is also clear both that we will be able to use the WTO to strengthen our guarantees of fair trade, and also that we will be able to use our own domestic trade laws for the same purpose. These are fundamental parts of any successful WTO accession. The American negotiators have also won an impressive set of commitments in market access. Let me offer a few examples: In agriculture, China has already begun by lifting its infamous ban on Pacific Northwest wheat, American beef, and also on citrus products. And when it enters the WTO, it will accompany this by major tariff cuts. For example, beef tariffs will fall from 45 percent to 12 percent, and adoption of tariff-rate quotas in bulk commodities; that is, minimum guarantees of imports into China. The wheat tariff-rate quota, for example, has the potential to lift China's imports from 2.4 million metric tons a day to 7.3 tons for the first year China is in the WTO and more afterwards. China will also give up any rights to export subsidies, a far cry from, say, Europe which has massive export subsidies; China going much, much further than Europe is today. In industrial goods, China will grant full distribution rights, retailing, repair, warehousing, trucking and more in almost all products over 3 years. And it will allow American companies to import and export freely. These are concessions that will fundamentally transform an economy which now operates by requiring both Americans and Chinese to use Chinese Government middlemen in these areas. It will make large tariff cuts to an average of 7.1 percent, and it will give up the quota policies at the heart of several industrial policy ventures. Another concession of special interest to my State of Montana is deep cuts in wood products, from levels reaching 18 percent today down to 5 and 7 percent after WTO membership. And in services, China has made commitments in every sector. They are especially strong, as I noted, in distribution, but also extend to telecommunications, to finance, to audiovisual, environmental services, law, franchising, direct sales and more. These are very significant concessions which go most of the way to creating a commercially meaningful agreement. The U.S. negotiators deserve immense credit for their tremendous achievements of the past months, absolutely amazing, perhaps even more for their willingness to refuse bad offers in the past years and remain firm in the commitment to strong accession in all areas. Several issues, however, remain unresolved. I am especially and very strongly concerned that we are not accepting any rapid phaseout of nonmarket economy dumping rules or import surge provisions. We can also improve on the market access commitments in several of the service sectors. However, we should also understand that there is a point at which we should say yes. We should not set a goal of transforming China's trade regime into Hong Kong's by next New Year's Day. Rather, we should expect a good, commercially meaningful accession, and we are almost there now. Finally, let me say a few words about the broader interests involved. A WTO accession is a set of unilateral trade concessions; in this case, made by China. As such, it is in our economic and our commercial interest. It will create opportunities while making trade fairer for our working people and farmers. But it is also a piece of a larger strategy designed to create a more stable, a more prosperous and more peaceful Asia-Pacific region. China's economic integration into the Pacific region since the opening under President Nixon in 1972 has been immensely important to our long-term national interests. We can see that very clearly in the Asian financial crisis, for example. When I came to Congress, China was a revolutionary power, which would have used this recent currency crisis to spread disorder, spread revolution throughout Southeast Asia and the Korean peninsula. But today it is a beneficiary of Thai, Singapore, Korean and Malay investment, and these countries are also China's markets. China has responded to the crisis by contributing to their recovery through currency stability and several billion dollars in contributions to IMF recovery packages. The WTO accession will deepen and strengthen this process. At the same time, it will move China toward the rule of law, give Chinese working people, students and families more frequent, more open contact with foreigners and, thus, contribute to our work toward a China which has more respect of the law and more respect for human rights. Mr. President, the U.S. negotiators thus far have done an excellent job. They have already offered American farmers a ray of hope during a very difficult year. We are very close to accessions that will make trade with China fundamentally more fair for our country. It will then be up to the Senate, to our colleagues, to take the final step by making the normal trade relations we now offer to China permanent. I thank the Chair. I yield the floor, and I suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise to note that this week the world's finance ministers and central bank presidents have gathered in Washington for the annual meeting of the World Bank and the International Monetary Fund. I suspect that Secretary of the Treasury Rubin reminded us last week that, despite the hype about the end of the world's financial crisis, we are just at the starting point of making those structural changes necessary to put the globe back on a solid growth path. Obviously, it is critical to repair the global financial system, and Secretary Rubin has been the leader in this with excellent ideas. But there is a whole other piece, which we can't ignore; that is, the need to maintain and expand an open trading system. Take a look at some troubling trade statistics released last week. First, the United States merchandise trade deficit in February hit an all-time record--over $19 billion. Imports into the United States are growing faster now than at any time in the last four years. Furthermore, American exports are lower than they were just one year ago. And remember that one billion dollars in exports equals about 12,000 jobs. Japan and China seem to be in a race to see who will have the largest deficit with us. Japan's trade deficit with the United States in February was over $5 billion, while China's was a little under $5 