11

extended to foreign-owned and U.S.-owned producers and to vehicle and components producers the key membership criterion would be commitment to the market principles of the association's charter. A draft charter is enclosed.

The positions advocated by the association would obviously promote the corporate interests of its members, but would also demonstrate how their interests benefitted the U.S. consumer and the U.S. workers and communities associated with their U.S. manufacturing operations. The association would coordinate its members' efforts to mobilize these workers and communities into an active political constituency to support constructive national and state policies.

If you believe this proposal has merit, I am most eager to discuss it further. I believe I am uniquely qualified to establish and lead an automotive association committed to market principles. A copy of my resume is also enclosed for your review. Although I am at present still serving as the Deputy Assistant Secretary of Commerce for Automotive Affairs and Consumer Goods, I am prepared to limit or end my responsibilities at the Department, when necessary, to assure conformity with all relevant ethics requirements. Also, the views expressed in this letter are my own and are not in any way associated with my official responsibilities.

Sincerely,

REW:mpг

Enclosure

Robert E. Watkins

Ms. KAPTUR. He was seeking employment with the Japanese, citing in his letter the exact points of negotiation that had been a part of our trade talks. I can tell you that one of our accomplishments during this term was to remove that gentleman from office. But the trade talks went nowhere, this country is in no better position, and frankly I think we do not have the kind of integrity in our trade negotiations and our trade negotiators that other nations do and it hurts us all the time.

I wanted to bring that to your attention because this convinced me even again that the legislation that we are proposing is absolutely on target and in need of your immediate attention.

Mr. Chairman, in view of the time, I would like to complete my statement there and just let the other gentleman testify and we can open it up for questions.

[The statement of Ms. Kaptur follows:]

Mr. Chairman, it is once again a pleasure to appear before
you to testify about post-employment restrictions for high
ranking government officials. This is the third time that my
colleague, Congressman Howard Wolpe (D-MI) and I have testified
before you on this issue. We keep coming back because the
problem keeps recurring--compounding the damage to America's
integrity and credibility, America's jobs, and America's trade
balance while lining the pockets of former government officials.

I first became aware of this problem from a businessman in
my district who had shared confidential information about his
business with a top U.S. Commerce Department trade official
during a trade mission abroad. He visited Washington a year
later only to find that person serving as a lobbyist on behalf of
his foreign competitors. Further investigation revealed many
instances of former U.S. officials working as lobbyists for
foreign interests, aggressively and effectively representing the
interests of their foreign clients before the U.S. government on
trade matters. I began to see a link between that lobbying and
our staggering trade deficit. I began to see the integrity of
our trade negotiators called into question time and time again.
These lobbyists often were former government officials who were
selling their insider knowledge and access in exchange for
lucrative compensation. It happened in textiles, then machine
tools, then automotive products, and many other areas we may not
even be aware of.

Abuse and exploitation of access and knowledge is no less
offensive when representing domestic interests than when
representing foreign interests. However, I do believe the close
linkage between our industrial might and our national security
cannot be taken lightly. At no time in our history has our
nation's trade deficit been so inextricably linked to the overall
functioning of our economy. For example, the stock market crash
in October was due largely to a fear of higher interest rates
that could result from foreign creditors pulling funds out of the

MARCY KAPTUR
PAGE TWO

United States. Similarly, the recent noted drop in the stock market followed the release of the trade deficit figures for February 1988. Our nation is in an unusual period in its history. We need to take extra care to ensure our economic security and the integrity of the decisions that impact our economy's future. By shutting the revolving door between government service and foreign interest representation, we can close a loophole that exacerbates our trade deficit and undermines America's competitive position in the international marketplace. We can do so without unduly restricting employment opportunities for any federal employee.

We

The Foreign Agents Compulsory Ethics in Trade Act, H.R. 1231, would prevent former high level government officials, including Members of Congress, from representing a foreign interest for a period of four years after leaving government service. The bill would ensure that our trade negotiators were working on behalf of America while they served in government. have seen too many government officials negotiating with one eye towards post employment opportunities with their counterparts on the other side of the negotiating table. Government service should once again become a worthy career goal in and of itself, rather than simply serving as a stepping stone to more lucrative employment.

We commend the Senate for their efforts to revise our nation's ethics laws and stand ready to assist you and the other. Members of the Subcommittee in drafting the House response to

S 237.

MARCY KAPTUR

PAGE THREE

I would like to share several examples of foreign influence peddling which have come to light since your last hearing on this issue in August 1987. My first example has an impact on the jobs of many constituents in my own district. It is a perfect example of the contrast Congressman Wolpe spoke of in his testimony between the behavior of public officials in the United States and other countries. Congressman Sander Levin (D-MI) and I led a Congressional effort to have auto parts included as a part of the MOSS (Market Oriented Sector Specific) talks with Japan. We were seeking to open the closed Japanese auto market to the many qualified parts firms in the United States. Our imports of auto parts from Japan have soared to over $10 billion in the last year while our exports have hovered at $250 million for years.

The U.S. negotiating team for auto parts was headed by Bruce Smart, Undersecretary for International Trade. Mr. Smart joined the Commerce Department in June of 1985 after serving as the Chief Executive for the Continental Can Company. He has no experience in the automotive area. A working group negotiating the specifics of the agreement was headed by H.P. Goldfield, Assistant Secretary of Commerce for Trade Development. He left the Commerce Department in the midst of the year-long talks to establish his own consulting firm. The specifics of the agreement were then left to Mr. Robert Watkins, Deputy Assistant Secretary for Automotive Affairs and Consumer Goods and head of the "experts level" group. These three U.S. negotiators were pitted against three Japanese negotiators, Messrs. Kuroda, Kodama, and Nakgawa. Each gentleman is a career civil servant and has a detailed understanding of the workings of the Japanese auto market and its interrelationship with the world auto market. fact, in my opinion, Mr. Kuroda is the most knowledgeable expert in the automotive field that I have ever encountered.

In

As the talks progressed, little progress was made. At the conclusion of the year-long talks in August 1987, all the U.S. ended up with was a weak provision to monitor the purchases of auto parts in certain product categories between the U.S. and Japan. Japan, in fact, was to provide the statistics. No sooner had the ink dried on this agreement than it was revealed that Mr. Watkins was in fact seeking employment with Japanese firms on the other side of the table, offering to help Japanese auto manufacturers fight against the very measures he was supposed to be fighting for on behalf of the U.S. auto parts industry. His letter of solicitation, along with the U.S. negotiating objectives, are attached to my testimony. Is it any wonder then that the MOSS talks yielded little? We can hardly be sure of whose side Mr. Watkins was representing during these talks. It is certainly no surprise that our trade deficit in auto parts has not improved since these negotiations and the Administration has dragged its feet on implementing this agreement.