billion. There is more. Another troubling statistic was the World Trade Organization announcement that last year the world's exports grew only 3.5 percent. That compares to a 10.5 percent growth rate in 1997. And they expect the growth of world trade to slow down even further this year. Third, and this is even worse news, while imports into North America were up 10.5 percent, our exports from North America, which means mainly the United States, rose only 3 percent last year. That is, imports rose three and a half times faster than exports. All this means that the world economy is surviving by exporting a lot to us while importing less and less. Why is this? A major reason is that our economy is so much stronger today than any others. This is due to American economic strength and competitiveness, as well as to the global financial turmoil that has hurt so many of our trading partners. But another significant reason for the growing trade deficit is the continuing discrepancy between the openness of our market versus the openness of others. It is true that once the world emerges from the financial crisis and global recovery begins to kick in, these numbers will change somewhat. However, the trade barriers that existed prior to the start of the global financial crisis are still there today and will still be there tomorrow. If Secretary Rubin and other financial leaders succeed in their efforts, foreign economies will pick up later this year or next. We should see an increase in our exports as those economies need American capital goods and start buying more consumer products. But, economic recovery overseas does not mean that trade barriers will disappear. We must deal aggressively with barriers to our goods and services to take advantage of this opportunity for greater export growth. That is why we must always keep market opening and trade liberalization on the top of our national agenda, aggressively negotiating new agreements, insisting on full implementation of existing agreements, and repairing those aspects of our trade law that are not working. Our farmers, manufacturers, and service providers are the most efficient in the world. They must have the same freedom to do business overseas that foreign businesses have in our country. And it is the duty of the Congress and the Administration to ensure that those opportunities exist. We have all been pretty frustrated by the European Union's unwillingness to abide by WTO decisions on beef and bananas. In fact, Europe's reaction to the WTO beef hormone decision is to become even more protectionist. We have also been frustrated by Japan's unwillingness to implement its trade agreements with the United States. A recent study concluded that Japan was implementing fewer than one- third of those agreements. One possible bright side to this picture, however, lies in the WTO negotiations with China. USTR, USDA, and other agencies have done yeoman's work over the past month. I hope the agreements made thus far with China hold together and the negotiations underway can bring it to a conclusion. We have an opportunity to expand significantly American exports in many sectors--agriculture, manufacturing, and services, for example. Another example of this is the Pacific Northwest wheat agreement, which has been a problem for us in the Pacific Northwest. China now agrees that we will be able to sell our Pacific Northwest wheat to China. Mr. President, I firmly believe that opening markets is profoundly important for our national well-being. But it requires persistent, aggressive, high-level attention at all levels of our government. I will do everything in my power to ensure that this is done. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, what is the pending business?

Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BAUCUS. I thank the Chair.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to speak to the Federally Impacted School Improvement Act. As we all know, there is a very important debate going on in our country today concerning our Nation's schools. Schools all across our country are crumbling, in many cases in such disrepair that it affects the child's ability to learn or even feel safe. I hope and expect that this Congress will reach a consensus on a school construction bill very soon. I support and have cosponsored several bills in the last Congress that encourage a nationwide effort to rebuild our public schools. Quite simply, it is the right thing to do. But in a heated national debate, one group of children is continually left out in the cold; that is, students who live on federally owned land, usually an Indian reservation, very often a military installation. In my State of Montana, about 12,000 children are classified as federally impacted; that is, they live on Federal land. For almost 50 years, Congress has provided financial assistance to school districts that are impacted by a Federal presence. We call this Impact Aid funding. Unfortunately, it has been underfunded for the last 15 years. And even worse, for the last 5 years Impact Aid schools have received zero dollars to help in paying for badly needed repairs and construction. This has created an underclass of schools with glaring infrastructure problems that border on dangerous and inhumane. How bad is it, you may ask? Let me tell you. In one school in Montana, the Hays Lodge Pole Elementary School on the Fort Belknap Reservation, they say that the high school has infrastructure problems that are so bad that saying it has problems is like saying that the Titanic had a small leak. Whenever it rains or snows, the roof leaks making classrooms unusable. The kindergarten is located on a stage, not in a classroom. The school nurse and counselor work out of a converted locker room shower with no ventilation. The decrepit sewage system regularly backs up into this same shower, filling the nurse's and counselor's office with raw sewage. And all special education services, which a large percentage of students use, are provided in a separate house requiring the children or staff to walk over an ice rink in high winds and adverse weather just to get to class. While some may say, OK, that sounds like a bad deal, shouldn't the local taxpayers pass a mill levy to build a new school? Or shouldn't they get help from the President's school construction bill which gives billions of dollars in bonding authority to school districts for just these sorts of problems? The answer, sadly, is no. The problem is that these schools have no bonding authority. Since the land is owned by the Federal Government, there is no local mill levy to raise. And since the Federal Government has, for 5 consecutive years, provided zero dollars for repairing Impact Aid schools, these problems have just gotten worse and more expensive. And it is our children who pay the price. So the Baucus-Hagel Federal Impacted School Improvement Act aims to fix that. Make no mistake, this is not some budget-busting Government handout. The act authorizes a small but meaningful $50 million a year appropriation for the next 5 years for Impact Aid school construction and repair. And 45 percent of the funds appropriated under the bill go to Indian lands. Another 45 percent is dedicated to military schools. The final 10 percent is reserved for emergency situations. In order to make this small appropriation go further, our bill requires local school districts to match every Federal dollar except for the 10 percent reserved for true emergencies. The act also limits to $3 million the amount an individual school district can receive in any 5-year period. This is done to ensure that all--or at least more--impacted schools will have the opportunity to use these grants to improve the lives of their children. Mr. President, this bill is vital to a vast number of children in Montana, Nebraska, and all across our country. I am hopeful that a comprehensive school construction bill can pass this Congress. But let me tell the Senate today, Senator Hagel and I plan to make sure that any school construction bill that passes this Senate will also take care of federally impacted school districts. We hope to pass this bill regardless of the larger debate. But if that does not happen, we will also work to include this act in a broader school construction bill. In closing, I want to reiterate that the children who attend schools on Indian lands or military installations are all of our children. We must not ignore them or allow their schools to fall into dangerous disrepair. They deserve the same education as every other child. Let us take this opportunity to redress our negligence in ignoring these children, and show them that we care. Let's pass this bill. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today I am pleased to join my colleague Senator Hatch in introducing legislation to permanently extend the exception from Subpart F for active financing income earned on overseas business. United States companies doing business abroad are generally allowed to pay U.S. tax on the earnings from the active operations of their foreign subsidiaries when these earnings are returned to the U.S. parent company. Until recently, U.S.-based finance companies such as insurance companies and brokers, banks, securities dealers, and other financial services firms, have not been afforded similar treatment. The current law provision that is intended to afford America's financial services industry parity with other segments of the U.S. economy expires at the end of 1999. Our legislation, intended to keep the U.S. financial services industry on an equal footing with foreign-based competitors, would make this provision permanent. The financial services sector is the fastest growing component of the U.S. trade in services surplus (which is expected to exceed $80 billion this year). It is therefore very important that Congress act to maintain a tax structure that does not hinder the competitive efforts of the U.S. financial services industry. That would be the case if the active financing exception to Subpart F were permitted to expire. The growing interdependence of world financial markets has highlighted the urgent need to rationalize U.S. tax rules that undermine the ability of American financial services industries to compete in the international arena. It is important to ensure that the U.S. tax treatment of worldwide income does not encourage avoidance of U.S. tax through the sheltering of income in foreign tax havens. However, I believe it is possible to adequately protect the federal fisc without jeopardizing the international expansion and competitiveness of U.S.-based financial services companies, including finance and credit entities, commercial banks, securities firms, and insurance companies. This active financing provision is particularly important today. The U.S. financial services industry is second to none, and plays a pivotal role in maintaining confidence in the international marketplace. Through our network of tax treaties, we have made tremendous progress in negotiating new foreign markets for this industry in recent years. Our tax laws should complement, rather than undermine, this trade effort. As is the case with other tax provisions such as the Research and Development tax credit, the temporary nature of the U.S. active financing exception denies U.S. companies the certainty enjoyed by their foreign competitors. U.S. companies need to know the tax consequences of their business operations. Over the last two years, U.S. companies have implemented numerous system changes in order to comply with two very different versions of the active financing law, and are unable to take appropriate strategic action if the tax law is not stable. I ask my colleagues to join me in supporting this legislation, and provide a consistent, equitable, and stable international tax regime for the U.S. financial services industry.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today I am pleased to join my colleague Senator Hatch in introducing legislation to permanently extend the exception from Subpart F for active financing income earned on overseas business. United States companies doing business abroad are generally allowed to pay U.S. tax on the earnings from the active operations of their foreign subsidiaries when these earnings are returned to the U.S. parent company. Until recently, U.S.-based finance companies such as insurance companies and brokers, banks, securities dealers, and other financial services firms, have not been afforded similar treatment. The current law provision that is intended to afford America's financial services industry parity with other segments of the U.S. economy expires at the end of 1999. Our legislation, intended to keep the U.S. financial services industry on an equal footing with foreign-based competitors, would make this provision permanent. The financial services sector is the fastest growing component of the U.S. trade in services surplus (which is expected to exceed $80 billion this year). It is therefore very important that Congress act to maintain a tax structure that does not hinder the competitive efforts of the U.S. financial services industry. That would be the case if the active financing exception to Subpart F were permitted to expire. The growing interdependence of world financial markets has highlighted the urgent need to rationalize U.S. tax rules that undermine the ability of American financial services industries to compete in the international arena. It is important to ensure that the U.S. tax treatment of worldwide income does not encourage avoidance of U.S. tax through the sheltering of income in foreign tax havens. However, I believe it is possible to adequately protect the federal fisc without jeopardizing the international expansion and competitiveness of U.S.-based financial services companies, including finance and credit entities, commercial banks, securities firms, and insurance companies. This active financing provision is particularly important today. The U.S. financial services industry is second to none, and plays a pivotal role in maintaining confidence in the international marketplace. Through our network of tax treaties, we have made tremendous progress in negotiating new foreign markets for this industry in recent years. Our tax laws should complement, rather than undermine, this trade effort. As is the case with other tax provisions such as the Research and Development tax credit, the temporary nature of the U.S. active financing exception denies U.S. companies the certainty enjoyed by their foreign competitors. U.S. companies need to know the tax consequences of their business operations. Over the last two years, U.S. companies have implemented numerous system changes in order to comply with two very different versions of the active financing law, and are unable to take appropriate strategic action if the tax law is not stable. I ask my colleagues to join me in supporting this legislation, and provide a consistent, equitable, and stable international tax regime for the U.S. financial services industry.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, this amendment before the Senate, which I do not favor, saddens me. It is not being straight with the American people. It is packaged in a way to look as if it is protecting Social Security. It is like a lot of products: They are packaged, with a promise on the label which may or may not describe what is inside the package. The package here is called a lockbox to save Social Security. That is the package. That is the wrapping around the product. It is not indicative of the product inside. What is the product inside? Inside the package, the so-called lockbox package, not one penny is added to Social Security. The Social Security trust fund is due to expire in roughly the year 2034. The passage of this amendment does not extend that by one day. There is no difference, no change. What is the product inside this so-called package? What is inside is essentially a provision which will be in the law which says public debt has to decline by the amount that the Congressional Budget Office projects. If at any date it does not, then the debt ceiling is in effect. That means that Government cannot make its payments and meet its obligations as we bump up against the debt ceiling. The amendment before the Senate, the public debt ceiling limit, declines right along with reductions in public debt as projected by the CBO. Why is that a problem? It is a problem because the debt limit is not the way we force fiscal discipline. It is a charade. I have been in the Senate for almost 20 years. I have been part of many debt limit extension debates. They are very embarrassing, very embarrassing. The Government has, through the Congress, through authorization programs, obligations. Of course we have to increase the debt limit or we don't meet our obligations and the creditworthiness is in jeopardy, as in 1975 when Moody put us on a list for possible downgrade. At that point, we were flirting with whether or not to raise the debt limit. Some Senators wanted to add different provisions. It was a political nonargument because we all knew we had to pass the debt. It is a game that is being played here. That is why I stood at the outset to say I am saddened by this amendment. It is not being straight with the American people. Enforce fiscal discipline by spending less, pay-go, or through spending caps we enact and adhere to. That is the main reason the budget deficit declined and now we are reaching surpluses. It is not because of any debt limits. We already have a total debt limit in existence--the public debt plus the debt the Government owes to itself. We have that. This is inside the package, a new debt limit, which is meaningless, totally meaningless, because, obviously, if we meet the debt limit, we have to either raise the debt limit or we do not meet our obligations, which means we cannot spend money we are obligated to spend. Social Security is supposed to be protected, but it is only a priority. If the debt limit is exceeded by such a great amount, it is possible that Social Security beneficiaries will not be receiving their payments. It is a priority above veterans. Veteran benefits could be cut if we pass the debt limit. In addition, the usual debates in the past of whether to extend or raise debt limit ceilings are only majority votes. They are very, very difficult to get even though we all know it has to happen. The amendment before the Senate says it has to be a supermajority, 60 votes. We all know that is practically impossible. The honest approach to saving Social Security and the honest approach to fiscal discipline is to continue the pay-go provisions, extend the caps on discretionary spending. We do our job here because this so- called lockbox, public debt limit provision, is not what it is cracked up to be. The other side is trying to make it look like they are protecting Social Security when, in fact, that is not what they are doing. I yield the floor.

Mr. BAUCUS. Mr. President, reserving the right to object, how much time is that?

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I join my chairman, Senator Chafee, in support of the legislation before us today, S. 507, the Water Resources Development Act of 1999. I also want to recognize the new Chairman of the Transportation and Infrastructure Subcommittee, Senator Voinovich, for his hard work on this bill, along with last year's Chairman, Senator Warner. As we all know, the Water Resources Development Act of 1998 passed this chamber last year, but was never enacted. It is our hope that early action in this session will help us wrap up the unfinished business from the 105th Congress. It will also set us on course to develop a Water Resources Development Act for 2000. S. 507 authorizes more than 40 projects for flood control, navigation, shore protection, environmental restoration, water supply storage and recreation. Twenty-seven projects are modified and the Corps is directed to conduct 43 separate studies throughout the Nation. The projects have the support of a local sponsor willing to share the cost of the project. The Congressional Budget Office estimates that the total Federal cost of this bill will be $2.3 billion over the next 10 years. Many of the projects contained in this bill are necessary to protect the nation's shorelines, along oceans, lakes and rivers. Several of the navigation projects need timely authorization in order to keep our ports competitive in the global marketplace. Furthermore, the study authorizations, including a comprehensive, cumulative impact study of the Yellowstone River in my home state of Montana, need to get started to help us make informed decisions about the future use and management of these precious resources. The projects in this bill have been reviewed by the Army Corps of Engineers and have been found to be in the Federal interest, technologically feasible, economically justified and environmentally sound. In other words, these are projects worthy of our support. I am pleased to bring this bill to the floor and urge my colleagues to approve it. Amendment No. 253 (Purpose: To make managers' amendments)

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am very pleased the House Ways and Means Committee began to act on this issue by passing this bill and the bill passing the full House will come over to the Senate, which we can also then pass. Clearly, our service men and women, particularly those in harm's way, deserve all the support we can possibly give them. The provision we are now discussing which releases them of income tax liability during the time they are serving in a zone of danger, particularly in Kosovo, is the very least we can do. Similarly, the provisions in the bill coming over from the House which provide for all men and women on active duty wherever they may be serving overseas to get the 60-day extension, and also have penalties potentially against them for late filing waived--that, too, is very important. Mr. President, I think it is the very least we can do at this point. In addition to our service men and women, there are also other Americans in harm's way in the war zone, performing above and beyond the call of duty. I am talking about employees of the State Department. I am talking about other groups of people over there, serving, doing their utmost, who are in equally dangerous situations. At some future point I believe they also deserve due recognition in the same way as our military. We support our Americans. We deeply support our fellow Americans serving in the Balkans. I am very pleased the House has acted, and the Senate will be acting very soon. I might say, I am also pleased the House approached this matter in the proper way. That is, they brought it up in the House tax-writing committee, the Ways and Means Committee, where the bill was discussed. It was marked up in the committee and then went to the House floor. That is the preferable way of doing business. In this case, there was an attempt for a bill to be filed at the desk and then brought up directly on the floor on this issue, not going through the Senate tax-writing committee, the Senate Finance Committee. I hope we go back to the usual course of business as a general rule where tax bills go through the Finance Committee before they are brought to the floor. I say that because the legislation will be much better. It will be thought through. There is a chance to correct mistakes. There is a chance to add on measures that should be added on or subtract out measures that should be subtracted out. Having said that, obviously time is of the essence in this case, and the House Ways and Means Committee has acted; that is, the authorizing committee in the other body did act so we did have at least that assurance this has been looked at with some considerable examination. I will be very pleased when the House bill comes over. We will be able to vote on it. That will probably be within the hour. As I said, I hope after we do that we can give also the same kind of thought to other Americans who are also serving in the zone who are also sacrificing to a great degree in serving our country. I yield the remainder of our time. (Pursuant to the order of April 14, 1999, the bill (S. 767) was returned to the Calendar.)